By Professors Douglas Schuler and Laura Marie Edinger-Schons of the University of Mannheim, originally published in The Conversation

Many companies in the U.S. and elsewhere have been quick to sever ties to Russia – going well beyond applying the sanctions ordered by their governments.

IKEA, Nike and H&M are temporarily closing their Russian stores. Disney, Sony and Warner Bros. paused the release of new films in Russia. Apple, Samsung and Microsoft stopped selling their products there. McKinsey, Ernst & Young and many other top accounting and consulting firms said they are leaving the Russian market – possibly for good.

In all, over 300 companies have announced plans to close stores, reassign staff or stop selling products in Russia since the invasion began on Feb. 24, 2022, according to a running tally by Yale management professor Jeffrey Sonnenfeld. Most recently, McDonald’s, Starbucks and Coca-Cola joined the list on March 8, 2022, announcing they would close stores and cease sales.

In some ways, these decisions fit in with a recent trend in which companies have increasingly staked out public positions on often controversial social and political issues, such as restrictions on trans rights and ability to vote. As business professors who study why companies engage in activism, we feel the same factors that have driven those decisions to speak out are at work over Ukraine.

But we also believe Ukraine stands out for one important reason: For many of these companies, it may have been one of the easiest stands they’ve ever taken – even if there is a financial cost.

Taking a stand

Corporate sociopolitical activism – the technical term we use – entails companies making public declarations or taking actions about significant social or political issues that extend beyond their core business.

Until relatively recently, companies rarely took stands on social or political issues.

That didn’t really change until the 2000s, when LBGTQ rights were under attack and major companies such as Walmart spoke out against bills that would have allowed discrimination.

Since then, there’s been a surge in companies taking proactive stands on issues ranging from climate activism and racism to abortion and voting rights.

For example, in the wake of the murder of George Floyd by police in Minneapolis in 2020, hundreds of CEOs signed a pledge against racial discrimination and created an organization dedicated to diversity, equity and inclusion. In 2021, the CEOs of Dell, American Airlines, Southwest Airlines and AT&T spoke out against a Texas bill aimed at making it more difficult for citizens to vote.

Others have taken more decisive action. Uber and Lyft said they would pay to defend their drivers if they got sued under a Texas law that allows anyone to sue a person who helps someone get an abortion. And in 2016, PayPal and the NCAA pulled business from North Carolina after the state passed a bill limiting LGBTQ protections.

Surveys show today’s consumers expect companies to live up to the values they espouse in their press releases, and big corporate groups such as the Business Roundtable even began urging companies to focus on creating value for everyone – not just shareholders.

More specifically, research has identified three major factors that typically drive a company’s decision to pursue corporate activism: employee beliefs, consumer pressure and the CEO’s personal involvement or conviction.

It’s not always clear what is driving corporate decisions to suspend operations in Russia, but it seems as if all three factors are at play.

IKEA, for example, cited the support and security of its workforce in announcing its “pause” in Russia and a donation of 20 million euros for humanitarian assistance for those displaced by the war. After a #BoycottMcDonald’s began trending on Twitter to protest its presence in Russia, the fast-food chain said it was temporarily closing its stores there. And Tesla CEO Elon Musk agreed to provide Ukraine with free satellite internet after a Ukrainian official requested it on Twitter.

But ultimately, the decision whether or not to sever a relationship with a country – even if temporarily – is very different from taking a stand on an anti-trans measure.

Even so, the speed with which U.S. and other Western companies have abandoned Russia is something we’ve never seen in our lifetimes. And it suggests the decision was likely a no-brainer.

For one thing, Russia’s invasion has been met with widespread revulsion in the West. And even before the war, the public’s perception of Russia in Western countries was very low.

One post-invasion poll found that 86% of Americans saw the invasion as unjustified – with broad bipartisan agreement – and another showed that half of the respondents would compare the actions of Vladimir Putin with those of Adolf Hitler.

And governments including those like Germany that have close commercial ties to Russia have strongly condemned its actions and joined unprecedented sanctions. About 80% of Germans said they approved of their government’s decision to sanction Russia and export weapons to Ukraine – or said it didn’t go far enough.

Ultimately, the Russian market is just not that big for companies in the U.S, such as Apple and Disney. For others, such as McDonald’s, which has been in Russia since 1990 and has about 850 locations there, days of pressure finally persuaded company officials they had to pull out.

On many hot-button social issues like trans rights and gun control, the general public is split almost right down the middle, meaning taking a stand could alienate a lot of consumers.

But on the issue of Russia’s invasion of Ukraine, many companies likely were more worried about the risks to their reputation were they to do nothing. With so many other companies pulling out, it likely seemed better to explain to shareholders and customers back home why they’re leaving than why they’re staying.

Douglas Schuler, Associate Professor of Business and Public Policy, Jones Graduate School of Business at Rice University and Laura Marie Edinger-Schons, Professor of Sustainable Business, University of Mannheim

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Based on research by Vikas Mittal

When it comes to choosing an electricity provider, researchers found that customers who had reliable service tended to stick with their current company. More surprisingly, so did those with unreliable service. 

Many customers with spotty service stuck with unreliable providers because they found it easier to maintain the status quo. Even those who were often left in the dark valued the familiarity they had with their current provider. Despite the inconvenience of frequent power outages, they felt uncomfortable with change.

In another study, concertgoers waiting in line to buy tickets exhibited similar inertia. They stayed put in a long queue even after finding out the performer wasn’t one they liked. They stuck with it, not wanting to lose out after investing time in the endeavor. 

It’s often the same for executives, who are prone to this so-called status quo bias, or a tendency to stay with a certain course of action regardless of its likelihood of success or failure. Consider a recent study in which senior executives participated in a strategy simulation to divvy up resources for a series of projects and initiatives. 

Half of the executives received no input before making their choices. The other half were given prior year’s budget. The second group ended up allocating resources much like they had the previous year, even though there was little correlation with market conditions and the potential for future returns. 

Many senior executives who set budgets, initiatives and priorities stubbornly stay with their initial priorities, often throwing good money after bad. But this tendency to stick with the status quo can seriously damage a firm’s strategy planning and execution. When executives stay put, they often continue allocating resources to the same initiatives, which increases costs even as revenues stagnate. As more and more initiatives are added to the strategy plan, it becomes more complicated to execute. 

Executives stay put or even ramp up resources to multiple initiatives for a variety of reasons. For one, there’s comfort in what’s familiar. A project or initiative that has persisted for five or ten years is easy for an executive to understand. Analyzing an initiative that is already in place requires less time and mental effort than starting and evaluating a brand new endeavor. 

Executives, like some investors, also succumb to loss aversion, or a tendency to take even bigger risks for an existing initiative to prevent further losses. They hope more money can revive the failing endeavor. It’s a tendency that researchers have found in a variety of settings. For example, long-shot bets at race tracks often balloon toward the end of the day as gamblers look to recoup their losses from earlier in the day.

Finally, executives fall victim to resource dependence. They’re reluctant to give up valuable resources — money and people — that will be allocated elsewhere. Many executives therefore find themselves using budget-based planning to maintain the status quo. They make only tiny changes to the prior year’s budget and keep most initiatives. 

In our research, we found one company’s senior executives and frontline employees whittled down its 27 initiatives to 19 that should be discontinued. Yet, when executives from different functions, including marketing, HR, sales and finance, were then asked which of those 19 should ultimately be eliminated, the executives couldn’t agree on a single one.

One study found that firms with a high level of complexity in their operations and strategy lost an average of 13% to 15% in value. Multiple complex company initiatives were in part to blame for General Electric’s falling stock prices from 2008 to 2018. 

Sticking with the status quo also makes executives more vulnerable to the planning fallacy, where people underestimate the cost of proposed initiatives while overestimating the benefits. There is a solution, however, for executives who want to change course.
To thrive, executives need to purposefully narrow their focus and dedicate resources only to projects that create the most customer value. This requires senior executives to shift their mindset and view customers as the biggest source of value for their company.

CEOs have to be steadfast, and sometimes even ruthless, in cutting initiatives that their senior executives might cling to. One way to ease into this is to evaluate all initiatives at the 50% complete mark. If a project is truly creating customer value, then it continues. If not, it’s scrapped. 

Former ExxonMobil CEO Lee Raymond instructed his corporate-planning team to identify 3% to 5% of the company’s assets to dispose of each year. Divisions could keep assets only if they could prove their value. To use a similar approach, CEOs should first create measurable criteria to assess the success of initiatives and projects. Next, CEOs should insist that initiatives not meeting the criteria be scrapped.

When one manufacturing equipment distributor we studied took this tactic, they had dramatic success. After ranking 65 company-wide initiatives by their potential increase in customer value, they found that 10 of those initiatives lifted the company’s value by 71%.

Among those 10 initiatives, five alone boosted value by 61%. Executives funneled their resources into just those five, putting 14 initiatives on hold and dropping 46 projects entirely. Not only did they save $15 million from felled initiatives, they ultimately boosted growth due to a laser-focused customer strategy. 

Growing up, Ope Amosu’s elementary school classmates bought his famous “Ope Sauce,” a mixture of ketchup, mayonnaise, mustard, salt and pepper. In high school, he sold chocolate chip cookies that he baked after football and basketball practice.

In college, his frat brothers dubbed him “Chef Homeboy” because of his consistency at the grill. But Amosu, who only dabbled in cooking, never thought he would become a professional chef.

“It wasn’t like I grew up saying I stayed in the kitchen with my mother every day and cooked. I didn’t. I enjoyed being a consumer of food. I enjoyed going to restaurants,” says Amosu, 34. “My family always fellowshipped around food. Food was always a celebratory experience.”

But over time, Amosu’s passion for cooking began to blossom. And his time at Rice Business, where he earned his MBA in 2014, planted new entrepreneurial seeds.

In November, Amosu opened ChopnBlok, a West African restaurant inside the new POST Houston building, which infuses the traditions of his Nigerian upbringing with other African cultures and cuisines. And when Bravo’s “Top Chef” series filmed in Houston this season, featuring a selection of the city’s most celebrated culinary stars, he shared the spotlight with local legends Hugo Ortega, Monica Pope, Chris Williams and Kiran Verma — the ‘godmother of Indian fine dining,’ and the mother of Puja Verma ’12, the director of operations and strategy at Kiran’s.

In a very short time, ChopnBlok’s fast-casual spin on West African cuisine has bubbled to the top of Houston’s rich, diverse culinary scene. “I want this to be a cultural crossroads, where we take West African culture and local communities and bring them together,” says Amosu. “I want people that walk by to know that this is the place to get good food.”

Ingredients

Amosu was born in London, but when he was 2, his parents sent him and his brother to Nigeria to live with their grandparents. Meanwhile, his parents traveled to the United States to determine where they wanted the family to settle down. They finally chose Houston, living in an apartment on the southwest side of the city, which Amosu describes as “Little Nigeria.”

At home, Amosu was surrounded by Nigerian culture. Food also played a central role at his family’s big celebrations. He even traveled back to Nigeria sometimes with his family. But during the day, he went to a private school where, in many of his classes, nobody else looked like him.

“The norms there were also different than the norms in my neighborhood. Reflecting on it, I think a lot of that is obviously what shaped me, but it’s also kind of what made me be able to connect with so many different people, with so many different backgrounds, with so many different walks of life,” says Amosu.

Amosu, who enjoyed playing sports as a child, ended up getting a football scholarship to Truman State University in Missouri. In college, he also joined a fraternity, where he taught himself how to grill. Some of the recipes he developed in college eventually made their way to the menu at ChopnBlok.

Being in rural Missouri also made him miss home more. After graduation, he moved back to Houston and got a job with the signage company Grimco. But he knew that he wanted to further his education and ultimately get an MBA. He set his sights on Rice Business.

Prep Work

Amosu’s entrepreneurial spirit took shape during the MBA program, where entrepreneurship classes were the ones he enjoyed the most. In Al Danto’s new enterprise course, Amosu recalls reading case studies about entrepreneurial journeys, which got his mind whirring. As part of the course, he also interviewed other entrepreneurs, including the Pappas family, who have opened more than 100 restaurants across the U.S. (Evy Pappas ’09 and Eleni Pappas ’19 are both Rice Business alums).

“The whole goal was to say: At the end of my life, what do I want to be known for?” says Amosu. “Then, from a professional standpoint, what types of things would I consider that can also help me achieve that level of fulfillment throughout my career?”

The dream of entrepreneurship stayed with Amosu as he transitioned into his first job after business school. He went to work for General Electric in Philadelphia, where he was responsible for projects all over the world, including the Middle East, Latin America and Southeast Asia. But he grew restless in his position and wanted more from his career. He also wanted to stay connected to his Nigerian heritage.

“As I’m living in these different parts of the world, I keep asking myself like, ‘Man where can I get access to my culture?’ Be it the food, be it the music,” says Amosu.

Amosu moved to Dallas in 2016. One day in January 2017, he traveled to a work conference in Houston and became inspired after coming across an Italian street food kitchen, Piada. He envisioned creating a similar concept, but centered on West African food and drinks. With ideas brimming but no practical experience in fast-casual dining, Amosu decided to work at night as a prep cook at Chipotle to pick up some needed skills. 

Cooking With Gas

He and his wife moved back to Houston in December 2017, and he began learning how to make traditional West African dishes from home cooks, then modifying the traditional recipes in fresh and unique ways. He also began hosting small pop-up dinners in 2018, which soon ballooned to quarterly pop-up dining experiences that drew up to 150 people per night. Attendees would dine on dishes that can now be found at ChopnBlok, such as the Trad, a dish of smoky jollof jambalaya rice, grilled chicken, stewed sweet plantains and peanut-pepper spiced vegetables.

The pop-up dinners gained momentum until the COVID pandemic hit in 2020. Like many business owners, Amosu suddenly had to pivot. He began shipping to customers across the country and finding new ways to market his fare. For example, he partnered with “Insecure” actress and comedian Yvonne Orji to deliver ChopnBlok meals to her fans as a promotion for her HBO Comedy special “Momma, I Made It!” In the special, Orji reflects on being Nigerian-American and shares footage from a trip to Nigeria. Amosu also organized a “Bloktober” event in October 2020, offering ChopnBlok home delivery in Houston and beyond.

Eventually, Amosu got a dream opportunity to open a restaurant inside the high-profile POST Houston development, a mixed-use complex in what was once Houston’s downtown post office, developed by Rice alum Frank Liu.

After a long journey that brought him from late nights at Chipotle to a series of pop-up dinners to an unexpected pandemic pivot, Amosu is finally seeing the fruits of his labor. Since ChopnBlok opened in November, it has been widely acclaimed by critics and Yelp reviewers alike. He hopes the restaurant’s popularity will help make West African culture and food a part of society’s daily routine and celebrated by all. Ultimately, he hopes to expand the restaurant to other locations across country and the world.

“I think this whole story, of how we slowly created our own niche and built a following, paid off,” says Amosu. “At the end of the day, it’s the people that came to our pop-ups, who are excited to see that someone who was going to do something is actually doing it and doing it in a way that they can be proud of.”

ChopnBlok’s most popular dish currently, The Motherland, takes West African staples like black-eyed peas, stewed plantains and suya-spiced vegetables, and merges them with East African coconut curry. Amosu says the dish tells a story of the whole African continent.

His advice for those just starting out on their own entrepreneurial journey is rooted in words from the late rapper Nipsey Hustle.

“One of the things he said on one of his songs is: The difference between him and the next person is he just didn’t quit,” says Amosu. “I’ve gone through every single emotion possible and I continue just to do it.”

There’s this effort to make Houston the Silicon Valley of the South, and I want to be a part of it. I didn’t think I would have access to all those opportunities without a foundation in business principles. The curriculum at Rice Business is so thoughtful and so purposeful — they challenge us at every turn.

Keri Sprung, EMBA ’22

As Texas Heart Institute’s communications director, with 25 years of work experience in medical research, Keri Sprung has worked with giants in medicine throughout her career. “In the Texas Medical Center, you’re surrounded by breathtaking innovations and human greatness — scientists, doctors, surgeons, inventors, policymakers,” she says. “I have amassed a unique and varied perspective over my two decades in the industry, but I was missing the full complement of business principles. There was something I just didn’t know that everyone else in the room knew, and part of it was the ability to execute business strategy to advance the mission and business goals of an organization.” She started taking seminars and online courses to fill the gaps in her knowledge, but it never seemed like enough. About five years ago, she realized that what she really wanted was a full business school curriculum. “There was a hole that I knew I couldn’t really fill by taking classes here and there.”

At Rice Business, she’s been humbled by how much there is to learn and emboldened to recognize how many skills she’s already mastered without being fully aware of it. “You really have to get through the coursework to realize it’s not rocket science, but you certainly cannot cut corners,” she says. “You really do need to study to become a better leader and be mindful and purposeful about how you’re leading at all times. There is an art and a science to leadership; it doesn’t just come naturally.”