The American social theorist Sidney Verba once said that for participation to be meaningful, it has to be clear, loud and equal: clear so that public officials know what citizens want and need, loud so that officials take notice, and equal so that the preferences and interests of the many are not violated for the sake of the few. Writing in his book, Voice and Equality, Verba describes the situation in America as “often loud, sometimes clear, but rarely equal.”
While Verba was referring to participation in the traditional sense of engaging in and shaping political decisions, his catchy indictment also appears to hold true for the world of corporate governance and shareholder democracy. A recent article in the Observer, for instance, notes how an increasing number of major company boardrooms are having to grapple with one or two aggressive and intransigent shareholders who are determined to steer the business down a path more suited to their own interests. According to the article, although many of these individuals own less than 50 per cent of company shares, by rallying others and relying on abstentions they are able to wield a disproportionate amount of power in the boardroom and effectively remove directors who fail to do their bidding. With a company like M&B losing 4 chairmen in less than 2 years, it is little wonder that the current situation has been described as “more Soviet than City.”
At a time when the markets are already gripped by an acute sense of uncertainty, the concern is that this kind of activity can only serve to amplify the disruption that these businesses are experiencing. Yet perhaps more worrying is the kind of impact that an absence of shareholder democracy might have on the prospects of businesses playing a greater role as the new agents of change in society, a mantle which many now expect and actively urge them to take up.
It is not hard to imagine a situation where the majority of shareholders in a company are socially conscious individuals willing to sign up to a more ethical strategy, but where a more seasoned shareholder uses their experience, organisational savvy and influence to derail such ambitions. Likewise, while a company may have a board, chairman and CEO all committed to pursuing a more ethical business model, the threat of major disruption in the boardroom from a bellicose shareholder could lead them to wonder whether it is really worth the effort in changing their strategic tack.
This isn’t to say that every senior shareholder is determined to prevent the implementation of a more socially minded business model, nor that every smaller shareholder is determined to put one in place. But judging from recent experience, it is usually only through the sustained efforts of a large swathe of minor shareholders working in concert that businesses truly begin to transform their operations for the benefit of wider society. And often this goes against the wishes of a dominant minority.
So when we talk about changing business behaviour for the better, shouldn’t we be paying greater attention to the individual shareholders who are making and breaking the boardrooms? Too often we seem to deal with and lobby against companies as if they were a single entity with all stakeholders acting in unison. Yet the reality tells a different story. Many organisations’ shareholders are as cohesive as a political party is united. Look beneath the surface and you will often see frustration and fractious relationships, with a few individuals who hold the balance of power.
If the government is serious about getting “every business to commit” to playing a more positive role in society, and if they are truly concerned about addressing exorbitant bonus pay-outs in the City, perhaps a large part of the solution lies in examining the current state of shareholder democracy. This might mean, for instance, revising company law, tightening the “say on pay” rules, or introducing fairer shareholder voting rights which acknowledge the disproportionate power that certain individuals hold.
I’m certainly not an expert in this area, and there are bound to be several failed attempts in making headway on shareholder democracy. But what is clear is that we should think twice before saying, as was recently noted in the Evening Standard, that it is up to shareholders to decide the direction of their business, not government.
George Orwell once described advertising as the rattling of a stick inside a swill bucket. The famous comedian Bill Hicks even went as far as telling those who in dabble in it to “go kill yourself… seriously”. Though few would consider themselves to have feelings that run parallel with those of Orwell and Hicks, it’s highly likely that most of us instinctively sense that there is something untoward about the level of advertising which is present in our lives. We are often told that we are bombarded with thousands of messages a day, and indeed there is rarely a day that goes by without the sheer number of adverts actually provoking a conscious reaction to them. More often than not it will be to ask ourselves, who would actually fall for this kind of thing?
Yet the concern is that many people certainly do fall for the stream of advertising slogans and marketing messages which they encounter. Whether it’s bottled tap water, scientifically unproven multivitamins or the shaver with the nth new blade, many of us, it is argued, are dragged into thinking that what we currently have is somehow unsatisfactory. It is no wonder then that advertising and marketing triggers considerable consternation among academics, social commentators, journalists, novelists and comedians alike. Take Neal Lawson, one of advertising’s fiercest critics. In an article written for Compass last year, he attempts to highlight the extremely persuasive advertising techniques now being using by companies to mould our wants, for instance by using Facebook to ‘friend’ customers and by finding out which images are powerful enough to push our ‘buy buttons’. The thick relationship between brand and consumer is key to all of this, and as Lawson says, “everything is about emotion.”
While I think most of us can sympathise with these sentiments, couldn’t the power of marketing, advertising and branding also be seen as an opportunity, rather than simply a threat? In his speech on Enlightened Enterprise earlier this year, Matthew Taylor talked about the way in which businesses can combine competitiveness with the pursuit of social good by applying new models of corporate social responsibility. In particular, Matthew sought to make a distinction between “upstream” and “downstream” CSR, the former referring to conventional company CSR strategies, for instance cutting back on CO2 emissions, and the latter referring to the new way in which companies are promoting behaviour change directly among their customers. To illustrate downstream CSR Matthew used the examples of Nike’s running community website and B&Q’s growing number of DIY workshops, both of which are promoting positive behaviour among their customers while at the same time further increasing loyalty to their brands.
What Matthew doesn’t touch upon, however, is the more nuanced way in which companies are able to shape the narratives and ‘life stories’ of their consumers by using the leverage of their brands. In The Consumption Dilemma, a report released earlier this year by the World Economic Forum and Deloitte, it is made clear that companies can lead rather than follow the pro-social tendencies of consumers by communicating value propositions through their products and services. In other words, businesses can mould how people see themselves by associating pro-social values with their brands. Take, for instance, Nike’s recent advert, ‘The Human Chain’, which delicately flits between inspiring images of athletes gradually honing their skills and getting better at what they do. The message of “practice makes perfect” is an inspiring one which clearly resonates with us all. Likewise, Levi’s ‘Go Forth’ campaign preaches a similar message about setting ourselves goals and reaching out for new things in life.
Although this seems like such a simple and obvious way for companies to market their products, this is really much more of a recent phenomenon than it first appears. In previous decades most adverts were about trying to associate a brand or a product with sophistication and higher status, but more and more we are seeing a shift from the ‘aspirational brand’ (all about status) to what Umair Haque calls the ‘meaningful brand’ (all about values).
While it’s of course ill-advised to ignore the structural causes of much that is wrong with the world – and there is much to be said against putting forward unattainable goals for those who have no chance of achieving them – it is also true that narratives, if used in the right way, can be an immensely powerful way of shaping people’s behaviour for the better. In a recent blog, I mentioned the work of author and social psychologist Timothy Wilson. In his book, Redirect, Wilson explains how the narratives which we tie ourselves to can have a profound impact on how we actually behave. We in effect act out our stories, many of which are not written by us but by the cultural context that we sit within. If businesses can use the affinity of their brands to write pro-social stories which we literally buy-into, then arguably they could have a powerful role in causing the same kind of placebo effects, whether that’s getting people to eat more healthily, to get involved in their communities or just to achieve more at work. In this respect, the old aphorism “I shop therefore I am” has never been more relevant.
There are good reasons to think that in the future businesses will be asked to play a large part in this kind of new narrative shaping. Whereas the actions of national and regional governments seem cumbersome and unable to effectively address some of our most pressing challenges, businesses, particularly those with the most respected brands, are now reaching across borders and touching the lives of millions, placing them in a valuable position to effect positive social change.
But before businesses can take up such a mantel, we first have to begin recognising that consumption is not necessarily a bad thing in itself. If we continue to think so we might just end up missing numerous opportunities for pursuing positive change in the years ahead. The world is on a seemingly unstoppable trajectory towards higher consumption, so the question we should be asking ourselves is whether we want to try and reverse this trend, or whether we want to play an active part in turning this challenge into an opportunity, taking people’s affinity for branding as an asset to be harnessed rather than a threat to be tackled.