Dick’s Sporting Items Adopted Its Conscience on Weapons—and It Paid Off

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Days after the 2018 mass school shooting in Parkland, Fla., a devastated Ed Stack, then CEO and largest shareholder of Dick’s Sporting Goods, decided it was time his chain of 850 stores pulled certain guns off the shelves .

The accused 19-year-old shooter in the Parkland massacre had not bought his AR-15 assault rifle from a Dick’s sporting goods store. But he’d legally bought another shotgun from a local Dick’s store months earlier — and that hit Stack close enough to home.

“I don’t want to be a part of history anymore,” Stack told his top leaders days after the killing of 17 students and teachers in Parkland.

And with those words, Stack, a gun owner and gun rights supporter, launched a series of corporate actions that could serve as a model for other CEOs trying to balance their personal conscience and corporate interests when dealing with sensitive societal issues Problems are addressed by two new case studies from Harvard Business School.

“Business leaders are increasingly expected to take a stand on societal issues – to do good for society. It goes beyond “doing no harm,” says George A. Riedel, Henry B. Arthur Fellow and associate professor at HBS, who wrote the case studies titled Dick’s Sporting Goods: Get Out of the Gun Shop. “Social exclusion is becoming less and less an option for companies and business leaders.”

Riedel emphasizes that no two companies are alike. Other companies that want to take a stand on social issues may not necessarily take the dramatic steps Stack and his colleagues took to rid their company of most, if not all, gun sales.

But Riedel, who teaches leadership and corporate accountability (LCA) at HBS, says business leaders still have many lessons to learn from how Stack successfully navigated this difficult decision. These lessons include involving top executives in a change, analyzing the financial impact, and developing a communications strategy aimed at explaining the company’s actions to customers, employees, suppliers, and investors.

“There will always be compromises,” says Riedel. “But the case of Dick’s Sporting Goods shows that if you do things well, you can do it right, you can have a positive outcome.”

A calculated change

Stack, whose father founded the company in upstate New York in the late 1940s, has become increasingly concerned over the years about multiple mass school shootings across the United States, the case says.

In fact, after the 2012 mass killings at Connecticut’s Sandy Hook Elementary School, Dick’s Sporting Goods began removing assault rifles from its stores, according to the cases.

But after the Parkland massacre six years later, Stack felt compelled to do more, including eliminating the semi-automatic rifle type used for shooting from stores and banning the sale of firearms to anyone under the age of 21.

“Watching these kids, listening to these parents — it had a profound effect on me,” Stack says of the case. “I hadn’t cried that much since my mother died. Someone had to do something to fix this broken system and given our position in the industry I felt we had to take a stand and do something. That has to stop.”

Despite this, Stack avoided acting on impulse. Days after the mass shooting, according to Riedel’s case studies, he spoke to Lee Belitsky and Lauren Hobart, executives of Dick’s Sporting Goods, about his idea of ​​significantly reducing the gun retail business.

The top executives generally agreed with Stack’s decision, but all three said it’s important that they first analyze the potential financial impact on the company’s $8.4 billion in total revenue.

In one calculation, company officials estimated that Dick’s Sporting Goods would lose about $250 million because it stopped selling guns and other related items. As Stack commented, “There was no advantage in our economic analysis.”

Elaboration of a careful communication strategy

Stack and his colleagues fully anticipated a backlash from angry customers and gun rights groups like the National Rifle Association, and they were also concerned about Wall Street’s reaction to Dick’s suspension of gun sales.

They decided they needed a comprehensive communications strategy to minimize potential negative reactions and gain support from others for the company’s plans, which included phasing out the ban in stores and replacing gun products with clothing and other higher-margin items .

Just two weeks after the Parkland tragedy, Stack publicly announced his company’s new policy on the nationally televised Good Morning America show.

He then heard the “predictable reaction” from angry critics, some of whom called for the chain to be boycotted. But he was surprised to find that reaction on Wall Street had been muted — and by the end of the day, Walmart, LL Bean and Kroger all announced similar gun sales restrictions of their own.

Dick’s Sporting Goods lost millions in sales in the months immediately following Stack’s announcement, but the chain’s revenue ultimately rebounded on other sales in subsequent quarters. Profitability also increased given the improved trade margins that replaced guns.

Positioning yourself has paid off

Ultimately, the head of Dick’s Sporting Goods followed his conscience, and the strategy worked — largely because he resisted an impulsive move, built consensus, and communicated effectively, says Riedel.

The company undoubtedly benefited from the fact that Stack controlled nearly two-thirds of the company’s common stock votes and had the personal authority to take a moral stand and risk the consequences, says Riedel, noting that CEOs with less power at other publicly traded companies do so do might not be in such an advantageous position.

But the concrete steps Stack took also prevented the company from paying a higher price for following its entrepreneurial conscience — and the way it’s handled the change is for other leaders to learn, says Riedel.

“Ed Stack found the right balance and can always say, ‘I did the right thing for the right reasons,'” says Riedel.

[iStockphoto/Miosotis Jade]