Wrapping up the 2nd MScom Geneva communications forum, September 10, 2007: “Global impact: dealing with consumer boycotts and stakeholder ambiguity in an interconnected world”

Geneva communication forum 2007

(from left to right) Professor Harrie Vredenburg, Professor of Strategy, Haskayne School of Business, University of Calgary (Canada), Astrid Gade Nielsen, Corporate Communications Director, Arla Foods, Denmark, Yves Daccord, Director of Communications International Committee of the Red Cross, and Professor Craig Smith, Chair of Ethics and Social responsibility, INSEAD (France). The speakers’ panel was moderated by Vincent Lusser, Deputy Head of Media Relations ICRC.

Date & time: Monday, September 10, 2007, 16:30 hrs
Location: International Red Cross and Red Crescent Museum, Avenue de la Paix 17, CH-1202 Geneva, Switzerland

Nearly 100 communications professionals from a variety of corporate, public and organisational entities participated in the 2nd MScom Geneva communication forum at the International Red Cross and Red Crescent Museum,, proving the point that you do not have to be a big multinational corporation to be subject to stakeholder activism and that communicators in both the private and the non-profit sectors have a key role to ensure that their management understands the new paradigm. In her introduction MScom Managing Director Nina Volles reaffirmed the purpose of the Forum as a bridge between the academic and the world of communications practice.

The origins of the boycott* lie in a deep sense of unfairness and injustice felt by individuals or a community whose only recourse is to protest by refusing to behave in the manner which was expected of them. It was therefore somewhat appropriate that this subject was discussed within the Red Cross Museum with its stark and realistic depiction of man’s inhumanity to man. Today the Red Cross finds itself having to manage stakeholder interests which have very divergent views on the organization and its mission. This is most clearly demonstrated in Afghanistan where the concept of neutral intermediary is not always accepted as being a positive contribution by all parties in the conflict.

Because it was Danish and because the cartoons depicting the Prophet Muhammad in a manner totally unacceptable to people of the Muslim faith also originated in Denmark, Arla Foods’ products were boycotted in the Middle East. The company found itself right in the middle of a clash of business, politics and religion and it was not “a pretty sound”.

What is a company to do when it finds itself targeted simply because of an association which has nothing to do with either its products or its behaviour?

Does the issue management process or the crisis communications response provide the answer? Has the risk been previously identified and is there a response strategy in place? Today, the chances are that the boycott originates in a totally unconnected context which makes prediction or early warning all the more difficult.

Arla Foods finally found the answer in its patient efforts to establish dialogue and to explain that the respect for Islam and freedom of expression are both vital and indispensable elements of Danish society. Yet what the Danish public expected of the company was not the same as its consumers in the Middle East. Reconciling these different expectations proved problematic. There was no “quick fix” to a situation which saw Arla’s annual sales in the Middle East drop from USD 550 million to virtually nothing! Within a mere five days 50’000 stores or 95% of all supermarkets in the region had joined the movement.

The lesson of today’s interconnected world is that the logical link between the action and the target of the action is not necessarily present. It is one thing to be targeted because it is claimed products are being made with child labour in sweatshops (e.g. Nike) and quite another to find that your products are not wanted because of the actions of your national government (e.g. French wine in the USA). It was to the latter “disconnected” boycott that the speakers at the Forum addressed their remarks.

Research has demonstrated that approval of a boycott action or campaign is not necessarily followed by a proportional support in action. On average there can be an awareness level of 91% followed by a positive approval level of some 81%. But this falls to a surprisingly low level of a mere 16% of active participants in the campaign or boycott action. These results mean that what the media says or the campaigning organizations proclaim have to be taken with a “large pinch of salt”.

Normally, the stakeholders in a company are listed as customers, suppliers, shareholders and of course the employees. But there are secondary level stakeholders far more difficult to define beforehand who may not be wiling or able to engage, negotiate compromise or clearly articulate their position. This creates what Prof. Harrie Vredenburg calls “stakeholder ambiguity”. Managers are often ill-prepared to deal with the idiosyncratic and context-specific nature of stakeholder ambiguity and typically revert to formulaic decision-making frameworks such as discounted cash flow or cost-benefit analysis. This not only misses the point but also misrepresents the challenges. The simple answer to the simple question “who are our stakeholders?” has become rather more complicated. Vredenburg concluded with three options for dealing with the stakeholder “dragon”. One can deny that it matters, face it head on or feed and appease it. Companies have to learn to identify their hidden or ambiguous stakeholders and develop strategic bridging actions.

So we now know that boycotts are not what they used to be. And there is a new term to deal with – the buycott! such as buying dolphin-friendly tuna.

The “I will not pay for your product or service” boycott is often being replaced by the “I don’t agree with your values or sustainability track record” boycott.

These societal boycotts require different tactics and whilst each situation has its specifics, the broad approach is to “decouple” the brand or the company name and identity from the situation which triggered the original boycott action. An additional factor with the societal boycott is that establishing a dialogue with a specific stakeholder grouping is difficult in view of its diffuse membership and ambiguous identity. Does this mean there are no solutions? Professor Craig Smith had some words of warning:

• widen and deepen your scanning of the horizon for potential danger
• be ready for the long haul, it takes time to change attitudes
• don’t think that it could not happen to you
• and if it does hit you, be ready to develop a mix of tactical and strategic responses both short and long term

Save-the-date
The 3rd MScom Geneva communications forum will take place on June 11, 2008.

* The action has been traced back as far as 13th Century England. The word itself originates with Captain Charles Boycott (Ireland 1880) who refused to reduce the rent on land occupied by tenant farmers. They decided not to pay and soon also decided not to work for him and even the local postman refused to deliver. He was boycotted! The word gradually made it into the media by the end of the 19thC.