Richard Telofski

on "Irregular Competition"

Archive for category Activism

Activist Stockholders Gain Strength

Mar 10

Posted by Richard in Activism, Tactics, Threats | No Comments

My fourth and latest book, Insidious Competition – The Battle for Meaning and the Corporate Image, is scheduled to be published in June 2010. For more information about my new book, please click here to go to the book’s Web site.

Rows of locksIn the book, I discuss nine different types of insidious competitors present in social media. One of those types of competitors is NGOs and Activists, the “irregular” competitors that are the basis of our discussions here at Telofski.com. In fact, it was from the research on Insidious Competition that the concept of irregular competition evolved.

Well, putting aside irregular competition for a moment, I’d just like to mention that one of the insidious competitor types I discuss in my book is Activist Stockholders, cousins of the irregular competitors NGOs and Activists. In reviewing my news feeds recently I discovered the article “Divided SEC Proposes Investor Access Plan” which talks about how Activist Stockholders may be gaining more strength in their struggles against corporate management.

This article is quite interesting and updates an issue which I have been following for a while. The issue pertains directly to the discussion of Activist Stockholders as it appears in the book. Summarizing, the article discusses relaxation of U.S. Securities and Exchange Commission (SEC) regulations for shareholder balloting in annual public corporation elections. You know. The annual “proxy fight.” The proposed rule changes would make it simpler for various stockholder groups to gain access to the corporate board and thereby control certain corporate decisions.

In my new book’s discussion of this type of insidious competitor, I mentioned that there is a pending rule change. I also mentioned that that change may take place as soon as early 2010. From what this article says, it looks like I was right. When this regulation change is combined with the force and power of social media, as I pointed out in the book, the influence of the Activist Stockholder will increase tremendously. And because of this potential shift in power, it should be incumbent on all C-suite executives and corporate communications personnel to learn how to deal with this impending threat to corporate operations.

Insidious Competition – The Battle for Meaning and the Corporate Image discusses these “how-to’s” in detail.

I’ll keep you updated on the publication of the book.

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A Journey in Anti-Corporate Thought

Feb 9

Posted by Richard in Activism, Anti-Corporatism | No Comments

For those interested in learning about the anti-corporate movement, I recommend a book that I recently completed. The Rise of the Anti-Corporate Movement by Evan Osborne is a first-rate work.

Student studying behind bluSubtitled Corporations and the People Who Hate Them, in this book Evan does good work in laying out the history of the corporation, taking us back about four millennia to the origin of what evolved into today’s modern corporation. He then moves us forward in time, tracing the development of the corporation from ancient Assyria, up through 18th century Britain, and then to its current form both worldwide and in the United States. At each stop in this journey through corporate time, Evan stops to impress upon the reader the details of corporate myth created at each stage, emphasizing how those myths trickled down into today’s collective social conscience, but debunking the myth before continuing the journey.

During the early parts of the journey, he deftly points out that previous forms of the corporation had, by virtue of their legal foundation in significantly less democratic societies, much more power than the corporate form takes in today’s America, decrying the claims by anti-corporate activists that modern corporations are omnipotent and all-powerful. He punctuates this illustrative journey of countering the claims of the anti-corporate movement (ACM) with profound insights, based on common sense and everyday observations. One such insight undermines general ACM claims of runaway corporate power by observing the corporate disdain for the corporate income tax and stating that if corporations were truly as all-powerful as the ACM makes them out to be, then indeed there would be no income tax.

About a third of the way through the book, Evan, an economist at Wright State University, takes on the economic assertion often put forth by the ACM, that society is actually poorer because of the existence of the corporation. Over many pages, he does an excellent job explaining how this claim is invalid. His counter-argument is clear, cogent, and convincing. I’ve read other books making this same argument (For example, The Role of Business in the Modern World, by David Henderson.), but they were not nearly as on-point or as substantially sourced as is The Rise.

This is definitely a book that should be read by all engaged in business issues involving activists and NGOs.

It’s also a book that could benefit members of the general public, to help dispel some of those corporate myths generated over the past few hundred years. I have no illusions that members of the general public will read this book any time soon. But, the loss is theirs because of the great insights they would miss. I’ll close with one of those insights.

Near the end of the book, when Evan invokes the late economist Milton Friedman who stated that the corporation owes no more “social responsibility” than any other member of society, Evan states that it is just as improper for the anti-corporate campaigner to use the law to force a corporation to pursue the campaigner’s objectives as it is for a corporation to use the law to force the anti-corporate campaigner to pursue the corporation’s objectives. We see many examples of the former and, I’d dare say, none of the latter.

Of course, all the issues found within this book could be debated incessantly in philosophy and business ethics classes. But that’s part of what makes this book so interesting, the intellectual challenges found within.

Thanks, Evan for a great book.

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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, Irregular Competition, 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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The Marketplace Is Not Stupid

Jan 14

Posted by Richard in Activism, Friends of the Earth, Irregular Competition, Rainforest Action Network, Trends | No Comments

From much of my reading, I can see that the power of the NGO (non-governmental organization) is increasing. With regard to how that power affects business, my research shows that over the past decade NGO-influenced corporations are now becoming the norm rather than the exception. And from the projections I’ve read, it appears that that influence will only become greater over the next decade.

Silver pound coinsTo go along to get along with this trend, multi-national corporations (MNCs) are moving, seemingly together as if in lock step, to establish corporate social responsibility (CSR) programs in order to meet the demands and expectations of NGOs, whether it be on environmental, social, labor, or cultural issues. And to help them craft their CSRs, MNCs now regularly collaborate with NGOs, bringing NGOs to the table as trusted advisors and de facto consultants. And when MNCs do this, which is increasingly often, they seem to do it with a “mea culpa” attitude.

Mea culpa attitudes belong only on the truly guilty. MNCs don’t give themselves enough credit. They suffer from a poor self-image. Paraphrasing Jessica Rabbit, “MNCs aren’t ‘bad.’ They’re just drawn that way.” Their “We’re so guilty” attitude is unjustified. MNCs should not sit themselves in a corner.

Yes, it’s true that MNCs are guilty of doing some “bad” things. Aren’t you? MNCs are operated by humans. Imperfect humans who make mistakes. But I fear their mea culpa is overdone because most, if not all, MNCs indeed do more “good” than “bad.” One doesn’t need to perform extensive quantitative analysis to realize this.

If the MNCs were not doing more good than bad, then such behavior would be obvious to the marketplace, which is not stupid contrary to the belief of many activists. The marketplace is not stupid. We can use the activist’s own thought process to address this issue. Ask any activist how “stupid” the marketplace was in electing Barack Obama to the White House and the majority response will prove this point. So, if the “bad acts” of any MNC outweighed the “good acts” performed to support the economy and society, then the marketplace would know that; the people would “vote” with their dollars, numbering the days of any wayward MNC.

Given this automatic economic voting mechanism, where “election day” for the MNC is every day, is the current and projected level of NGO influence upon MNCs really justified? Which party receives more legitimization?

Yes, MNCs make mistakes. I accentuated the obvious above. MNCs are operated by humans. But so are NGOs. NGOs are run by humans, imperfect humans. NGOs, as well-intentioned as most probably are, are not exempt from making mistakes, and performing “bad acts,” whether by accident, or by intention, or by just plain ignorance. But how is the influence of these imperfect organizations counter-balanced? Unlike MNCs, NGOs are not subject to the same automatic regulatory mechanism of the “vote.” NGOs are not subject to the same daily “election day” as are the MNCs. The motivations and the acts of the NGO are not examined and evaluated with the same frequency as are those of the MNC. Neither are the acts of the NGO supported with the same number of votes from the public.

For example, according to their IRS Form 990, a publicly-available document filed by all non-profit organizations operating within the United States, for the fiscal year ending in 2008 both the Rainforest Action Network (RAN) and the Friends of the Earth (FOE), two of the most powerful environmental advocacy groups in the world (read that as NGOs), received less than $5 million each in revenue, i.e., fewer than 5 million votes of support. Each. (You may see these documents by going to Guidestar.org and searching on each NGO.) You can plainly see how this vote tally would compare to the annual vote tally of any MNC with which any NGO might collaborate or against which any NGO might compete.

Yet, the MNCs embrace these largely uncontrolled NGOs. NGOs. Organizations who do their best to compete daily for the image of the corporations they target (Note: I deal with this concept of corporate image competition in my newest and forthcoming book, Insidious Competition – The Battle for Meaning and the Corporate Image. Due out Spring 2010). Organizations who by the number of votes collected possess far less legitimatization than do the MNCs who do their best to incorporate NGO agendas. Organizations who pride themselves on “democratic” principles and acting for the “public good.”

Show me the votes. Show me the democracy. Without legitimization, how do these collaborations make sense?

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Will the Baby Boom Create More Activism?

Jan 11

Posted by Richard in Activism, Anti-Corporatism, NGOs, Trends | No Comments

Today I came across an interesting idea in World Out of Balance by Paul Laudicina. Yes, I’ve mentioned this book before. It’s been a while since last mentioned and that’s because I’m reading it slowly. This one I read while I Nordic Track in the morning, so I might do only about ten pages at a time, and some days I listen to the radio while working out. So progress in this book is slower than normal. But my reading strategy on this book is not because it is not interesting. Quite the contrary. Here’s one intriguing thought that came from my reading of this book.

bear with signFrom pages 148 to 149 Paul presents an interesting concept: that there will be an increase in activism because of the Baby Boom. He doesn’t say it in quite this way, but he does say that because of the aging of the U.S. population that there will be a decrease in the number of employees working for the American government. Paul hypothesizes, from the perspective of the publication year of 2005, that these retiring employees would likely not be replaced at a rate that would equal the attrition. The reason he gives is that government employment is not as attractive as that in the private sector, and that because of this handicap the attrition rate may exceed the replacement rate.

Of course, that viewpoint was from 2005, before the stuff hit the fan in Fall 2008. Currently, with government being one of the few employment sectors that is expanding its hiring, Paul’s theory may not be entirely sound. Yet, analyzing from a current perspective, there are valid take-aways that may be had from this line of reasoning. Paul’s theory relates to the quantity of government workers, but he says little to nothing about the quality. Having worked for the federal government at one time, I could say something about the quality of federal workers. But that’s material for a different post. For now, let’s extend Paul’s thinking into present circumstances.

Because the aging U.S. population will cause more and more employees to retire from the ranks of federal employment, there will be progressively fewer experienced workers to carry out the regulatory mandates set down by the feds. Right now, because of government’s mania to hire more workers, the issue isn’t so much about the quantity as it is about the quality, i.e., the experience factor.

So, my point is that due to the Baby Boom the quality of federal regulatory enforcement may likely decrease because less experienced employees would need to takeover for those with decades of experience in regulatory matters. And if there are fewer experienced regulators, then businesses might be less likely to adhere to federal regulations than if the feds were fully staffed with experienced regulators.

How does this problem create more activism? Well, when activists see this situation, and believe me they won’t miss this, there would likely be an increase in their efforts. Activists and NGOs would increase their efforts to regulate business because those activists and NGOs would see that the feds weren’t staffed to do a “quality” job.

Thus, going forward with Baby Boom retirements which are now in progress, businesses should “gird their loins” and ready themselves for increased actions from advocacy groups.

It’s all in the demographics. And those numbers don’t lie.

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An Activist Strategy to Bank On?

Jan 5

Posted by Richard in Activism, Strategy | No Comments

As I mentioned in my last post of last year, “The Warm and Fuzzy Side of the Anti-Corporate Movement,” I would be back on Telofski.com after the first of the year. And here I am. You are now reading the “2010 Season Premier.”

Happy New Year.

Around the time of my “2009 Season Finale,” I caught an article on FoxNews.com about a company called CREDO. The article, titled “Wireless Company Mixes Liberal Politics with Business,” intrigued me. Author Stephen Clark writes about this wireless phone company who positions itself as “an agent of social change.” Stephen says that “It (CREDO) pitches its mobile phone services with a vow to fight for ‘real’ health care reform, free speech, peace and the environment.”

piggy bank 2Continuing from the article, CREDO has reported that it has raised $63 million for liberal causes such as Doctors Without Borders, Planned Parenthood, ACLU, and Earthjustice. That’s a lot of money to be finding its way to various advocacy groups, some of which aren’t very business-friendly.

In the article, the main theme is whether or not this type of business strategy is sustainable (no pun intended). Within the article are quoted marketing experts with some saying “yes” while others say “no.” The naysayers make their case by stating the obvious strategic view that running a company based on a political agenda will alienate too many potential customers. Additionally, the naysayers cite that a wireless company the size of CREDO, regardless of their positioning strategy, will have a difficult time up against such corporate giants as AT&T or Verizon. While, on the other side, the proponents say that given the level of political rancor and political polarization presently in the country, a “highly partisan” approach could be successful.

The naysayers seem to intimate that CREDO is crazy, in a marketing sense. And yes, I must say that I agree. I think that CREDO might be crazy, but crazy like a fox (again, no pun intended). I’d have to see some marketing research data on this question in order to be sure, but my WAG* on this would be that there is a large enough market segment out there for CREDO to attract, a segment consisting of the political partisanship to which CREDO orients, so that such a marketing strategy may have legs. My WAG is based on my estimate that there are probably at least tens of millions of far-left, or at least left-leaning, adults in the United States, all of which might prefer to send their monthly wireless dollars to a company which will use them to further a political agenda, rather than enrich stockholders.

If you read this blog regularly, you will know that my professional opinion is the opposite; I think companies should enrich stockholders and not causes. But this orientation is not the sort that motivates CREDO, nor the people in the market segment that they target. And it is their motivation, not mine, that is critical within this discussion.

Within the United States, with its current leaning to things liberal, a marketing strategy like that of CREDO might actually work, or work at least well enough so that they can survive while they support various causes. One condition for success in this model is that the company would most certainly need to be privately-held, but I see no indication that CREDO is publicly-held.

Another condition for success is that a strategic operation of this sort would need to leverage social media. CREDO seems to be doing that. With about 38,000 fans on their Facebook page they’ve made a good start. Although, their Twitter following is around 3500 (about the same as mine, as of the date of this post), with a little effort they could increase that number and use the additional audience to advantage.

No. I have to disagree with the marketing naysayers. This one might have legs. This strategy may contribute to filling the bank accounts of many activist organizations. Conditions in macro-environment, like the aforementioned political situation, line up in their favor. And if this strategy does take off, then it will literally be an example of using a business against the interests of business.

* Note: WAG is defined as a “wild-assed guess.”

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