Walmart’s quick decision to remove confederate flag themed products from its stores following the killings in South Carolina reflects a sea change in attitudes about business leadership.
Not long ago, the standard big company response to controversial social and political issues was to lay low and stay out of the line of fire. But the quick corporate backlash to the Indiana religious liberties law earlier this year marked a turning point. Increasingly, corporate leaders believe taking a stance on such issues is an important signal to both customers and employees, who want to do business with, or work for, a company that they believe is doing good in the world.
In our recent survey, we asked Fortune 500 CEOs which of the following statements best reflected their own philosophy:
As a CEO, it’s best to focus on issues that directly affect the bottom line, and avoid controversial public issues.
As a CEO, it’s important to take a stand on some public issues.
Just over half of the CEOs who responded – 52% – chose the second response, while 48% choose the first. This is the first year we’ve done the survey, so we can’t say how that’s changed over time. But my conversations with dozens of CEOs lead me to believe the response is significantly higher than we would have gotten as recently as a decade ago.
Some CEOs also say they also feel compelled to speak out on public issues because of the general failure of political leadership, as typified by the waffling among GOP candidates on the flag issue.
Have good day. And take a few minutes to read Jamie Dimon’s moving tribute to his colleague Jimmy Lee.
• Why Apple caved
The weekend's story surrounding Apple's decision to reverse a key portion of its new music service (after a critical letter from pop star Taylor Swift) generated a ton of media coverage on why it mattered. Fortune's take is this: Not paying artists makes Apple bad in front of other musicians and their fans, and altering strategy won't cost much in the end. And ultimately without the content from top selling artists like Swift, new fancy music services aren't worth much. Fortune
• Greece offer runs into backlash
While European leaders welcomed new budget proposals from Athens as a basis for a possible agreement to unlock aid and avert a default, lawmakers at home weren't happy with the concessions that were offered. If parliament fails to back the latest offer, which included higher taxes and welfare changes, Prime Minister Alexis Tsipras could be forced to call a snap election or a referendum that would prolong the uncertainty. Reuters
• Walmart's Confederate flag stance
The world's largest retailer has weighed in on a debate involving the Confederate flag far faster than some major politicians: Walmart won't sell items emblazoned with the likeliness of the flag in stores or online. That move came in the hours after South Carolina's governor called for the flag to come down on Statehouse grounds, which came several days after nine people were shot to death at a historic black church in Charleston. Fortune
• What's inspiring insurers to merge
Andrew Ross Sorkin has weighed in on why the business community is seeing merger talks among the nation's five largest health insurers that could whittle their number to three. The deal making, Sorkin argues, is largely a result of the Affordable Care Act, which has constrained the profits hospitals and insurers can generate. That has led both to seek scale to generate higher margins by generating additional savings out of a larger customer base. New York Times (subscription required)
Around the Water Cooler
• Jurassic World's bragging rights
Jurassic World is poised to reach $1 billion in ticket sales faster than any other film, already roaring to half of that amount in global box office gross in its first few days of release — the most ever for a film’s opening weekend. The success of the dinosaur film, as well as another sequel, Furious 7, have helped Hollywood rebound after suffering a down year in 2014. The industry's haul is up by more than 6% compared to last year at this time. Fortune
• P&G's Gillette cut by the competition
Web sales of men's shaving gear in the U.S. has nearly doubled in the 12 months through May, gobbling up 8% of the roughly $3 billion market and picking up more sales at an accelerating pace. The online market for razorblades was barely a blip before, so it makes sense that market leader Gillette was caught off guard. The Procter & Gamble brand commands 60% of the bigger retail market but online, it controls just a fifth of the pie. WSJ (subscription required)
• What's behind CVS Health's upgrade
CVS Health's decision to end sales of tobacco products is an ethical stance (to also become a bigger player in the healthcare industry) but it also importantly results in the lost of $2 billion a year in tobacco revenue. How can the drugstore replace those lost sales? CVS is updating many locations to offer more healthy foods, as well as upgrading its beauty sections and adding new private brands. "The big question was, 'How does this front-store fit in with this growing healthcare company?'" one top executive told Fortune. Fortune
• Egypt's vanishing cotton
Egyptian cotton has long been celebrated as a supple fiber of softness and durability. But farmers are abandoning the crop and switching to grains because long-fiber cotton isn't profitable without government aid, and those subsidies are ending as the nation deals with a big budget deficits in the Middle East. Production is expected to tumble 35% in the next season to reach a new all-time low. Bloomberg