Richard Telofski

on "Irregular Competition"

NGO Social Media: Some Weakness in “Reach”

Feb 4

Posted by Richard in Friends of the Earth, Greenpeace, NGOs, Research, Strategy | No Comments

Introduction

Social media is an environment that is seemingly tailor-made for NGOs and activists to exploit. Among other characteristics, social media are accessible to almost everyone in the developed world. Social media are pervasive; more and more people use social media every day. Social media are inexpensive. And social media skew young.

Businessman reading newspapBecause of these factors, economically, demographically, and psycho-graphically, social media are perfectly positioned for NGOs to leverage in their campaigns against business. Because of these reasons, and because NGOs are among the chief anti-corporate campaigners out there, companies want to know more about what these atypical competitors, these “irregular competitors,” are doing from within social media.

Today, I am going to give those corporations a “mini-heads-up” and give a little bit of insight as to what two NGOs are up to in social media. This heads-up will be limited to the examination of “reach.” The NGOs examined will be:

  • Greenpeace US
  • Friends of the Earth US (FOE)

I’ve chosen to examine these two NGOs for six reasons.

  1. They’re both about the same age, and therefore have the same opportunity at notoriety, and reach.
  2. They’re among the largest of the tens of thousands of NGOs on the planet.
  3. Because of their size, these NGOs would tend to have the most potential for influence on the companies they target.
  4. These two are among the most active of all NGOs in terms of anti-corporate activism.
  5. In an effort to compare “apples to apples,” I chose these NGOs because they operate within similar issue arenas, such as the environment; their Venn diagrams of issues coverage overlap, not completely but highly.
  6. Again with attention to an “apple to apple” comparison, both NGO operations cover the same geography. Each NGO has an international organization, but in this article I will only be looking at their U.S. operation.

Factors

Reach is significant in social media. Yes, I know that some of my social media colleagues don’t regard “reach” as important in social media as it is in traditional media. But I submit that reach is very important, especially so in a medium that is perfectly positioned for NGO goals, as noted above.

One of the elements which produces the social media”reach” of an organization is its size. The bigger the organization then the more well-known will be its brand. And the more well-known its brand, then the more followers, friends, fans, and/or subscribers that brand should have in social media. The more followers, friends, fans, and/or subscribers had by that brand, then the more opportunities for the brand’s message there are to be transmitted and discussed and forwarded and discussed again and back and forth and so on. Social media is a medium of discussion and “pass along.” So, if the originator of a message, like Greenpeace US or FOE US, has more followers, friends, etc., than a similar organization, well, then there are simply more opportunities for message propagation not only at origin, but also further down the chain of the social web.

So, let’s go ahead and do a bit of analysis on the social media reach of these two NGOs.

Findings

Below you’ll see a table which details, for each NGO, the number of Facebook fans, the number of Twitter followers, the number of MySpace fans each has, along with similar statistics for each NGO’s YouTube presence.

NGO Social Media “Reach” Comparisons
FacebookTwitterMySpaceYouTube SubscribersYouTube FriendsYouTube Channel Views
Greenpeace USA41,58214,850123,5951,8511,00566,372
FOE US11,6153,10314,67672283,102

As of January 14, 2010

Discussion

You can see that Greenpeace has FOE beat hands down, across all categories. This could be a function of Greenpeace being a more established organization, with a brand that is a global icon. People like to follow the leader, and they’ll do so in social media as in any other aspect of life.

The number that particularly stands out in the table above is that MySpace friends number. Since MySpace is a site heavily trafficked by music lovers, this differential would indicate that Greenpeace has some particular strength with music fans. That’s something for corporations in the crosshairs of Greenpeace to keep in mind, i.e., targeting (or not) the music lover segment in future PR battles. But there’s a big disconnect between that MySpace fan number and that Twitter number. The Greenpeace twitter number is only a bit over 10% of their MySpace number. I think they’re missing something there. Greenpeace could be leveraging that MySpace following into their Twitter effort and using it for effect in various campaigns. And the same idea could be applied to Facebook. With only about a third of the following on Facebook as they have on MySpace, Greenpeace doesn’t seem to be doing much in the way of cross-pollination. This lack of cross-pollination should be something kept in mind by targeted corporate communications personnel. Now, let’s chat about FOE.

What I find especially disappointing in these FOE numbers is the level of Twitter followers that FOE has. I have more Twitter followers than that. They simply aren’t leveraging their Facebook and MySpace presences to increase their level of Twitter followers which, if FOE had more Twitter followers, could make it easier and more effective for them to spread quick, mini-blog type messages during hot and fluid campaigns. And speaking about their Facebook and MySpace followings, for an organization the size of FOE US, those following levels are terrible. Numbers of that level indicate that FOE isn’t doing an adequate job in developing their social media campaigns. Perhaps FOE isn’t taking social media seriously? Something else for targeted corporate communications personnel to keep in mind.

What about the FOE YouTube numbers? Well, it seems abundantly clear, about 20 times more clear, that Greenpeace is giving viewers a lot more to look at than is FOE. Perhaps FOE isn’t as visually oriented as Greenpeace. Again, you corporate communications managers take note.

So, what can we conclude from all of this?

Conclusion

The take-away, for corporate opponents of these “irregular competitors,” is that between Greenpeace US and FOE US, in social media Greenpeace would be a more formidable foe than would FOE itself. In social media, by comparison, FOE isn’t much of a foe. With such low numbers, for corporations in a social media PR battle with FOE US, corporations should concentrate very heavily on creating, discussing, and propagating their message in social media. FOE has a relatively underrepresented presence there, and any corporation locking horns with FOE US should take advantage of FOE US’s relative absence and comparative disengagement with the medium.

For corporations with high Twitter follower numbers, they should especially concentrate in that mini-blogging venue, both preemptively and reactively. It’s apparent that FOE US doesn’t realize their weakness there in that social venue. And any corporation that has ever been engaged in a “battle” with FOE US, or anticipates one in the future, should act now to build their following in Twitter, so that FOE may be “out-Twittered” if and when the time comes.

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NGO & Corporate Collaboration: How Far Does It Go?

Feb 2

Posted by Richard in Activism, NGOs, Trends | No Comments

In the field of issues management, it’s common knowledge that some corporations now “partner” with NGOs on various issues of “social concern.” That term “social concern” is often one that is defined by the NGO, rather than the corporation, by the way. So now, instead of an NGO and a corporation fighting tooth and nail over an environmental issue, for example, they work together toward a “common goal.” Okay. That seems all warm and fuzzy, on the surface. But let’s dig a little deeper into the nature of this “partnership.”

Yellow Pay SignIn a situation like this, what’s that “common goal?” For the NGO, the goal would be the achievement of, perhaps, a social agenda objective that they have pursued for years, often via an adversarial relationship with the corporation. For the corporation, what’s the goal? What motivates the corporation to take on such a “strange bedfellows” relationship? Well, as a recent article in the Christian Science Monitor commented, corporations often approach NGOs to partner on a common project so that those same NGOs don’t turn around in the future and spread bad press about the corporation. A “common goal?” Seems more like a protection racket.

Imagine this scenario. Corporation X is concerned that future bad press could negatively impact their expected future revenues. So, to preclude the threat of negative press, an implicit threat at least, the brass at X dial up their historical foes at NGO Z and play let’s make a deal. The brass over at Z aren’t going to say, “Hey X, thanks for calling, but no thanks.” No. Z’s ship just came in. The pressure that the folks at NGO Z have been applying to Corporation X all of these years has just paid off.

Didn’t I see a scene something like this in at least one episode of The Sopranos?

Now, when the NGOs and the corporations get together like this, at least according to the previously mentioned Christian Science Monitor article, no money changes hands. The article stated that the NGO doesn’t receive any fees from the corporate partner. But isn’t there an exchange of value here? Isn’t this somewhat like a scene from The Sopranos? Let’s look at it this way.

The Sopranos Example – Paulie, grey slicked-back side wings and all, goes into a shop and “tells” the proprietor that the shop could “have some trouble” in the future. This “implicit threat” means that the shopkeeper might lose some of his or her “expected future revenues.” But, Paulie and his problem-resolution specialists can “protect” the shop and make that trouble “disappear,” for some consideration of course. In this Sopranos example, that consideration is money.

Paulie and his problem-resolution specialists get what they were looking for, i.e., they reach their direct objective. The shopkeeper avoids that “implicit threat” and gets to keep his or her future revenue stream.

The NGO Z/Corporation X Collaboration Example – The presence of NGO Z represents an “implicit threat” to Corporation X, the threat of future negative publicity. Corporation Z recognizes that this “trouble” is possible. The presence of this “implicit threat” means that Corporation X might lose some of their “expected future revenues.” But, the problem-resolution specialists of Corporation X realize they can “protect” the corporation and make that problem “disappear,” for some consideration exchanged of course. In this NGO Z/Corporation X example that consideration is collaborating with NGO Z to allow NGO Z to achieve one of their social agenda objectives.

The Corporation Z problem-resolution specialists get what they were looking for, i.e., they get to keep their future revenue stream. NGO Z gets what they were looking for, i.e., they achieve their direct objective of “social concern,” which, of course, is defined by them.

Weird, isn’t it?

And once this “partnership” is established, where is the line drawn? How far does this relationship go?

In The Sopranos Example, Paulie keeps returning to the shopkeeper saying there are always “other” troubles on the horizon and that an increased payment is needed to keep those troubles away.

In The NGO Z/Corporation X Collaboration Example, the management of Corporation X realizes that there is always the possibility that NGO Z could spread bad press, regardless of how much or how well they work together on any selected project. What happens after that project is complete? Corporation X knows that NGO Z will always have “other” future projects of “social concern” on their horizon.

Are these NGO/corporate collaborations a good way to run a company?

How far does it go?

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Could Slacktivism Be the Next Big Thing?

Jan 28

Posted by Richard in Activism, Anti-Corporatism, Greenpeace, NGOs, Trends | 1 Comment

In the digital world, most everyone keeps their eye out for what will be the “next big thing.” Usually it’s a technology, either hardware or software. Lately Google’s been hitting it hard and heavy on the forecasted next big thing stage, Google Wave and Droid.

But I’ve been thinking lately that the next big thing in the online world might be a movement, rather than a technology. And that movement I have in mind is “slacktivism.”

What’s slacktivism? The word itself is a portmanteau of “slacker” and “activism.” Thus, the meaning becomes clear. For further edification, let’s take a definition from the UrbanDictionary.com. They define slacktivism as:

One of those feel-good internet campaigns that doesn’t actually help anybody or has political impact. It’s your way of pretending to care while sitting on your butt in front of a computer playing WoW. Also used for people who want to get a million people on their page by before bettering themselves (sic) or the world instead of just doing it.

Other than the grammar or typo error there in the last sentence, the UrbanDictionary.com is clearly saying that slacktivism is something like what we could call “armchair activism.” It’s being an “activist” without actually being one, although you could still wear the black tee shirt and/or beret while sitting at your computer.

Black laptop computerSlacktivism is a way for people to make themselves feel like they are advocating for a social cause, while actually committing little or no time or money to the effort. It’s, for the most part, a feel-good activity. Not only does slacktivism make individuals feel good about themselves when they sign up to be a friend, fan, or follower on the page of a cause’s website or social network or Twitter page, but the act of slacktivism impresses others with the individual’s “social awareness.” That impression, of which the individual is aware, further adds to the individual’s ego gratification.

I don’t think we need any social psychology references to support these assertions. It’s all pretty much backed by common sense acquired from our years of experience with the human condition. So, given the ease of slacktivism as measured against its psychological benefits, it would follow that many people would sign-up online for an activist’s cause, and not really add much to the activist effort in the process. To test my theory, let’s have an example.

On Tuesday, January 19, 2009 which is the day on which I wrote this post (Yes, I know it’s dated January 28th, but thanks to the magic of the Word Press scheduling function such miracles are possible.), I went to the Greenpeace.org/usa site and clicked on the link to their Facebook fan page. When I went to their Facebook fan page, I noticed that, on that date, Greenpeace USA had 41,728 fans. I wanted to see how “active” these individuals might be, so to test my slacktivism theory, I scrolled down to the Greenpeace USA “Causes” box and clicked on “See Greenpeace USA’s Total Impact.”

For those unfamiliar with Facebook fan pages and causes, following is a brief explanation. Any organization, or company for that matter, may sign-up on Facebook for a “fan page.” On the fan page, the organization can gather fans and communicate, interactively, with them through text and pictures. The organization, and individuals can do this on Facebook also, may then sign-up for “Causes” pages, which are pages featuring a particular charitable organization’s agenda. On the Cause page, the organization can then accumulate “members,” who can be different and/or the same people as on the fan page, and solicit donations for the featured cause.

When I clicked through on Greenpeace USA’s “Total Impact” link, I was taken to their page which summarizes the four Greenpeace causes they feature via Facebook: Climate Rescue, Greenpeace Organizing Term, Kleercut, and STOP the Whale Hunt. Clicking through on each cause listed revealed the following activity and support:

  • Climate Rescue – 473 members for this cause with $0 contributed.
  • Greenpeace Organizing Term – 574 members with $25 contributed.
  • Kleercut – 1,202 members with $40 contributed.
  • STOP the Whale Hunt – 153,941 members with $23,756 contributed.

Until I got to the Whale Hunt cause, I thought slacktivism was going to make the Greenpeace/Facebook contributions endeavor a total bust. The Whale Hunt cause showed 153,941 members with almost $24,000 in donations. But that means that on average each Whale Hunt member contributed only about 15 cents.

Perhaps after signing up for the Whale Hunt cause, most of those 153,941 members, feeling good about themselves, went back to playing World of Warcraft (WoW).

Slacktivism? Is it the next big thing?

At least judging by this test case, yes, I think my theory holds.

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Who Is Really Behind the Walmart Sustainability Index? – Part 2

Jan 26

Posted by Richard in CSR, Environmental Defense Fund, Motivation, NGOs, Research, Strategy | No Comments

Company chartIn my previous post, “Who Is Really Behind the Walmart Sustainability Index? – Part 1,” we began looking at the real reason why Walmart would want to initiate the Walmart Sustainability Index (WSI), an ecological product ranking that the company wants attached to products sold in their stores. To catch you up before you read this post, you may read that previous post by clicking here.

In Part 1, I discussed how I had two theories on who or what is sparking Walmart’s motivation to initiate the WSI. My first theory was that customer demand was the reason behind Walmart initiating the WSI. But in Part 1 we saw that Theory #1 did not hold together. Regardless of what Walmart says, I don’t think it is customer demand that’s the driving force behind the WSI. So, now here in Part 2 of “Who Is Really Behind the Walmart Sustainability Index,” you and I move onto Theory #2.

Theory #2

Premise

As most people know, over the past decade or so, Walmart has been the victim of negative publicity. That the company has been assailed on a public relations front is not exactly proprietary information.

Issues and accusations over: their influence on small-town mom & pop businesses, health insurance benefits for employees, hourly wages, etc. have been well-documented. Then there was that whole Walmarting Across America blogging gaff, a flap that started over a pro-Walmart blog that appeared on the surface to be organic, but turned out to be at least a little less so. After many years of this sort of treatment in the halls of public opinion, Walmart needed some PR wins. Their image had gotten beaten up. Walmart needed a PR image makeover.

Findings
    • Per a post from the Harvard Business Review, in October 2005 Walmart announced that it was embarking on a “sustainability strategy” to “dramatically reduce the company’s impact on the global environment and thus become ‘the most competitive and innovative company in the world.’ “
    • According to an article in the Christian Science Monitor (CSM), Walmart began a collaborative relationship with the Environmental Defense Fund (EDF) in 2005. The article said that EDF’s “most intense partnership began in 2005 when Wal-Mart sought out the environmental group for advice on how to craft a better corporate responsibility plan. At the time, the megaretailer was getting lambasted for everything from killing small business to poor personnel management. The relationship grew closer as it shifted to strategy.”
    • Also per the CSM article, in 2007 the EDF opened an office in Bentonville, Arkansas which also is the headquarters city of Walmart. The CSM article also quoted Michele Harvey, the EDF corporate partnerships project manager, in speaking of Walmart as saying, ” . . . we have a greater potential to influence the direction they take.”
Discussion

Given the fact that Walmart was being “pasted” regularly in the popular culture, they needed to do something which would allow them to appear as a more “benign” presence within the American landscape. Initiating a sustainability strategy within a larger corporate social responsibility (CSR) program could yield them the softer image that they sought. And “partnering” with a major environmental non-governmental organization (NGO) like the EDF to help implement that sustainability strategy would certainly help Walmart project the image of a large corporate organization that is willing to work with those “defending” the environment, softening the Walmart image. From the PR perspective, the fact that “Environmental Defense” is in the name of that NGO organization was probably not looked upon as a negative when Walmart made their NGO partner selection.

Relative to corporations’ entrances into CSR programs, it’s been written in the press that many companies undertake CSR programs in order to preclude attacks from NGOs and activist organizations. Indeed in the aforementioned CSM article, Daniel Korschun, a fellow at the Drexel University’s Center for Corporate Reputation Management, was quoted as saying “Many companies initially approach nonprofits in order to reduce the risk that the nonprofit will create bad press or organize protests and boycotts.”

Could this be the reason that Walmart got involved with EDF in 2005? Perhaps it wasn’t because of an altruistic concern that this corporation chose to enter the CSR arena. Perhaps there was a dual objective in Walmart’s decision to enter into CSR: to repair the image of the company and to preclude NGO and activist attacks.

Theory #2 Conclusion

Getting back to the central question of this post, “Who Is Really Behind the Walmart Sustainability Index?,” perhaps the EDF is really the driving force behind the WSI. Regardless of what Walmart might say about their customer as being the motivation for the WSI, the concept behind the WSI is not consistent with the profile of the average Walmart customer, as we saw in Part 1. But the EDF has the motivation to push this WSI into operation because the concept behind the WSI is consistent with the mission of the EDF.

Maybe the WSI is something that the EDF wants implemented, across all retailing, and not just at Walmart. If this is a goal of the EDF, they have gained a powerful relationship through which to implement that goal. As in the Findings above, the EDF’s corporate partnerships manager was quoted as saying, “we have a greater potential to influence the direction they (Walmart) take.” And as goes Walmart, so most certainly will go the rest of the retail world. This perceived influence in this relationship, and thus the perception of the power available to the EDF, is only accentuated by the knowledge that there is an EDF office in Bentonville.

So, what this all comes down to is that there is a strong possibility that the impetus behind Walmart’s initiation of the WSI was the influence of the EDF, and not customer demand as Walmart has indicated. There is no hard evidence of this, but based on the facts that I have located and presented here, the conclusion seems reasonable.

Epilogue

Now, you might be thinking, “Hey Richard, what does it matter who pushed the WSI? What’s so bad about the WSI?”

Well, I suppose that, at least on the surface, there would seem to be worse things in business than the WSI. Of course, analyzing its benefit to business and society will take some time, especially considering it isn’t even in the marketplace yet.

The WSI is sort of like the nutrition labels that appear on our food products, mandated by the federal government years ago. People can choose to read those labels or ignore them just as they can read or ignore the WSI if they so choose. Yes. Absolutely true. People can ignore the WSI. But the issue that I am raising here is not with the WSI itself. No, the issue I am raising here is one that is more than a label that appears on a product. The issue here is one of process, a process than can affect all companies. That process is one that is built on fear and is one that can insinuate itself into all companies.

When you consider the possibility, a very strong possibility, that it was the EDF who really may have had the goal of the WSI and initiated the WSI through their five-year partnership with Walmart, it doesn’t bode well, in general, for a company’s control of their own corporation. This loss of control would increase as more and more corporations “partner” with NGOs and activists; “partnerships” that are born in the desire to “preclude” publicity attacks. In so doing, companies may actually overlook the desires of their customers to meet the needs of an outsider. They may do this at the expense of those who actually pay to keep the company’s lights on, the customer.

And in this scenario we can see more of the political process insert itself into business as more NGOs become “partners” with fearful companies.

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There Is Only One Jobs Program Going On Now

Jan 22

Posted by Richard in Ideas, Personal Observations | No Comments

This is the first post in my newly created Ideas category.

This category will contain very brief posts addressing random insights that occur to me, well, randomly. I’m jotting them down here because this is a web log, after all. And I’d like to keep track of them for possible incorporation into a future book or article. I’m also posting them here to invite feedback, which would also assist me in putting together future books and articles.

Today’s idea is job programs.

Finally, there is a major jobs program being created in Washington, DC.

After last Tuesday’s (1/19/2010) Massachusetts special election, which changed the political dynamic in the nation’s capital and effectively derailed the health care reform initiative that polls had been telling Washington for months they were ramming through despite the electorate’s wishes, the Democrats finally realized that they were at odds with the people’s desires.

Construction workerThe majority party is now turning, in a deliberately obvious fashion, toward other “issues of concern,” such as the economy and jobs. Yesterday, Mr. Obama announced new, proposed banking regulations and frightened the financial markets. This strategic turn, which is more politically-based than economically-based and (this next clause was added after the market close on Friday, 1/22/10) looks to be nothing more than a temper tantrum from a guy who never even ran a lemonade stand, was made at this point in time in an effort to take the public’s attention off the health care reform failure. Today, he doubles down on this new “hissy-fit” strategy and goes to Ohio to give a speech about jobs. All done, I believe, in an effort to convince the electorate that the majority party is addressing the people’s main concerns, jobs and the economy. Duh. It took them this long to figure this out? (For now, let’s put aside the fact that Mr. Obama’s proposed banking changes would actually do more to hurt the economy than help it.)

Yes, these strategic shifts are the leading elements of a new government jobs program.

But this program’s primary intent is not necessarily to generate jobs for the general public. The primary intent of this new program, this strategic shift, is to allow the majority party members to keep their jobs after the November 2010 mid-term election.

After last Tuesday’s election, the majority party knew that if they continued on the course of ramming health care reform through, against the trend revealed by just about every poll taken on the subject and definitely against the results of the Massachusetts special election, then most of them would be packing their desks come November and hitting the unemployment lines with their constituents.

So, yes. They are now turning to a jobs program. It’s just not the kind that you think it is.

The question is, will people see his proposals as an effort to help the economy? And if they misguidedly do, will that save the jobs of the dweebs in Washington? Or will the people recognize it for what it is? A poorly conceived notion. A notion which will actually damage the banks when it’s now that we need them the most. If so, then this jobs program is doomed from the start.

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Who is Really Behind the Walmart Sustainability Index?

Jan 21

Posted by Richard in CSR, Environmental Defense Fund, Motivation, NGOs, Research, Strategy | No Comments

Glasses and a top hatIn July 2009, Walmart introduced their initiation, support, and funding of the new Walmart Sustainability Index.

What is the Walmart Sustainability Index (WSI)?

Briefly, the WSI is intended to be a ranking of the ecological efficiency of manufactured products. Factors that go into calculating a product’s ecological efficiency are things like the amount of energy used to make the product and how well the product can be recycled after it is used. Walmart wants this ecological ranking to be displayed on each product sold within its stores so that their shoppers can make purchase choices in a “sustainable way.” (Source: Walmart Sustainable Product Index: Fact Sheet, a PDF reachable via http://walmartstores.com/Sustainability/9292.aspx)

This index is often referred to in the press as the Walmart Sustainability Index, just as I have done at the beginning of this post. But, actually calling it such is a bit of a misnomer. They don’t really want the index to be theirs per se. According to the Walmart Fact Sheet, as mentioned above, the WSI is only an initiative created by Walmart. The fact sheet says that the company doesn’t intend to “create or own this index,” but that instead the company intends to help create “a consortium of universities that will collaborate with suppliers, retailers, NGOs and government to develop a global database of information on the lifecycle of products – from raw materials to disposal.” Through their own statement, it is clear that they don’t wish to own it; they just wish to initiate it. Yet, since they are the initiators it only seems fair that they should get the credit for it. So, the name Walmart Sustainability Index should stick. And I would think they would want this name to stick, as we shall come to understand later in Part 2 of this post.

Who or what is behind this WSI initiative?

What are the reasons behind wanting to initiate this ecological product ranking? I have two theories as to why Walmart would want to initiate the WSI.

Theory #1

Proposed: Walmart customers are the reason behind the initiation of the WSI.

Premise

All good businesses are customer-centric. As with any good business, and I certainly consider Walmart a good business (otherwise they wouldn’t be the world’s largest retailer), Walmart must be launching this initiative because this WSI service is something that is desired by their customers. Being a good business and customer-centric, Walmart must be responding to the desires of their customers. Yes, that must be it. The initiation of the WSI must be driven by Walmart customer demand. In fact, Walmart leads us to believe that customer-centricity is indeed the reason behind the WSI.

On Walmart’s website, on their Sustainability page, they post the following:

. . . our customers want products that are more efficient, last longer and perform better. They want to know the product’s entire lifecycle. They want to know the materials in the product are safe, that it is made well and is produced in a responsible way.

Most of what Walmart says here is stating the obvious. All customers want efficiency, durability, and top performance from the products they purchase. All customers want to know that the products they buy are safe and well-made. But, where does it say that their customers want to know about the degree of “sustainability,” or ecological efficiency, of the products they purchase? Walmart seemingly makes a big leap here between what their customers say they want and their reasons for the initiation of the WSI. Are you thinking that maybe the sentence “They want to know the product’s entire lifecycle,” supports that leap? I don’t think so because product life cycle means something else and doesn’t necessarily relate directly to sustainability issues.

I’d like to see Walmart’s research backing up this leap that they make. Short of seeing that research, I just have a difficult time believing that Walmart customers are demanding this type of service. Why? Well, let me explain why by taking a look at the Walmart customer.

Findings
  • In 2007, according to Supply Chain Digest, Walmart segmented their 200 million customers into the following categories:
    • Brand Aspirationals – People with low incomes who are fixated on brand names like KitchenAid;
    • Price-Sensitive Affluents – Wealthier shoppers who love deals; and,
    • Value-Price Shoppers – Those with like low prices who can’t afford much more. (I know this sentence is not grammatically correct, but it is a direct quote. I think the “with” should be “who.”)
  • According to MSN Money, “Walmart customer’s average incomes are below the national average.”
  • In 2005, The Washington Post said that the average annual income for the average Walmart customer was $35,000. (Allowing for an inflation rate of 2% per year since then, that brings the average up to only about $38,600 for 2010.)
  • A Zogby International poll found that in 2004, 76% of weekly Walmart shoppers voted for George Bush and not John Kerry.
Discussion

Hmmmm. My Theory #1, that the WSI initiative is driven by customer demand, doesn’t seem to be supported by the facts. The facts seem to point to a customer that is concerned mostly with price and value. The facts don’t point to the type of customer that is typically overly concerned with “green” issues. The facts point to a type of customer that wouldn’t seem to care one way or the other about the WSI.

The Supply Chain Digest article said that, using Walmart’s own customer categorization, Walmart customers were segmented only on the basis of value sought, i.e., they want low prices. On pricing, certainly Walmart is customer-centric. Walmart has a reputation for low prices. In fact, all the Walmart TV commercials I see have price as their selling proposition; in not one of those commercials have I ever seen an allusion to “green” issues. And that customer concern with prices appears to be supported given the data on average Walmart customer income as shown by the Washington Post article and the MSN Money post. People earning below average wages would most probably be more interested in low-prices than in a WSI.

That’s the demographic side of the information. Now for some psychographic information.

How do the the political leanings of Walmart customers enter into this argument? Per the Zogby poll info, it seems the average Walmarter in 2004 went for George W. Bush. Well, I could be wrong, but I think it’s safe to say that those who voted for Kerry are probably more “green” leaning than those who voted for Dubya.

Theory #1 Conclusion

No. Theory #1 isn’t supported by the facts.

I don’t think that Walmart customers are the reason behind the initiation of the WSI

The reason for Walmart wanting to initiate the WSI does not appear to be due to customer demand. So the “who” in our question doesn’t seem to be the customer.

So, now it’s time for an alternate theory.

*     *     *

And you may read that alternate theory in my next post. That post will appear on Tuesday, January 26, 2010. If you are reading this before that date, then please subscribe to the FREE RSS feed so you can receive that article directly. If you are reading this after that date, then simply click here to continue with Part 2 of “Who Is Really Behind the Walmart Sustainability Index?“

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Greenpeace CEO Makes “More” Than Exxon CEO?

Jan 19

Posted by Richard in Compensation, Greenpeace, NGOs, Research | No Comments

Money in till 1Does the Greenpeace CEO make more than the Exxon Mobil CEO?

Well, yes and no. In terms of absolute dollars, no. Not even close. But, in terms of a percentage of their respective organization’s revenue, yes. More. Very much more.

In terms of compensation as a percentage of revenue, the Greenpeace CEO pulls in considerably more than does his counterpart at Exxon Mobil.

Recently I performed research addressing this issue. The reason I performed this research was due to activist’s and NGO’s frequent claims that CEOs of multinational corporations (MNCs) take as compensation an unfair proportion of their companies’ overall revenue. After recently hearing this claim again, perhaps for about the 500th time, I wondered, “Who actually makes more in terms of percentage of revenue? Huge multinationals? Or NGOs?” I decided to do some digging, create a comparison, and take a look.

Methodology

Now, to address this question, what I decided to do was just take a “quick and dirty” look. I just wanted to test my theory with some trial research. Therefore, at the outset my intention was not to do an exhaustive study by including a large number of NGOs and MNCs in a representative and statistically controlled sample. When I began this research I decided that I would save that exhaustive study for another occasion should my theory be supported by the results of this “thumbnail” research project.

To commence my pilot research project, I simply selected, very much at random, one NGO and one multinational. The first two of each that came to mind were Greenpeace and Exxon Mobil. These two organizations are often at odds with each other and both are frequently in the news, making them top of mind.

To identify the revenues of Greenpeace I went to Guidestar.org. Guidestar is an organization which aggregates information about non-profit corporations. At their site, you may search for your non-profit of interest and find information you desire, much of it a no charge. One of the pieces of information stored by Guidestar is a non-profit’s US IRS Form 990.

The IRS Form 990 is a document that must be filed by all tax-exempt non-profit organizations operating within the United States. This document is much like a tax return and contains some information similar to what you would find in a for-profit corporation’s annual report or 10K filing. Among the information shown in a Form 990 is annual revenues and executive compensation. On the Guidestar site, I located Greenpeace’s Forms 990.

To obtain the revenue and executive compensation information for Exxon Mobil, I journeyed to SEC.gov, the site of the Securities and Exchange Commission for the United States. At that site, I accessed Exxon Mobil’s Schedule 14A Proxy Statement which contained summary compensation figures for Exxon Mobil executives for the years 2006 – 2008. Also available on that site was the Exxon Mobil 10K, containing the annual revenue figures that I sought. Additional information on Exxon Mobil’s revenue was obtained from their 2008 Annual Report available at ExxonMobil.com.

All information for this research comparison was obtained from US Government documents, or from an annual report, and is therefore considered to be highly reliable. The latest information that could be located for both Greenpeace and Exxon Mobil was from 2008. The 2009 figures were not as yet ready as of the date of this post.

Following is a summary of the information that I obtained from the sources.

Findings
2007 Revenue2007 Compensation2008 Revenue2008 Compensation
Greenpeace, Inc.$19.5 million$126,573$26.3 million$103,624
Greenpeace Fund, Inc.$39.6 million$42,191$9 million$103,624
SubTotals$59.1 million$168,764$35.3 million$207,248
Compensation Percentage0.28%0.587%
Exxon Mobil Corporation$405 billion$16.7 million$477 billion$22.4 million
Compensation Percentage0.00412%0.00469%

Upon visiting Guidestar.org, I found that there are two significant Greenpeace organizations. One is the primary campaign organization, Greenpeace, Inc., and the other is a financial arm, Greenpeace Fund, Inc. When I examined the Forms 990 for both organizations, I found that the same person is the Executive Director for both entities and that that person collects a salary from both organizations. So, that is why in the table above you see two Greenpeace lines.

You can see that for the chief of the Greenpeace corporations his compensation for 2007 totals $168,764 and for 2008 the total is $207,248. You can also see that his total compensation for 2007 represented 0.28% of the joint organizations’ total revenue ($168,764/$59.1 million) and that for 2008 that percentage of revenues increased to 0.587% ($207,248/$35.3 million).

In comparison for the chief of Exxon Mobil, although he pulled down a hefty $16.7 million in 2007 and $22.4 million in 2008, his compensation as a percentage of revenue for 2007 and 2008 was 0.00412% ($16.7 million/$405 billion) and 0.00469% ($22.4 million/$477 billion), respectively.

Discussion

Of course, these two chiefs are not in same compensation range, and I have no doubt that because of their different levels of compensation the types of neighborhoods in which they dwell are probably very much different. Yet there are at a minimum two important take-aways to be had from this pilot study.

Take Away One: The first take-away to be noted is consistent with my thesis, that this data indicates that perhaps NGO chiefs take as compensation a higher percentage of their organization’s revenue. In this comparison, for 2008 the compensation as a percentage of revenue is about 125 times greater for the Greenpeace chief as compared to his Exxon Mobile counterpart. That’s quite a differential.

At least in this case of Greenpeace vs. Exxon Mobil, we can see that my thesis might be true, or at a minimum is well-supported. And yes, this is only one case comparison which as such it is not scientific and may or may not be representative of the greater NGO community, but I noted that research limitation at the top of this post.

However, if the Greenpeace and Exxon Mobil comparison could be used as representative, we would say that NGOs and activist organizations are hypocritical when they accuse MNC chiefs of receiving as compensation an “unfair” proportion of their company’s revenues. In order to make that a convincing argument to be applied across the NGO spectrum, more research would be needed in this area. This Greenpeace and Exxon Mobil sample comparison indicates that such research may prove very interesting, indeed.

Take Away Twoo: Note that for 2008, the Greenpeace chief saw a nice increase of about 23%, during a year when many people saw a decrease of 100% by hitting the ranks of the unemployed. And this 23% increase was during a year when for Greenpeace total revenue declined by about 40%. This Greenpeace compensation increase is, of course, much less than the Exxon Mobil chief’s increase of about 34%. But, for 2008, revenue at Exxon Mobil increased by about 17%. For Exxon Mobil, a legitimate argument can be made that the compensation increase is tied to performance. Can Greenpeace make that same argument? How does Greenpeace justify an increase of 23% for their chief when their revenues decreased by 40%?

There are critics who blast the financial industry for rewarding its executives with compensation increases in companies which underperform the previous fiscal year. Doesn’t this Greenpeace example speak to the same type of criticism? And if so, why is it that we do not hear in the mainstream media these kinds of disparagements applied to NGOs as well as MNCs?

Conclusion

This pilot research has shown that there is reason to believe that NGOs and other activist organizations do pay their executives a higher percentage of revenues than is paid by the corporations that they combat in the environmental, social, and cultural arenas. The test research performed here indicates that further research should be done in this area.

The outcome of more a more statistically reliable enquiry could be used as the basis of counterstrategy against claims by NGOs and activists that executives at MNCs are “greedy” and take more than their “fair share” of revenues. Such a counterstrategy element would perhaps go far in overcoming these corporate image-damaging claims in the eyes of the marketplace.

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