Archive for January, 2008

Shedding light on Obama’s choice of identity

As never before, race and gender are playing into the politics of presidential elections. With the Republicans floundering to decide among a slate of undesirable candidates, the Democrats appear almost assured of winning the White House with either Hillary Clinton or Barack Obama as our new president. Either’s election would be historic.

Lately, I have been wondering how it is that Obama, the son of an Kenyan father and a white American mother, decided to identify himself as African American. What are the issues he had to weigh in making that choice? NPR’s Day to Day news program yesterday asked that question in a piece that discusses the reasoning Obama probably used in calling himself African American rather than biracial. Turns out for Obama to identify as biracial would likely cause more division and confusion among voters than declaring himself to be African American.

In a better world, Obama’s race and Clinton’s gender would not be factors in this campaign, although they clearly are. We haven’t reached a place in our nation’s development of being well past our historic prejudices against women, African Americans and other minorities. Even so, the election of either Obama or Clinton would be a sure sign of progress.

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Thursday, January 10th, 2008
Posted in Politics | 1 Comment »

Playing with green Air Jordans in a dead-end game

Say what you will about Nike, they know how to market and sell products. And they seem to take seriously the challenge of becoming a more sustainable manufacturer. Witness the 23rd version of its most high-profile product, the Air Jordan basketball shoe. It’s said to be Nike’s “first premium product designed according to the company’s sustainable standards.”

My question for Nike, and virtually any other manufacturer, is how do you square your boundless desire for growth and its associated requirement to make and sell more products with your stated objective of reducing your environmental impact.

Isn’t it a bit like exercising madly while eating ever-increasing amounts of low-calorie foods, and still expecting to lose weight? You can only exercise so much. Meanwhile, your caloric consumption steadily increases and eventually so does your weight. At some point, you have to start eating fewer calories.

Nike, and consumer products companies like them the world over, must at some point realize that selling ever-increasing amounts of products, no matter how low-cal (green), is an environmentally dead-end game. The earth’s natural resources are finite. Using them in smaller quantities per unit ultimately changes nothing when unit volume is always increasing. And that’s to say nothing about the carbon footprint of companies like Nike that continue to expand office space, send growing numbers of employees on countless airline trips around the globe and ship their products thousands of miles from where they are manufactured to where they are consumed.

Whether Nike or anyone else wants to admit it or not, there’s nothing sustainable about an economy dependent upon growing material consumption. Something has to give. And right now, Earth is doing all the giving. You won’t hear that in the new Air Jordan commercials.

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Trusting word of mouth, but for how long?

In advertising circles these days, “word of mouth” has its own acronym (WOM) and trade association (WOMMA), signaling its arrival as a marketing discipline. Companies love good WOM because they believe their customers are likely to believe friends and peers who recommend their products more than any commercial source. While that marketing axiom has been around for decades, what’s changed is the dedication and technology marketers are applying to monitor and generate WOM — or buzz.

So with a raised eyebrow I read an op-ed piece in the Sunday New York Times, “Loose Lips Win Elections.” The authors, executives at a research firm, claim that John Edwards and Mike Huckabee performed better than expected in the Iowa caucuses because they benefited from what they called “word of mouth advocates” — evangelistic supporters who spoke to friends and colleagues before and during the caucuses.

Whether by chance or design, such citizen advocates created the explosive growth in support for Mike Huckabee and sustained John Edwards, even as both were vastly outspent by their opponents.

I don’t believe sophisticated presidential campaigns leave anything like this to chance. It was by design that Edwards and Huckabee got their citizen advocates out in large numbers. Good for them. As the op-ed writers noted, both candidates had to do something to counteract the much larger TV advertising campaigns mounted by their chief rivals. And they understandably chose a WOM strategy. According to the authors:

Public trust in all kinds of communication is eroding, with a notable exception: word of mouth…Our mid-December survey of Iowa voters found 38 percent saying they trusted information provided by TV ads, while 69 percent trusted “comments from friends, relatives and colleagues.”

There’s reason to believe even word of mouth will soon suffer the same credibility loss as other forms of communications. Why? Because marketers are increasingly manipulating and instigating word of mouth, as Adweek magazine explained in last week’s issue:

People, of course, have always acted as brand ambassadors by sharing recommendations with friends and associates…Now, however, these interactions have become supercharged thanks to a new breed of brand ambassadorship programs that formalize the relationship between marketers and average consumers passionate about their products. These programs “hire” consumers, via incentives and rewards, to act as part PR agents, part sales reps and part evangelists. They mix the spontaneity of buzz building with technology to instigate, guide and measure what repeat customers are saying to each other about their brands.

As citizens begin to understand how these so-called ambassador programs work, it won’t be long before many of us start doubting the credibility of certain acquaintances or colleagues who speak with unbridled fervor for a brand — whether a product or a candidate. After all, they may be receiving compensation of some sort for speaking out. I say “may” because right now there’s no guarantee these enthusiastic consumers or voters will divulge their relationship to a commercial or political entity. As Adweek explains:

The Word of Mouth Marketing Association, a trade group of agencies and marketers who use word-of-mouth marketing, has instituted an informal, but largely unenforced, industry policy that brand reps must always disclose their relationship to the product or service when promoting it.

So whether on behalf of products or candidates, word of mouth appears destined to become yet another suspect source of communication. That means the Huckabees and Edwards of the next Iowa campaign won’t be able to count on vocal supporters to sway opinion like they did this time around. And worse yet, the rest of us are left to wonder whose words we can still trust and whose opinions have been put up for sale.

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Oregon law gives teeth to business sustainability

Oregon has opened its doors to a new kind of corporation. In a bill passed by the Oregon Legislature in 2007, businesses can state in their Oregon articles of incorporation they will operate with equal regard for environmental, social and shareholder impact. It appears Oregon is the first state to adopt such a law. And according to The Oregonian:

It’s not an empty gesture. One of the principles of business law is that corporations must act in the best interests of their shareholders. Some courts have narrowly interpreted that to mean companies must act only to maximize profits, even if the action runs roughshod over wider community interests.

It will be fascinating to see where this little publicized change in Oregon’s corporate governance laws will lead. Last spring, I heard a presentation from the founders of B Corporation, an organization whose aim is the widespread formation of corporations acting on behalf of all stakeholders (environmental, community, employee, supplier), not just shareholders. Oregon’s new law gives legal teeth to efforts such as this. According to Oregon Lawyers for a Sustainable Future, which drafted the legislation (HB 2826),

The statute makes it clear that anyone forming an Oregon corporation can include a provision in the
articles authorizing or directing the corporation to be operated in a sustainable manner. Moreover, any
existing Oregon corporation can take that step by amending its articles of incorporation, which will
then govern operations after the date of the amendment.

Under such a provision, corporate officers will be directed or authorized to make decisions that adhere to a triple bottom line (people, planet, profits). How this will all play out is anyone’s guess. Ideally, we will see businesses throughout Oregon adopting the triple-bottom-line standard for governance. And perhaps even a rush of out-of-state companies that want to incorporate here so they can legally act out of concern for more than maximizing shareholder return. But how long might it be before powerful investment groups challenge Oregon’s amended corporate code in the courts? Or an individual company is sued by shareholders for failing to act in their best interests while making decisions that benefit other stakeholders? Conversely, will the adoption of these sustainability provisions leave businesses vulnerable to lawsuits from other stakeholders who claim the business is failing its environmental and social responsibilities?

Legal issues aside, I’m anxious to see how companies that adopt these new governance provisions actually behave. Will their conduct be measurably different from shareholder-centric companies? When push comes to shove, will they make decisions that reduce short-term corporate profits or shareholder return out of an obligation to the environmental or social common good?

The Oregon lawyer group behind HB 2826 acknowledges “profitability is built into the DNA of a corporation.” The question for Oregon, and the rest of the country, is whether the truly sustainable corporation is even genetically possible. Thanks to the Oregon Legislature, we’re about to find out.

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