Most CEOs understand stakeholders increasingly expect them to take a position on major societal issues ranging from climate change to abortion to the war in Ukraine and so much more. But with issues presenting themselves with increasing speed and complexity, leaders can’t afford to make decisions based on limited data or intuition alone. The age of corporate activism demands a clearly defined and structured corporate capability.
Each decision requires careful attention on how it aligns with the company’s purpose, business interests, and stakeholder expectations. Missteps erode trust in the company, leading to strained relations, increased regulatory scrutiny, and reduced market valuation. CEOs who mismanage these issues put their jobs at risk.
That’s why a corporate-activism capability is essential. It allows companies to not only manage the risks but also seize the opportunities, enabling them to better align around decisions and mobilize people to deliver desired outcomes.
Ultimately, the capability can be a differentiator—giving the company an advantage relative to peers that have not brought sufficient discipline to their approach. I recently partnered with my BCG friends and colleagues Russell Dubner, Jeff Kiderman, and Marcos Aguilar to write about the issue of corporate activism and how organisations can develop the right tools for success. A few highlights I would like to share from our work:
Developing a Corporate-Activism Capability
Most businesses have undergone new capability-development efforts before. Still, for existing capabilities to mature into competitive advantages, development needs to be intentionally nurtured from the highest echelons of the company with deliberate design, planning, and investment.
There are four crucial must-haves of such a capability:
Purpose and Guiding Principles. The foundation of a strong corporate-activism capability is purpose: a clear articulation of why the company exists, the role it plays in the world, and the way its authentic and distinctive strengths uniquely position it to play that role. Purpose should be embedded in the organization’s culture, strategy, branding, and actions.
Developing a set of guiding principles in tandem with purpose allows a company to identify key issues with which to proactively engage. These principles should reflect an organization’s ethos and culture while considering specific context such as geography, industry, and market position.
Competencies. Successful corporate-activism decisions must draw from a range of disciplines—including strategy, HR, public affairs and communications, customer insights, operations, and risk management. Such decisions must also be based on input from those with deep knowledge on the societal issues themselves—input that should be shared with decision makers to build understanding and awareness.
The relevant expertise and skill sets will differ somewhat by company and may shift depending on the issue at hand. In most cases, this expertise should be drawn from or developed inside the organization. However, sometimes competencies will need to be sourced externally.
Processes and Tools. Effective, streamlined processes are critical given the complexity of issues that must be monitored, the challenge of integrating informed expertise, and the speed with which decisions need to be made. Processes need to be in place before issues reach critical points. This includes tracking hot-button issues, keeping an eye on stakeholder sentiment, horizon scanning, scenario planning, and ongoing discussions that include diverse perspectives on how to engage.
Additionally, the right tools need to be in place to aid the teams assigned to this task. Digital tools can monitor and measure developments related to various issues and the intensity of stakeholder sentiment. Analog tools (including frameworks, templates, and scorecards) can be used to ensure decision criteria are applied consistently.
Governance. Finally, a corporate-activism capability needs to clarify roles and responsibilities, particularly around when and how decisions are made and how to ensure risks are managed appropriately. This governance structure will undoubtedly cover a variety of factors.
While the CEO might be the ultimate decision maker for more time-sensitive issues, a board subcommittee may conduct regular reviews and make recommendations to the board for decisions regarding corporate-activism priorities, actions, risk mitigation, and learnings.
Thriving in a New Era
Corporate activism represents a seismic shift in what’s required from businesses. The expectation that companies engage on societal issues will not abate in the foreseeable future. Nor will the risks in handling them or complexity in navigating them. And that has significant implications for leaders who are still building the muscle to master this new environment, as well as those who have long seen activism as a part of their mandate.
Companies must be proactive in developing an organizational capability for corporate activism. Intuition and instinct, while essential, are not sufficient for managing the opportunities and risks related to these challenges. A strong organizational capability will enable companies and leaders to get ahead of looming events and react with consistency, ultimately increasing the trust of their stakeholders.
Ashley Grice serves as CEO and a Managing Director of BrightHouse Consulting, a Boston Consulting Group (BCG) company. BrightHouse is a global creative consultancy helping organizations uncover their timeless purpose so they can grow their people, profits, and social impact. She is a Visiting Fellow at the University of Oxford.