What Happens When Companies Become Partisan?
Elon Musk’s right-wing posts on Twitter have plummeted the stock at Tesla, the public company where Musk is CEO. I discuss this with Lana McGilvray of Purpose and Peter Horan of Horan MediaTech.
This issue of The Dispatch is a bit different in two ways.
First, The Dispatch has its first sponsor! (BTW, I welcome future sponsors!)
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Second, instead of just me sharing my thoughts this issue you’ll get a ranging conversation I had with two friends and advisors: Lana McGilvray, founder/CEO of Purpose Worldwide, and Peter Horan, founder at Horan MediaTech Advisors.
Please let me know what you think of this format.
Background: On Tuesday, December 13, Peter shared this article from Inside EVs about recent research from YouGov and Morning Consult, each arguing that Tesla is now partisan because CEO Elon Musk also owns Twitter and has been posting right-wing content. As a result, Tesla is becoming less popular with liberals at the same time that it’s becoming more popular with conservatives. That article was sparked by this earlier Wall Street Journal article on Tesla and partisanship. A subsequent WSJ article reveals that Tesla’s investors are concerned about both Musk’s split focus between Tesla and Twitter and also the plummeting value of Tesla’s market cap.
Peter’s question concerned when brands like Tesla started to become politically partisan, which we kicked around via text. Early in our back and forth, I invited Lana to join the conversation, whereupon we all pivoted into an asynchronous conversation in a Google Doc.
I’ve lightly edited and reorganized the results into this interview.
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Is there a difference between Partisanship and Purpose for brands?
Peter Horan: I’m interested in the notion of partisan brands: Chick-fil-A, Hobby Lobby, Patagonia…
Lana McGilvray: Me too. Great topic. Patagonia, talk about being accountable to your purpose. Whether you are a Patagonia customer or not. That was a bold move!
Horan: This is all God and motherhood. Be good. Be fair. Respect your workers. Think about the planet. Musk, specifically, is using Twitter not only to create a space for anti-social ideas but also to express them in ugly ways (the cartoon about Trump leering at the scantily clad woman and Musk covering his eyes).
Brad Berens: It’s the flip side of purpose in brands.
Note: Among many other books and articles, former Procter & Gamble CMO Jim Stengel started talking about this a while ago and wrote a 2011 book called Grow: How Ideals Power Growth and Profit at the World's Greatest Companies. Earlier this year, Ranjay Gulati at Harvard wrote Deep Purpose: The Heart and Soul of High-Performance Companies. And my friend Jeff Rosenblum’s first book was on this topic as well–about purpose as an accelerant rather than partisanship as limiting.)
McGilvray: I don’t see partisanship as the flip side of purpose; instead, it’s something to examine closely based on how purpose and partisanship work for every unique brand. At times, partisanship works for a brand. At other times, it does not. I think the question for Tesla and Twitter is really about what the brands represent to consumers and how those perceptions will impact its performance and value. Right now, the face of both brands is a verbose man with strong opinions. Those sorts of personas are polarizing by nature.
Berens: Lana, please forgive me for interjecting here, but I don’t agree that Musk has strong opinions. I don’t think he has any convictions at all beyond what will sell more Teslas over the long term. (I've written about this extensively.)
Harry Frankfurt, an eminent moral philosopher and former professor at Princeton, wrote a brilliant essay in 1986 called “On Bullshit.” … In the essay, Frankfurt distinguishes crucially between lies and B.S.: “Telling a lie is an act with a sharp focus. It is designed to insert a particular falsehood at a specific point.... In order to invent a lie at all, [the teller of a lie] must think he knows what is true.”
But someone engaging in B.S., Frankfurt says, “is neither on the side of the true nor on the side of the false. His eye is not on the facts at all... except insofar as they may be pertinent to his interest in getting away with what he says.” Frankfurt writes that the B.S.-er’s “focus is panoramic rather than particular” and that he has “more spacious opportunities for improvisation, color, and imaginative play. This is less a matter of craft than of art. Hence the familiar notion of the ‘bullshit artist.’”
Like Trump, Musk plays both the media and the Twitterati (two overlapping groups) like Itzhak Perlman plays the violin.
It’s easy but mistaken to treat Twitter and Tesla as if they were interchangeable just because Musk is the CEO of both companies. They’re not. I’m not even sure that Twitter is a right-wing partisan platform. Twitter’s owneris currently spouting a lot of right-wing partisan statements, certainly, but I haven’t seen the platform become univocally conservative (like Fox or OAN).
In my judgment, everything Musk is doing at Twitter is for the benefit of Tesla. And it’s worth pointing out that the annual advertising budget of Tesla is zero compared to the billions of dollars that other auto companies spend.
Note: Scott Galloway had a short timeframe analysis of this in one of last week’s Pivot episodes(starting at 32:00) suggesting that this was a bad move on Musk’s part. But I think Musk is a longer-term thinker than that, although he seems impulsive.
But Lana was in the middle of making a thoughtful distinction between purpose and partisanship…
McGilvray: Fair point. I should have said loud versus strong opinions.
In some cases, a company’s purpose may align with partisanship. For example: brands focused on period care. Brands in that category clearly serve a diverse and wide range of customers across demographics and identities. Still, the issues they focus on (period equality and abolishing what is widely seen as an unfair tax on a biological function) are economic versus cultural. There, the partisanship makes sense because they are taking actions that benefit both their customer set as a community and their own company.
That said, to the point of the WSJ article referenced, I agree that, by strategy or not, Twitter is becoming a partisan brand. Agreeing that Musk is a long-game thinker, I don’t currently see the logic of his brand actions because he’s leading with a “free speech” mantra that does not feel authentic based on who he is and the structural organization of the company.
But perhaps he’s changing that? Perhaps he is building a brand that is for “all” or “everyone in the community?” If so, the optics are off because it currently resembles a classic patriarchal dictatorship. If so, there is a disconnect between the cult of Elon Musk and his own purpose. It’s just not resonating.
Axios recently published an article about the relative value of partisan versus nonpartisan brands, based on the results of its annual reputation poll. By and large, the brand “winners” of nonpartisanship will not surprise you. They are the community-focused grocery brands—Trader Joe’s, Wegmans and H-E-B—places that strive to welcome and care for their communities at many levels. That’s great for those brands. But, to the point of the brands leading period equality, they are not brands for all. They are brands for their buyers. And the value exchange between the partisan actions they take benefit their buyers and their company.
As an aside, as an immigrant who grew up in upstate New York and somehow ended up in Texas, I adore both Wegmans and H-E-B. It’s not a lie to say they are special to me. They welcomed me to this country and to each state in a way that I can’t recall other brands doing. That type of experience is memorable and empowering. I also love the spunk and change the period care brands are fighting for because the issue that has affected me all my life is real. Why should I pay taxes on my body? That’s why I don’t see purpose and partisanship as flip sides.
One factoid to raise is the reminder that back in 2019, 100+ companies in the Business Roundtable did, in fact, pledge to purpose, or to promote an economy that serves all Americans. Moving away from shareholder primacy. The companies ranged from Accenture and Bank of America to J&J and Xerox
That is a really big deal because those companies signed up (IMHO) to be accountable to their stated purposes.
Horan: For public companies that is a violation of their fiduciary duty under current SEC regs. They can say that they will consider the needs of other stakeholders, but their primary legal responsibility is to shareholders. I have been on several public boards.
If the board of any public company took that Business Roundtable pledge to its logical extreme, they would be in violation of their fiduciary duty per the SEC. It’s the law. Period. Their obligation is to shareholders and only shareholders.
They could be sued by shareholders if they subordinate the interests of shareholders.
What you’ll see is boards all adding some weasel words to create a back door—best efforts. To the extent possible. Over time.
This article from the Harvard Law School Forum on Corporate Governance captures what I’m saying nicely: the authors agree with you, Lana, about the value of thinking beyond traditional stakeholder value, but they also acknowledge that the current obligation of the board is to shareholders in just that way.
McGilvray: Understood, Peter. But those that took the Business Roundtable Pledge went on record and spoke publicly across broadcast and business with the communal headline they were committing to a new, expanded definition of shareholder. That definition “moves away from shareholder primacy, includes commitment to all stakeholders.” So, if I agree with you that the statement is in conflict with legal binds, and I have no reason not to, they still said it, pledged it by signatures.
Unless, of course, it was and is a massive BS campaign that Jamie Dimon,Julie Sweet, Tim Cook, Joaquin Duato and 170+ others embarked on together.
However, I don’t read the pledge as a subordination of shareholder interest. I read it as a respectable acknowledgement that the best interests of corporation and community are not mutually exclusive. Through that lens, purpose and profit live together, although of course not in all instances. However, there are some massive opportunities/cases to be made, some of which are being made in the annual reports of these very companies.
We now see some accounting and attribution associated with purpose. We now see more details about how reducing carbon emissions or advancing literacy are good for the fiscal shareholders of a company as well as the communities they serve, which I see as a milestone itself.
Even if not legally binding, as a shareholder or consumer of commodity brands, perhaps I’m investing in the companies that aren’t polluting my drinking water, starving my neighbors, or maintaining barriers preventing certain neighbors from getting a fair shot at employment.
Berens: Hmmm, I don't think the two of you actually disagree: it's a timeframe distinction the way "comedy equals tragedy plus time." If you take the Business Roundtable pledge in 2019 as the beginning of a journey rather than a light switch that a bunch of businesses flip, then some of the differences between your positions go away.
We've also come a fair distance away from the partisan brands question we started with. Let's move back to that.
How much of this is in the eye of the beholder?
Horan: Is any of this new? I can’t remember Ford or Volkswagen having a partisan bias. Music, yes. But not things
McGilvray: I think some were, some weren’t. Right now, one of the more interesting cases, Ben & Jerry’s failed attempt to limit sales of its ice cream by its parent company, Unilever, in the West Bank of Israel. It was a huge purpose-partisanship collision.
Berens: One of the things that’s most interesting to me on this is how companies are willing to limit their markets from a Total Addressable Market (TAM) of something big (like people with feet) to a subset of that market (like politically conservative people with feet.) There must be some corporate math happening where companies figure that they can make more money over a set of quarters by appealing to the subset with a partisan message than by appealing to the general population with a nonpartisan message.
To Peter’s question, is any of this new? …depends on how far back you go. Fox News has been partisan from the get-go. Lots of brands hyper localize their messaging but want to appeal broadly.
Horan: Media has always been partisan. I am thinking about products and services.
The essence of brand is to be attractive to a certain group of people and, ideally, to become emblematic of their self-image. But with the exceptions of music and media, I can’t think of brands that both attract one group and repel another. Rock ‘n Roll and Country have done that in music. Fox and MSNBC in media. But not hard goods and services. We’ve gone from preference to polarization. The candidacy of a buffoon like Herschel Walker is another example.
McGilvray: I am not so sure if I buy that this has to be a Partisan versus Purpose proposition or an either/or situation because the Purpose of most organizations varies so greatly. I do believe that most brands aim to be true to their mission, successful, to serve their target audiences and to attract and foster talent. I also believe that approaches to driving that success vary, ranging from some that are very data-driven and may even identify as agnostic at some level.
That said, there is a very loud and high-profile dialog happening right now about “brand purpose” and “values” and “brand actions,” as well as about their impact on audiences, people, society, and culture. That dialog is making it more and more important for brands to assert and live by their unique purposes because it allows them to inform the hardest decisions across the organization. Often those decisions include refraining from taking an action, versus taking one.
How to measure Purpose and Partisanship?
Berens: I’ve been thinking about Return on Purpose (RoP) as a new metric for a while now.
McGilvray: You certainly have Brad, and it reminds me of the conversation we had on this topic with Stanley Black and Decker’s then Vice President and Chief Communications Officer, Shannon Lapierre, when you were serving as Editor-in-Chief at IAB. (Here’s a link to the long and deep talk we three had on this topic.)
Berens: We don't have an agreed upon metric for what an organization gets from its commitment to purpose, whatever that commitment might be.
Horan: It would need to be Net Return on Purpose (nROP). Like Net Promoter. Attractors minus detractors.
Berens: Nope. That’s the mistake all the researchers make. Positive attention plus negative attention still equals two units of attention. The salience of the attention drives awareness, of which a subset might start to move down the funnel. I’ve talked about this as Attention Quotient or AQ over the years, and specifically in the contexts of both Trump and Musk.
Horan: But if Tesla has such strong partisan interest that Republicans buy it as a statement and Democrats reject it, the true measure is the net. It’s not just attention
Berens: It depends on the time frame, too. Across how many years are we talking about? I know Tesla is a publicly traded company, and therefore is vulnerable to its quarter-by-quarter fiscal performance. But remember the Cybertruck is coming-real-soon, and it's not bad back-of-the-envelope math to say that pickup trucks and Red States over index.
Horan: I am not saying it’s inherently good or bad, only that the most important measure is whether they add more customers than they lose by cultivating a partisan brand image
Berens: Agreed, but, again, across what time frame? If we’re measuring total vehicle sales between now and 2027, then an increase in conservative buyers might more than compensate for a decrease in liberal buyers…
Horan: Whether that’s true is a separate question. My point is that vehicle sales is the key measurement over whatever time frame.
Berens: Even that gets messy quickly. Let's say an organization decides to measure RoP in terms of employee retention over a three-year period. If it finds that employees engaged with an organization's stated purpose churn five percent less than disengaged employees, that's measurable, but then you have to figure out how that reduction in churn connects to, in our Tesla hypothetical, vehicle sales.
Berens: Let’s wrap this up with whether the three of us have experienced any personal impact from Elon Musk’s purchase of Twitter.
For example, although I haven’t left the platform, my engagement with Twitter has dwindled a lot. Also, even though I have loved my Tesla 3 since I picked it up nearly two years ago, I am sufficiently disheartened about the company CEO’s behavior that I probably won’t buy another Tesla.
What about the two of you? Peter, you’ve been an avid Twitter user for years. Lana, as a PR professional, walking away from the platform that obsesses journalists seems impossible.
McGilvray: I’ve certainly made purpose-driven consumer decisions, but I don’t prescribe them to others. I can see many reasons why you, my friend and colleague, own what seems to be an incredible vehicle. I was attracted to that brand, too. But then it began to feel like putting one in my driveway was analogous to putting an “I Love Elon” bumper sticker on it. I’m not interested in his personal brand.
However, I should point that that I also resist designer logos in general. My husband, a well-known graphic designer, laughs at me when I buy shoes I like and scrape the labels off.
I think a lot of us buy and/or refrain from buying—and even vote—based on identity versus cost or impact. It’s not always a good thing.
Horan: I terminated my Twitter account this week with some regret. I was on the platform for almost 13 years, had tweeted 12,000 times and had more than 4,000 followers. I didn’t leave with a soft landing spot. I don’t know how I will communicate on the same issues for which I used Twitter.
But as Musk has increasingly cited the lack of defection as validation of his management, I felt that I had no choice but to leave Twitter. Continuing on the platform is a tacit endorsement of Musk’s policies.
Berens: Thanks, Peter. Thanks, Lana. This has been fun and thought-provoking.
See you next Sunday for the last Weekly Dispatch of 2022 and my single prediction for 2023!
Thanks for reading The Brad Berens Weekly Dispatch! Subscribe for free to receive new posts and support my work.