Best Practices

Disney CEO Bob Chapek originally opted to work behind the scenes to soften the legislation, but he was not successful. On March 28, the company issued a statement saying that the law should never have passed and committing Disney support to organizations working to strike down the new law. To some extent, this new position may have been an outcome of the hue and cry emanating from Disney employees in response to the initial “soft” response.

Florida’s governor took particular exception to the company’s statement and almost immediately began discussing the revocation of Disney’s advantageous status since 1967 within the 39-square mile area known as the Reedy Creek Improvement District, which gave Disney broad authority over how that property (e.g. Disney World and its environs) is developed and managed. In return for that status, Disney is responsible for all municipal services within that district, including fire and rescue, water treatment, road repairs, etc.

In April, Florida legislators passed the bill revoking Disney’s special status, effective June 2023. There are various areas of uncertainty as to how exactly it will be implemented and its impact on local taxpayers as well as on Disney.

In previous articles I have made the point that in general companies would be wise to limit their exposure to political issues, except in such cases where that position is in fact critically embedded in their company mission and values. An example of such a case might be Tesla, wherein its CEO Elon Musk has made it clear that he believes climate change to be the biggest threat that humanity faces in this century, and that his company is dedicated to progress in this area. 

Another example is Patagonia, which claims on its website, “We’re in business to save our home planet.” The company also has a network of “Global Sports Activists,” who use their roles to drive positive social and environmental change. However, for many Lubes’n’Greases readers, their companies are not in such a position, and neither their brands nor their missions are tied to any particular political cause. Rather, they are trying to sustain and grow their businesses through a difficult environment plagued by increasingly polarized politics.

So what is a company to do? Is my original advice—to low-key politics—still valid? Let’s look at the Disney situation for instruction.

Overall, I would argue that Disney in fact botched its response. I am not sure if it properly evaluated its strategy toward this issue by thinking through all of the stakeholders involved. If it had done so, I think it might have taken a different approach. In articular, if it had taken a stakeholder view of the issue it might have foreseen the following:

• From the community viewpoint, taking a strong and visible position on the law could result in backlash from local and state government. Did Disney think this was not likely? Did they eval- uate the cost of such backlash?
• From the employee viewpoint, while Disney seemed to have a vocal group within their company,
• it is doubtful that maintaining Disney’s original low-key position would have resulted in any pro-tracted employee response. Of course, it is possible there would have been some short-term pain that would have to be managed, such as staff walkouts.
• Perhaps most importantly of all, how did Disney consider their customer response? People of all political persuasions are Disney customers, and the long-term impact on the Disney brand due to its visibility on this issue is unclear.
• From an investor viewpoint, Disney stock has declined in the light of all these headlines— although the market has declined as well. There have also been negative headlines about growing tensions between CEO Chapek and renowned former CEO Bob Iger, which are not positive for the stock, either.

In addition to perhaps an inadequate stakeholder review of their strategy, I wonder if Disney evaluated a range of response options. For example, they could have signed the petition that many other companies did. They could have voiced their support for the LBGTQ community and increased donations in this area, all while not openly denouncing the law.

I watched a Fareed Zakaria piece on CNN recently, which is pertinent to this discussion. His premise was that while ideology certainly informs strategy, in the end the United States must be extremely strategic in its dealings with countries whose ideology is very different from its own. The United States’ strategy vis a vis Russia should be different from its strategy with China, despite the fact that both countries have been accused of committing human rights violations. It remains in its strategic interests to have dealings with these countries, but the level of such dealings will vary depending on circumstances and objectives.

Similarly, in business we often must deal with entities with ideologies different from our personal ideologies or our business ideology, should there be one. It seems to me that Disney may have placed ideology over strategy in their recent decision-making in Florida. Perhaps they just failed to consider sufficiently the potential responses of all stakeholders to their actions. Either way, I believe they could have done better. In your decision making—particularly in response to controversial political issues—consider carefully how all stakeholders may respond to your actions. While ideology may inform your array of options, let strategy be at the forefront of your decision process.  

Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. Contact her at saralefcourt@gmail.com or (908) 400-5210.