The inexorable rise of people power Article icon


The idea of a Fortune 500 company, with operations in 61 countries, bowing to pressure exerted by British campaigners on the issue of tax would have been unthinkable several years ago. And few would have predicted that a high street stalwart would have capitulated to popular demands and backtracked on a planned corporate partnership, after just 12 days and 40,000 emails to its chief executive.

But Starbucks will now pay £20 million in corporation tax over the next two years, after what it described as 'loud and clear' complaints from UK customers, while Waitrose put on hold plans to open shops in Shell petrol stations after vociferous opposition by Greenpeace supporters.
Both stories played out in the important trading days in the lead up to Christmas. But, timing aside, do these examples suggest that companies are becoming increasingly risk averse and are unable to cope with greater threats from an increasingly energised consumer base?
Chris Rose, campaign expert and author of How to win campaigns - communications for change, is sceptical as to whether consumers are becoming more activist. 'There is certainly a lot more online campaigning now but whether overall that means there is more campaigning is another question,' he says. 'Every major social or communications change will change the way campaigns are done but some of the fundamentals remain fairly constant'.
The big difference now, according to Rose, relates to societal values. Environmental groups have long been adept at mobilising effective campaigns against questionable practices by big business. But Starbucks' tax woes have demonstrated that few issues are now off the menu, particularly after the financial crisis which has highlighted inequalities in society.
It started with a story
Starbucks' headache began in October after The Guardian claimed that the coffee chain, together with Amazon, Facebook, Google UK, had paid just £30 million in tax over the past four years even though the four businesses had generated sales in excess of £3.1 billion.
The significance was not lost on consumers. Just days after The Guardian broke the story, YouGov's BrandIndex poll, which records the strength of companies' brand identity, revealed Starbucks had seen its standing plummet. Its 'buzz' score, measuring the number of negative and positive comments heard by customers, reached a four-year low.
And, just weeks later Margaret Hodge MP, the chairman of the House of Commons Public Accounts Committee, called on customers to boycott Starbucks, Amazon and Google in protest at their 'immoral' tax avoidance using a complex web of accounting strategies that were cynical and 'unjust'.
Starbucks, it emerged, had paid no income tax over the past three years despite sales of £1.2 billion pounds in the UK - and only £8.9 million since it first opened in 1998. By comparison, McDonald's UK has paid tax worth more than £80 million since 2009 on sales of £3.6 billion.
As Starbucks bowed to consumer pressure, an open letter from UK managing director Kris Engskov appeared in Britain's newspapers. 'We know we're not perfect,' it concluded, 'but we have listened over the past few months and are committed to the UK for the long term. We hope that over time, through our actions and our contribution, you will give us an opportunity to build on your trust and custom.' But the efforts didn't prove enough to appease the general public, and days later its Twitter campaign to spread Christmas cheer was hijacked by protests against its tax situation.
Changing expectations
Jon McLeod, chairman, corporate communications and public affairs at Weber Shandwick, believes consumers' perceptions about what makes a good company have changed in the last two years. 'People have higher expectations of corporate conduct now,' he explains.
But, McLeod adds, this has coincided with a growing movement of people who realise they can achieve change through direct action. 'Social media driven campaigning is a bit of a novelty at the moment and it allows consumers to crowdsource hostility towards a brand,' he says.'And some corporates are arguably overly sensitive to social media because of its current perceived significance.'
Robert Nuttall, managing director, head of corporate responsibility and sustainability, at MHP Communications, believes the window of opportunity for companies to respond to criticism is narrowing and that where they respond is key. 'It's not just about putting a response on a corporate site,' he says. 'You have got to go to where the conversations are happening.'
But there are also other forces at play that kept the Starbucks' story, and others like it, in the public eye. Well organised activist campaign groups, such as 38 Degrees, who describe themselves as 'a digital non-governmental organisation', are gaining momentum.
With almost one million members in the UK, 38 Degrees has created a powerful pool of online activists well poised to bring about people-powered change in a similar vein to Avaaz, with more than 18 million members worldwide, US-based MoveOn and Australia focused GetUp.
38 Degrees asks members to suggest ideas for campaigns and then polls them on where its priorities should lie. Among the 'people powered victories' cited by the group, with its strapline people. power. change, is helping to stop the government's plans to sell off ancient national forests.
One week after the campaign was first suggested on 38 Degrees' Facebook page, tens of thousands had signed its petition. More than half a million members eventually signed its Save Our Forests petition, over 100,000 emailed or called their MPs urging them to stop the sale while 220,000 shared the campaign on Facebook. Supporters even donated nearly £60,000 to pay for advertisements in national newspapers and fund a YouGov poll, which found that 84 per of the British public opposed the sale. Within weeks the Government dropped its plans.
Nuttall explains: 'A lot of campaign groups are much better at digital than a lot of the organisations they might be targeting.'
Tools of the trade
There has been an explosion in smaller non-governmental organisations with greater access to affordable campaign tools. '[Sophisticated online tools] have become much cheaper and easy to get hold of. Smaller charities who couldn't have afforded their own programmes in the past can use an off the shelf package,' explains Rob Blackie, managing director of Blue State Digital.
38 Degrees leases software from Blue State Digital and the group's online tools use RSS/xml feeds directly from the live data to show members how their efforts are adding up, a feature that the organisation believes helps to drive member engagement.
There are also direct action groups, such as UK Uncut, which first targeted Vodafone and Arcadia Group in 2010. It was among those that seized upon growing antipathy towards tax avoiders, and mobilised more than 40 protests across the UK at Starbucks' shops in December.
But while the changes may be unnerving to some companies, the experts believe they also create huge opportunities.
Blackie points out that member organisations can be a route to finding new customers. Last year, consumers association Which? and 38 Degrees launched an initiative called the Big Switch.
The initiative called for consumers who were willing to transfer energy providers for a more competitive tariff. Energy companies were invited to create a low cost tariff offering and, in the process, win new customers. Nearly 300,000 consumers signed up for the Big Switch. Co-operative Energy, which it won in a reverse auction, was allowed to cap the number of customers to 30,000, while the rest were offered the chance to switch to EDF Energy, which came a close second. The Big Switch is estimated to have secured up to £25 million of savings in energy bills for its subscribers.
By contrast, if a company finds itself on the receiving end of thousands of messages from members of a campaign group they should see it as an opportunity to open up a dialogue with a new audience.
'You could say Here's our view but we would like to keep you informed. Click here we will update you once every three months. This gives companies a chance to build a direct relationship with a new audience, which could eventually mean that the group has to keep a dialogue going,' explains Blackie. 'Then they may come and talk to you before they launch any action in the future.'
But while many MPs and companies recognise the importance of having a relationship with a Fleet Street editor, not all will make the effort to get to know the leaders of organisations like 38 Degrees, something which Blackie views as a missed opportunity.
McLeod agrees, noting that groups such as 38 Degrees, while fiercely independent, can be great partners for the right issues. 'A lot of companies wouldn't think of approaching an organisation like 38 Degrees but it can be very effective. '
In 2011 McLeod worked with Avaaz on behalf of his client, Media Alliance, the united front of Fleet Street rivals, including the publishers of The Guardian, Daily Telegraph, Daily Mail and Daily Mirror, in order to bolster popular opposition to the proposed acquisition of BSkyB by News Corporation.
'You need to approach them succinctly like you would with any other organisation or individual - do your research be relevant,' suggests McLeod.
Every cloud . . .
Flemming Madsen, founder and executive chairman of Onalytica, believes that the Starbucks debacle afforded a great opportunity for companies that did pay a high tax contribution.
When there is a negative story there's an opportunity to profile yourself if you are a competitor, like Costa, and you are a big contributor to HMRC,' he explains. Justin King, chief executive of Sainsbury's, used an interview on Channel 4 News to claim the supermarket was the UK's 12th biggest taxpayer, adding that he was 'proud of our taxpaying record'.
'The consumer is more powerful than governments on this. The vote that you make with your wallet will move the decision making of corporations much quicker than governments will ever be able to do,' King said.
But experts also believe that the Starbucks' situation has highlighted the need to align messages to different stakeholder audiences. Journalists soon uncovered transcripts of investor and analyst calls from the past 12 years in which Starbucks' officials regularly described the UK business as 'profitable' and an example to follow for other operations.
'Companies have to be accountable fiscally. The best advice is Don't get in that situation in the first place. The impact of tax behaviour on reputation has to be considered at the earliest stage around the boardroom table and communications advisers need to be advising on how to stay out of trouble,' McLeod says.
Close attention also needs to be paid to the kinds of issues that might be critical in the near future.
'As well as having good mechanisms for measuring commentary you need to set the targets in advance. For a fast moving consumer goods company like Starbucks, you'd look for movements in sales,' McLeod suggests. 'There will always be people who want to campaign against some corporate brands but every organisation has to determine a tolerable threshold.'
Perhaps the final lesson from the Starbucks' debacle is that a company's vulnerability is affected by its sector, brand loyalty and market positioning. It is interesting that neither Amazon nor Google were forced into a similar situation despite paying minimal tax.
But it is hard to say whether the changing climate is down to people power or to companies changing tack. Or indeed, a combination of both. Either way, there is an increasing belief in the need to keep conversations going.
'It's changed. Some environmental campaigners used to be branded as terrorists but there is a lot more behind the scenes now and agreement that it's better to be having a dialogue rather than sitting in isolated camps,' says Nuttall.
Greenpeace versus Waitrose
After 40,000 emails from customers, several store visits, one spoof video, hundreds of Facebook posts, a social media meltdown, and the appearance of a life-size polar bear at its Islington store, Waitrose declared support for the protection of the fragile Arctic.
It followed a campaign by Greenpeace supporters who rounded on Waitrose after it announced plans to expand a pilot scheme running outlets at Shell petrol stations.
Greenpeace, which is campaigning to save the Arctic from oil drilling, is fighting against Shell's plans to drill in the region.
After Waitrose announced its pilot scheme last April, Greenpeace sent three letters querying the partnership. But after seeing no visible change in strategy, it decided to ask its supporters for help. The organisation, which has around a quarter of a million supporters in the UK and a global email subscriber base of ten million, got the result it wanted in less than two weeks. Mark Price, managing director of Waitrose, announced the partnership roll out had been put on ice.
Greenpeace used a combination of online and offline campaign elements. 'We use email, hard copy and our dedicated volunteer network,' explains James Sadri, head of mobilisation at Greenpeace. 'The aim of the campaign was to get supporters to email Mark Price. We chose the action that we thought would deliver the campaign impact we wanted.'
Greenpeace also worked with freelance filmmakers on spoof adverts that overdubbed an alternative script over the Waitrose Christmas advert, featuring Delia Smith and Heston Blumenthal.
The new voiceover said But Waitrose don't ask you about everything. Like our partnership with Shell, who are drilling for oil in the Arctic. We know our customers care about the environment, so we've kept it hush-hush that we've buddied up with these Arctic drillers. But let's face it, the Arctic's for life, not just Christmas.
The advert altered the supermarket's trademark green tokens to carry Shell's logo with a line crossed through it, and showed Delia and Heston dropping them into the Community Matters collection box with the words So we're going to give you a say. So drop enough of these [tokens]. And Waitrose will drop Shell, before laughing As if that will happen.
'We try to produce the content that will inspire people. Focus group testing is too expensive and we are generally time constrained so we test messages digitally by split testing,' explains Sadri.
The approach seemed to work. Angry campaigners hijacked Waitrose's Facebook page, and the supermarket was criticised for deleting critical posts.
Sadri concludes: 'Social media has stacked the chips in our favour. Some companies think they can ride it out but your best option is to sit down with the campaigning organisation. It was a quick win but some campaigns take longer. Some companies dig their heels in.'