If 1967 was the summer of love, and 1996 the summer of the Macarena, then 2014 has been the summer of the Ice Bucket Challenge.

If you don’t know what that is, congratulations—you had a Facebook-free August. The rest of us, though, could not help but see an endless parade of videos of people dousing themselves with ice water in support of defeating Lou Gehrig’s disease, also known as ALS, and challenging others to do the same in the following 24 hours.

What does this phenomenon have to do with corporate governance?  A lot, actually. The viral campaign is a case study in the mobilization of social media. The Ice Bucket Challenge highlights the positive aspects of social media gone viral: Its mission was to trigger donations to the ALS Association, and it more than accomplished that goal. But what if the next digital tsunami is an attack on your company? How can you manage that risk?

Let’s start by looking at what happened to spark the dumping of all that frigid water. Contrary to early assumptions, the Challenge was not some sort of ingenious master plan by the ALS Association to turbocharge contributions. Time magazine traced the beginning to Pete Frates, a Boston ALS-sufferer and former Boston College baseball player with a wide network of sports contacts. After hearing of the ice bucket challenge as a generic fundraising gimmick, he lit on the idea of promoting it specifically for ALS—and got a cohort of sports celebrities to go along. Frates’ first video, one of himself airing the challenge and issuing it to athletes and the Howard Stern Show, was posted on Facebook on July 31.

The lesson here, then, is for companies to keep the public relations ground as inhospitable as possible for viral criticism. Understand what potential storylines could explode for or against you.

Frates’s campaign rapidly went Facebook-viral, and to great effect. In 2013 the ALS Association accepted $2.5 million in donations during the month of August. This year, it has received $94.3 million in donations from August 1 through August 27. And the message has reached far and wide, bringing awareness to new groups of people, with nearly two million new donors sending money to the organization. Remarkably, this influx occurred without the Association spending a dime.

Governance Mobilization

At least three other cases of social media mobilization erupted this past summer—albeit with far less intensity than the Ice Bucket Challenge. These were squarely in the corporate governance wheelhouse. One pit Amazon, one of the world’s largest online retailers, against Hachette and the Bonnier Group, both publishers. At issue is e-book pricing. Amazon wants a standard $9.99 for each book, while the publishers want flexibility to set their own prices.

In the Hachette quarrel, more than 900 writers founded Authors United, which kicked off with a conventional media ad but quickly sparked a host of social media champions—including a Twitter drive to boycott Amazon (see, for instance, #CutDownTheAmazon).

Late night comedian Stephen Colbert piled on with routines and a Web page dubbed “Stephen vs. Amazon.” It offered downloadable stickers with the words, “I Didn’t Buy It on Amazon.” In the Bonnier dispute, some 1,000 European authors signed an open protest letter, which was then posted to a dedicated Website: www.fairer-buchmarkt.de. One week later, the number of signatories had swelled to 1,655 and included endorsements from writer-oriented NGOs. For its part, even though it is at the vanguard of cyber-savviness, Amazon in both clashes stuck closely to its creed of being as opaque in corporate matters as it is aggressive in marketing. It posted a spare “Readers United” Website but otherwise kept a low profile.

A second social media squall hit British supermarket chain Sainsbury’s when, last month, a manager of a central London branch ordered kosher foods stripped from shelves to head off potential hooligans participating in anti-Israel protests. A shopper named Colin Appleby, the Guardian reported, snapped a photo of the empty kosher section and posted it on Facebook, where it went viral. Within hours a social media assault on Sainsbury’s was underway. “@Sainsbury’s are the scum of the earth as a company for taking away kosher food rather than contacting police. Evil racism from them,” wrote one. Sainsbury’s quickly got the kosher food section restocked.

Pay on Say

A third much smaller, but telling, wave hit U.K. brokerage Hargreaves Lansdown, a public company. Demonstrating a singular tin ear, the board in June authorized a £10 charge ($16.58) for any client investor who wished to vote at the firm’s own annual meeting. “We’ve applied it because it’s a proportionate charge to cover the administration cost of obtaining our clients’ views,” explained a spokesman. In quick response, ShareAction, the London-based NGO that advocates for institutional investor accountability, launched a social media campaign to get the decision reversed. (Note: Stephen Davis is a trustee of ShareAction.) In August, Hargreaves did just that—before its image and business could suffer more damage.

What makes one crusade blast off and others fizzle? Scholars are doubtless at work on the forensics of precisely what made the historic ALS Ice Bucket Challenge succeed. But some lessons can already be drawn for the corporate sphere.

For one, even though a lone individual can plant a campaign, the topic must fall on fertile ground to spread in ways that could be beneficial or harmful to a company. There are “narratives” that have resonance in popular culture.  When a social media event captures the zeitgeist of that narrative, it takes off. In the ALS case, it was a patient fighting back and suggesting a way for others to do so.  It became a fun way to participate in a good cause amidst a summer of depressing news.

For Amazon, the lurking narrative was its sheer size. People are deeply skeptical of a global behemoth bullying smaller competitors, even if consumers regularly patronize the leviathan and often benefit from it. For Sainsbury’s, Appleby’s photo appeared to some as a capitulation to mob rule, as well as an aid and abetment of anti-Semitism.

As for Hargreaves, we can only ask “what were they thinking?” even while knowing the answer is that they were not.  The aborted fee to exercise corporate democratic rights fit neatly into the common narrative of an entitled, thoroughly insulated board which regarded public shareowners as a cost, rather than its collective boss. All that was missing was a “let them eat cake” public statement.

The lesson here, then, is for companies to keep the public relations ground as inhospitable as possible for viral criticism. Understand what potential storylines could explode for or against you. Emerging analysis of social media phenomenon suggest that conventional techniques companies use to gather intelligence on markets—say, keeping a close eye on clubby bodies such as brokerage houses or professional groups—are out-of-date and insufficient, if not downright counterproductive. 

If, today, any individual can in the right circumstances incite a damaging offensive, it is critical to shape corporate strategies in macro terms. Amazon’s approach is, of course, quite contrary: It is hunkering down to ride out the e-book pricing controversy. Other companies may be far more vulnerable to social media attacks. Pretending a cyber-campaign doesn’t exist may not be economically rational. In a way it’s a tautology: If a cyber campaign has viral legs, then it has found resonance and needs a response.

For companies to absorb implications from events such as the Ice Bucket Challenge, it helps to have directors with a natural appreciation of social media. That’s a tall order for firms with little board turnover. To mitigate the risk of having too few eyes on the digital world, board nomination committees may need to ensure their matrix of needs includes social media literacy. Instruction to those handling board search should include finding directors with that knowledge. And corporate secretaries should consider regular briefings for current directors on how to manage social media risks. After all, if they don’t get ready, board members may find themselves doused with financial cold water whether they want to or not.

 

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