CEO activism and value of the ‘x-factor’

The Dutch Financial Times addressed on its opinion page on November 6 and 27 the vision of two CEOs of publicly listed companies. These visions (separately) this time were not about shareholders or business results. Instead, they were about a vision on society, politics, personal responsibility, and position in society. The media attention was therefore not linked to remuneration, a relocated headquarters, or sensitive business activities. No, the media focus this time was on the substantive depiction of societal and political dilemmas faced by a company and its leadership. Even in the boardrooms of other internationally operating companies, CEOs are discussing the balance of being more vocal and are increasingly stepping onto the public stage. The question is: is this incidental, or can we speak of increasing CEO activism in the Netherlands?

Former Prime Minister Rutte once called on Dutch CEOs to sit more often at talk show tables. He did so following a visit by company supervisors to the Catshuis (the official residence of the Prime Minister of the Netherlands) on an audience with the Prime Minister. The controversy did not arise from the visit itself but from the mode of transport—a tinted bus that unintentionally gave an impression of secrecy. There are many myths about the reason for that bus, though it was merely a coincidental and practical choice of transportation: the location of the meeting between the Prime Minister and the company representatives was changed at the last moment, requiring quick transportation to the Catshuis. This unwanted photo moment at the Catshuis served as both a wake-up call and a learning moment for the companies. At later Catshuis meetings between the business sector and members of the cabinet, participants arrived by (borrowed) bicycle or on foot, with official cars parked far out of sight.

The “bus affair” occurred exactly six years ago. Over those years, it impacted the relationship between business, politics, and the media, leading to a certain wariness. Meanwhile, much is happening behind the scenes, with CEOs and companies committing to societal issues. However, they prefer not to publicize this, possibly out of caution to avoid being accused of hypocrisy. “Damned if you do, damned if you don’t,” as the Americans aptly put it. For years, those less visible but genuine efforts were sufficient. A CEO did not need to flaunt their societal contributions. Why not? Because the CEO and their company enjoyed trust. But in an era of societal and political polarization, trust in business has also declined in recent years, just as trust in the institution of the House of Representatives and politicians has diminished (see also the Statistics Netherlands / CBS monitor).

A decision-making framework for whether a CEO or company should engage in societal discussions was outlined, for example, by Professor Paul A. Argenti (Harvard Business Review, October 2020). Argenti identified, simply put, three parameters for such considerations: 1) strategic alignment of the issue with the company’s mission, vision, and core values, 2) meaningful impact and whether the company has the resources and expertise to make a difference and influence outcomes, and 3) the level of support from stakeholders relevant to the positioning. If these three parameters are positively addressed, the company, led by its CEO, can adopt a visible position. If the outlook is mixed, restraint or collaboration with other parties is a more logical approach. If the decision is indeed made to go public, this should be done systematically and using a playbook. It is also important to monitor and proactively manage reactions and promises. Because going public is inherently a one-way choice: once a position is taken externally, there is no turning back. It creates expectations that must be met. And in that respect, there is no difference between making promises to shareholders or to society. A promise is a promise.

A fourth parameter could be added to these already non-quantitative parameters. One more focused on gut feeling: does a company or CEO have the X-factor? Can they authentically, with authority and an internalized story, take to the stage? Because no matter how good and visionary leaders may be internally, that external role is a different ballgame. And the risk that must always be avoided is the perception that the company is engaging in purpose-washing. In that case, it is better not to go public at all or to ask a colleague to step forward.

The Netherlands has a modest tradition of CEO activism, with former leaders like Peter Bakker (TNT), Feike Sijbesma (DSM), and Paul Polman (Unilever). They passed the baton of societal leadership to the new generation of CEOs who again want and dare to be more vocal. The previously mentioned CEOs are examples of this. By opening the shutters of the boardroom and engaging in dialogue with the society of which an internationally operating company is a relevant part. This is expected of all CEOs, and many are willing to do so. To then be challenged substantively and held accountable for the provocative positions they share with society.