Activist or capitalist: is there space for ethical CEOs in the commercial world?

Thursday, April 21, 2016 - 16:32

When we imagine true leaders, many of us picture amoral, cunning and ruthless people leading an equally intense group to their goals - think Julius Cesar and Henry Kissinger.

But does this archaic understanding of leadership still ring true in today's commercial world, or is there space for other points of view and new leadership training paradigms?

The laws of leadership - debunked

I know, I know, there is nothing worse than hearing that dreaded phrase: "the laws of leadership". Yet, many still believe that leadership can be explained in laws, especially those that seem like they have come from the dark ages. 

Take a book from Robert Greene, The 48 Laws of Leadership. Within its pages, the author uses the likes of Machiavelli and Sun Tzu to outline a set of laws that focus on force, deception, manipulation and coercion to lead people. For instance, law three argues you need to always conceal your intentions, while law 18 insists leaders must suspend others in continuous terror. 

With so many top-selling books following this paradigm, we sometimes fall into the trap of believing that positions of power demand this kind of practice. Or in other words, for society to run smoothly we need leaders who will conduct themselves in such a way. 

While this pattern of thought is seductive, it is not the most truthful. Instead, a number of new studies into power are showing that benefits flow where leaders use power responsibly to understand and engage with the needs of others.

CEO activism and corporate social responsibility

A recent study from the Harvard Business School has found CEOs that actively take public positions on social and environmental issues can impact both public opinion and consumer attitudes. 

The experiment they conducted examined the influence of Apple CEO Tim Cook's public comments on legislation in the US that critics argued would discriminate against same-sex couples. While the research found that CEOs have the ability to sway public opinion in the same way politicians do, it importantly showed that CEO activism can also increase consumer intentions to purchase products. 

Specifically, those that were exposed to his activism, were much more likely to purchase Apple products than those who were not. Additionally, while the effects on supporters of same-sex marriage were obvious, the research found that Cook's statements did not drive away same-sex marriage opponents.

The outcome of the research illuminates the impact CEO activism can have on consumers. It acted as a signal to customers, showing where the company leader stood on the issue and in this case galvanising support for the organisation's products. 

Is there space of new kinds of leaders?

Harnessing goodwill through CEO activism

Companies have for years been engaging in non-market strategies that aim to change the market for the better of the company. Take for instance CEO of General Electric Jeff Immelt, who has been advocating for the US government to implement more green energy policies with the aim of promoting GE's wind turbines.

Yet, for organisational leaders to harness their feelings on social issues they must stand firm against allegations that these are merely veiled attempts to attract customers. While this can make it challenging for leaders to become activists, they, unlike the majority of the world, have the power to have their voice heard. 

So where does Tim Cook diverge from Jeff Immelt? The former's outspoken position was mostly unrelated to the core business operations of Apple. Furthermore, while LGBT rights are related to employment, Apple is already seen as a healthy working environment for LGBT people.

So for organisational leaders, being an activist is not about driving your business operations through outspoken remarks about areas related to your company. Instead, it involves being truthful and using your position of power to drive the interests of others.