Before you discard this as a daft suggestion, consider this.
Elon Musk has just asked his followers to decide whether he should sell 10% of his Tesla stock.
Thats a pretty major decision to outsource to his 3 million plus twitter followers.
But is there method to this madness?
And if there is, is it an approach other eminent CEO's would do well to follow?
Well, earlier in the year I collaborated, with author Chris Skinner and Easy Equities CEO Charles Savage, to write an article called "Retail Investors Will Change The World".
In it, we talk about why populist investing is changing how CEO's run their companies and how this could be good for society at large.
Elon's tweet provides a super example of what we wrote about.
The full piece will be published in Chris' upcoming book, Digital For Good, but here's an edited excerpt....
We are seeing the power of influence pass from institutional investors to the individual.
With that transition, we can expect an upsurge in populist ideologies, forcing CEO’s to focus more on what’s right, rather than simply what’s profitable.
CEO’s that understand this are going to have to redefine their strategies to placate these new investor pools.
This means that millions more people will start to influence markets by proudly investing in stocks for ideological reasons.
I imagine statements like these to become commonplace...
- I invested in Nike because I supported their move to stop using sweatshops in Asia;
- I invested in Starbucks because I enjoy the overall experience they offer versus other coffee outlets, and believe their staff are well looked after compared to other chains;
- I invested in Apple, because I support their stance on protecting my personal information; and
- I invested in Zoom, because their product is easy to use and it’s a platform to help me travel less and reduce my carbon footprint.
We will each have our own ideas about what a good brand should look like, but, regardless, it is clear that there is a trend for much stronger, almost altruistic drivers in how today’s investors invest.
Individuals can now invest easily and cheaply in virtually any stock or asset class they want.
If these trends continue it’s difficult to see how incumbent CEO’s can avoid a shift in their priorities?
Elon Musk is an outlier today, because he fully understands the impact of marketing his vision to his retail followers, at the expense of his institutional relationships.
But he’s also laying down a new approach for a new generation of CEO’s to mimic, and in so doing, narrowing the gap between the needs of shareholders, customers, employees and society at large.
This may ultimately lead to a situation where businesses that focus on delivering to the real shareholders, will automatically be forced to deliver real benefit to their customers, employees and society at large.
For example, I can imagine futures where it’s normal to walk into a Nike or Adidas store, and be offered discounted shares at the same time I purchase their latest trainers.
I can imagine a time when Starbucks shareholders, are offered discounted coffees, subscription models and free refills.
More importantly, I fully expect progressive CEO’s to be more transparent and communicative with their retail shareholders and open new channels where opinions can be shared, which influence the decisions of the companies’ leadership teams.
These ideas would have been far-fetched a few years ago, but now they are not only possible but being developed and realised.
Courageous CEO’s might well decide to ask their shareholders, as opposed to the board, for input on significant decisions:
Would you support us expanding into China, despite their human rights record?
Should we close a profitable business line that uses plastics, because we are uncomfortable with the negative externalities caused?
We would like to introduce a minimum wage of $20 per hour. This will mean we will have to increase our products prices by 3%. Should we?
How far fetched is all of this?
I'd argue not very after Elon's recent should-i-sell-my-stock twitter post!
Of course the real question is whether this approach will catch on and if it does what the impact will be?
Personally I hope we see more of this, because one thing is for sure.
The current model where CEO's focus on driving dividends for their institutional shareholders isn't helping to create a better world for us all.
Would love to hear what you think?