Why Did Adidas Wait So Long to Drop Kanye West?

kanye west

By Dr. Gleb Tsipursky

Adidas does not tolerate antisemitism and any other sort of hate speech… the company has taken the decision to terminate the partnership with Ye immediately,” according to its October 25 news release1. That statement conveys a principled and admirable stance against the antisemitism shown by the rapper formerly known as Kanye West after his antisemitic tweet2 on October 10 that he would go “death con 3 on JEWISH PEOPLE.”

Yet Adidas waited much, much longer than other companies3 that cut ties4 with Ye. Even Ye’s own talent agency dropped5 him before Adidas. In fact, Adidas delayed so long that Ye taunted them on his October 16 appearance6 on the Drink Champs podcast, saying “I can say antisemitic things, and Adidas can’t drop me. Now what? Now what?”

Adidas faced particular pressure to drop Ye due to its dark past. A German company founded7 by a former member8 of the Nazi party, Adidas had an especially strong reason to drop Ye earlier than other companies. Adidas faced mounting pressure9 from the Anti-Defamation League and other10 organizations to drop Ye given its Nazi past. A Change.org petition11 set up by the Campaign Against Antisemitism urging Adidas to sever ties with Ye had gathered 169,100 signatures by October 25.

Short-term financial damage is highly visible and painful, while the long-term brand damage is much less visible and less painful. Yet realistically, such brand damage is much more important to the long-term success of Adidas.

Yet Adidas refused to drop Ye until all the other companies dropped him. Instead of getting ahead of the problem and dropping Ye immediately after his October 10 anti-semitic tweet, or even his October 16 taunting of Adidas, the company had to be shamed and pressured into cutting its ties with Ye. As a result, Adidas seriously damaged its brand, harming its reputation among anyone opposed to antisemitism. After all, it appeared Adidas dropped Ye due to the pressure, rather than Ye’s antisemitism and other bad behaviors.

What explains the poor decision-making by the Adidas leadership? It’s a classic case of the ostrich effect12: a dangerous judgment error where our minds refuse to acknowledge negative information about reality. It’s named after the mythical notion13 that ostriches bury their heads in the sand at a sign of danger. The ostrich effect is a type of cognitive bias14, one of many mental blindspots15 impact decision making in all life areas16, ranging from the future of work17 to mental fitness18.

The Adidas leadership buried its head in the sand. It refused to acknowledge the growing damage to its brand from Ye’s antisemitism, as well as his prior bad behavior, such as having models wear19 “White Lives Matter” T-shirts in early October.

Such denialism in professional settings happens more often than you might think. A four-year study20 of 286 organizations that had forced out their CEOs found that 23 percent were fired for denying reality, meaning refusing to recognize negative facts about their organization. Other research shows that professionals at all levels suffer from21 the tendency to deny uncomfortable facts.

adidasAdidas’ denialism likely stems from the cognitive bias known as the sunk costs22 fallacy. According to Adidas’ statement23, the termination of the contract is expected to “have a short-term negative impact of up to €250 million on the company’s net income in 2022 given the high seasonality of the fourth quarter.” Presumably, the impact will be much higher in 2023, over half a billion at least.

The partnership with Ye had a long history24 since 2013, when the company signed his brand away from rival Nike. In 2016, Adidas further expanded its relationship with the rapper, calling it “the most significant partnership ever created between a non-athlete and an athletic brand.”

In other words, Adidas invested a great deal of money and reputation into its relationship with Ye. That kind of investment causes our minds to feel strongly attached to whatever we put those resources into, and throw good money after bad.

Adidas seriously damaged its brand, harming its reputation among anyone opposed to antisemitism. After all, it appeared Adidas dropped Ye due to the pressure, rather than Ye’s antisemitism and other bad behaviors.

You’ll see this happen often in major projects that are working out poorly, such as Meta’s Metaverse project. Several high-profile industry figures recently criticized25 Mark Zuckerberg’s efforts. That includes Palmer Luckey, the founder of VR headset startup Oculus, which Meta acquired in 2014 for $2 billion. Luckey said “I don’t think it’s a good product” about Horizon Worlds, Meta’s core metaverse product. He called it a “project car,” a fancy automobile that the owner spends a lot of money on as a hobby. So far, Facebook’s shift to building the metaverse has been costly, with the company last year losing $10 billion on it, and Wall Street analysts expect it to lose more than $10 billion again this year.

Similarly, you’ll see sunken costs in major relationships. That can range from marriages that lasted much longer than they should have to brand partnerships like the one between Adidas and Ye.

kanye adidasThe final cognitive bias relevant here is called hyperbolic discounting26. This term describes our brain’s focus on short-term, highly visible outcomes over much more important and less visible long-term ones. Adidas didn’t want to take the short-term financial hit to its bottom line from cutting ties with Ye. However, Adidas failed to give sufficient weight to the long-term damage to its brand from failing to do so.
Short-term financial damage is highly visible and painful, while the long-term brand damage is much less visible and less painful. Yet realistically, such brand damage is much more important to the long-term success of Adidas.

In my consulting27, I’ve seen many executives struggling with the same three mental blindspots when they face top performers engaging in bad behaviors, ranging from incivility to sexual harassment and discrimination. Leaders deny it happened because they have so much invested in the top performer, whether a star salesperson or top data scientist, and they don’t consider the long-term consequences to the organization’s culture and employee morale.

In fact, it’s easy for anyone to fall for these three cognitive biases when someone whom you value behaves badly. Fortunately, forewarned is forearmed: knowing about these three mental blindspots means you can watch out for these problems in your own professional and personal life.

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About the Author

Gleb TsipurskyDr. Gleb Tsipursky serves as the CEO of the boutique future-of-work consultancy Disaster Avoidance Experts. He is the best-selling author of 7 books, including Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters and Leading Hybrid and Remote Teams: A Manual on Benchmarking to Best Practices for Competitive Advantage. His cutting-edge thought leadership was featured in over 650 articles in prominent venues such as Harvard Business Review, Fortune, and USA Today. His expertise comes from over 20 years of consulting for Fortune 500 companies from Aflac to Xerox and over 15 years in academia as a behavioral scientist at UNC-Chapel Hill and Ohio State.

References

  1. Adidas Terminates Partnerships with Ye Immediately, Adidas, October 25, 2022 https://www.adidas-group.com/en/media/news-archive/press-releases/2022/adidas-terminates-partnership-ye-immediately/
  2. Twitter, Instagram block Kanye West over antisemitic posts. AP News, November 11, 2022 https://apnews.com/article/twitter-inc-entertainment-music-ba5c710ec59d195fe4d83cb2c9343589
  3. These brands have dropped Kanye West amid antisemitism controversy, Washington Post, October 25, 2022 https://www.washingtonpost.com/business/2022/10/25/kanye-west-companies-cut-ties/
  4. ‘Had to Cut Ties’: Kanye West Breaks Silence on Adidas, Ye-Related Brands Fallout as Rapper Loses Billionaire Status, Entrepreneur, October 27, 2022 https://www.entrepreneur.com/business-news/adidas-drops-ye-what-companies-have-cut-ties-with-kanye/437844
  5. Hollywood talent agency CAA cuts ties with Kanye West after antisemitic tirade, LA Times, October 24, 2022 https://www.latimes.com/entertainment-arts/business/story/2022-10-24/hollywood-talent-agency-caa-cuts-ties-with-ye-after-anti-semitic-tirade
  6. “the thing about it being Adidas I can say antisemitic things and Adidas can’t drop me … now what … now what …”, Adidas Twitter, October 21, 2022 https://twitter.com/StopAntisemites/status/1583151910932336641?s=20&t=HzybdycOZRdPVv8TBi3fEw
  7. The Nazi history of Adidas, the sportswear giant that took weeks to drop Kanye West over antisemitism, Jewish Telegraphic Agency, October 24, 2022 https://www.jta.org/2022/10/24/culture/the-nazi-history-of-adidas-the-sportswear-giant-that-hasnt-dropped-kanye-west-over-antisemitism
  8. Kanye West antisemitism: Was Adidas really founded by a Nazi?, Yahoo News, October 26, 2022 https://news.yahoo.com/kanye-west-antisemitism-adidas-really-183747882.html?guccounter=1
  9. #RunAwayFromHate, Twitter, October 25, 2022 https://twitter.com/JGreenblattADL/status/1584638026717622275
  10. “the thing about it being Adidas I can say antisemitic things and Adidas can’t drop me … now what … now what …”, Adidas Twitter, October 21, 2022 https://twitter.com/StopAntisemites/status/1583151910932336641?s=20&t=HzybdycOZRdPVv8TBi3fEw
  11. Adidas must end its partnership with the antisemite Ye (AKA Kanye West), Change.org, https://www.change.org/p/adidas-must-end-its-partnership-with-the-antisemite-ye-aka-kanye-west
  12. The ostrich effect: Selective attention to information, Springer Link, February 11, 2009 https://link.springer.com/article/10.1007/s11166-009-9060-6
  13. Truth or Tail: Do ostriches really bury their head in the sand when scared or frightened?, Cleveland Zoo Society, March 11, 2010 https://www.clevelandzoosociety.org/z/2020/03/11/truth-or-tail-do-ostriches-really-bury-their-head-in-the-sand-when-scared-or-frightened#:~:text=Contrary%20to%20the%20popular%20myth,blend%20in%20with%20the%20terrain.
  14. How to Evaluate Unconscious Bias Caused by Cognitive Biases at Work, Disaster Avoidance Experts, June 27, 2019 https://disasteravoidanceexperts.com/how-to-evaluate-unconscious-bias-caused-by-cognitive-biases-at-work/
  15. The Blindspots Between Us, Disaster Avoidance Experts, https://disasteravoidanceexperts.com/blindspots/
  16. Never Go With Your Gut, Disaster Avoidance Experts, https://disasteravoidanceexperts.com/nevergut/
  17. Leading Hybrid and Remote Teams, Disaster Avoidance Experts, https://disasteravoidanceexperts.com/hybrid/
  18. Top 10 Science-Based Tips for Effective Online Therapy, Top10.com, November 2, 2022 https://www.top10.com/online-therapy/top-10-science-based-tips-for-effective-online-therapy
  19. Kanye West stirs controversy in ‘White Lives Matter’ T-shirt at Paris fashion week, The Guardian, October 4, 2022 https://www.theguardian.com/music/2022/oct/04/kanye-west-white-lives-matter-t-shirt-paris-fashion-week
  20. Leadership IQ Study: Mismanagement, Inaction Among the Real Reasons Why CEOs Get Fired, Cision, June 21, 2005 https://www.prweb.com/releases/2005/06/prweb253465.htm
  21. Denial: Why Business Leaders Fail to Look Facts in the Face–and What to Do About It, Amazon, https://www.amazon.com/gp/product/159184391X/ref=as_li_qf_asin_il_tl?ie=UTF8&tag=intentinsigh-20&creative=9325&linkCode=as2&creativeASIN=159184391X&linkId=cea93f837e44949c7402ed264941c0d8
  22. Sunk-cost fallacy and cognitive ability in individual decision-making, Science Direct, https://www.sciencedirect.com/science/article/abs/pii/S0167487016307346
  23. Adidas Terminates Partnerships with Ye Immediately, Adidas, October 25, 2022 https://www.adidas-group.com/en/media/news-archive/press-releases/2022/adidas-terminates-partnership-ye-immediately/
  24. Adidas terminates partnership with Kanye West, CNN, October 26, 2022 https://edition.cnn.com/2022/10/25/business/adidas-ye-ends-partnership/index.html
  25. Oculus founder Palmer Luckey compares Facebook’s metaverse to a ‘project car,’ with Mark Zuckerberg pursuing an expensive passion project that no one thinks is valuable, Insider, October 25, 2022 https://www.businessinsider.com/palmer-luckey-blasts-facebook-terrible-metaverse-product-oculus-2022-10?r=US&IR=T
  26. Hyperbolic discounting, https://psycnet.apa.org/record/1993-97149-003
  27. Consulting, Disaster Avoidance Experts, https://disasteravoidanceexperts.com/consulting/

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.

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