Weekend musing - is Nike a corporate activist?

Den Howlett Profile picture for user gonzodaddy September 8, 2018
Summary:
There's a hot debate about whether commercial enterprises should take activist social positions. Like so many things, much depends on whether brands think it is good for business or not. Nike is the current poster child for this form of commercialization. Others will surely follow.

Nike - activism
Nike's calculated decision to put out an advertising campaign featuring Colin Kaepernick in celebration of Nike's 30th year of its 'Just Do It' ad series qualifies as the current embodiment of corporate activism as a commercial endeavor. It's also a polarizing event.

Last week, the Washington Post declared:

Shortly after Nike's announcement, the consumer-research firm Morning Consult released a survey showing that Nike had indeed, as President Trump predicted, taken a reputation hit from its overtly political campaign. Interviews with 8,000 Americans showed a nearly 50 percent decline in Nike's favorability after announcing the Kaepernick ad campaign. Consumer interest in buying Nike products dropped by 10 percentage points.

As the story points out, the devil is in the detail and a relatively small survey (8,000 is a small number in the context of retail) does not necessarily indicate a real trend.

Elsewhere, Fortune pointed out that:

A new report from Edison Trends says Nike’s online sales grew 31% from Sunday through Tuesday of Labor Day weekend this year. That’s notably better than last year’s 17% seasonal increase.

“There was speculation that the Nike/Kaepernick campaign would lead to a drop in sales but the data does not support that theory,” the company said in a statement.

The report does not factor in brick-and-mortar sales

Interesting? Retail researchers will closely watch how this topic plays out because, as WashPo says:

Companies have historically avoided entering the political fray for fear of just what this survey shows: You often alienate far more customers than you gain. And that's especially true for big companies. A brand with a left- or right-wing identity can thrive in a smaller niche where most of their customers lean in one direction. But larger-scale operations need to be able to sell into the whole market, so they've generally eschewed any moves that would alienate sizable portions of their potential customer base.

But as America has divided into distinct camps — geographic, demographic, political — more companies have started chasing explicitly political identities. Starbucks's leftward lean has famously roused conservative ire, but many on the left still haven't forgiven Chick-fil-A owner Dan Cathy's remarks opposing same-sex marriage a few years ago. The result is a world in which every decision, even what kind of fast food to buy, has taken on a political aspect.

That's not healthy for America, which needs more points that people have in common, not more ways to divide into separate teams. Politics and fighting for causes are vital pursuits, of course. I admire Kaepernick for sticking to his principles. But if we Americans are to stay in top fighting form, we also need spaces where we can rest and recharge without agonizing over which brand of chewing gum is the most politically appealing.

Hmm...I'm not as convinced and neither is Scott Galloway who interestingly juxtaposes Google's refusal to turn up at the latest Congressional hearings with the Nike campaign. (ht: Azeem Azhar) Galloway says of Google:

Google’s decision to wave the middle finger in democracy’s face, and not send a senior exec to the Senate hearings, can be explained with one number: 90. Google commands a 90% share of a sector that, by dollar volume, is greater than the entire ad market of any nation except the US. If the search firm had a 30%, or even 60% share, one of the three senior execs (Larry, Sergey, or Sundar) would have fired up the jet and found their way to DC. Instead, Google cemented the notion that these firms have decided, or know, they are more powerful than elected officials. In sum, Google said to the Senate, “We own you, bitches … Don’t bother us.”

This was not just tone deaf, but plain stupid.

The reference to 90% is Google's U.S. search market share when taking into account all its properties. What of Nike?

 Nike announced the spokesperson for their 30th anniversary: Colin Kaepernick. In a word … genius. It’s a bold move and a risk — but a good risk. History judges people not on their inner beliefs, but their outward conviction and sacrifice. The athlete every brand would endorse if they could turn back the clock? Muhammad Ali. A man who was stripped of his wealth and Olympic medals for refusing to enlist in the draft. Thirty years later, we asked him to light the flame at the Atlanta Olympics — in my view, the most meaningful moment in sport.

My emphasis added and a sentiment with which I can agree, having grown up with Ali as athlete and activist. More to the point, Galloway produces an interesting graphic illustrating how Nike did the at risk math:

activism risk

Nike was indeed brave because as the stock price movement shows, the market wasn't impressed although the initial reaction has moderated:

Nike activism

The problem for any brand wanting to own positions, and especially one as polarizing as the NFL kneeling issue, is that the brand itself has to be close to flawless. Nike doesn't fit into that category. AdAge notes the apparently positive outcome of the Kaepernick ad while at the same time reporting that:

Nearly a dozen executives have left the brand since the spring, when reports of a toxic work culture for employees first began to surface.

And there are outstanding lawsuits alleging sexual discrimination which don't help burnish the brand, even if the number of such actions is very small for a company as large as Nike.

My take

I have no dog in any of these positions and tend towards the more cynical view that for-profit firms make commercial decisions first and socially relevant decisions second.

We saw this in the mid/late-noughties when companies like SAP tried to push a CSR agenda through Jim Hagemann-Snabe who was unabashedly altruistic in his reasoning behind CSR but which ultimately withered. Paradoxically, CSR was and remains good for SAP as a long-term cost reduction measure.

Today, we see Marc Benioff, co-CEO Salesforce stepping into multiple social issues, sometimes to criticism that can be argued multiple ways. Even so, there is no doubting the impact. Whether what we see in the case of Nike represents an activist led change that is expanded in the future has yet to flush through.

While I have tended to argue internally that diginomica should exercise care in how it expresses itself on socially sensitive issues, the kind of bias problem that Brian Sommer is currently discussing in areas as mundane as recruiting and which is increasingly becoming a problem in the application of AI forces us to express views that won't always be popular or acceptable elsewhere.

We live in times that Thomas Mann would likely recognize where 'everything is politics.' How we parse that both in terms of business models and the technologies we employ as part of the goal of accomplishing corporate objectives will be an unfolding story the next 2-3 years.

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