Why Big Businesses Need a Political Director to Navigate the Uncertainty of the Modern World
The modern world is characterized by political uncertainty and instability, with geopolitical events influencing the strategies of businesses across various industries. From the Brexit and the protests in France to the Trump presidency, the challenges posed by politics are becoming a defining feature of business in the 21st century. For leaders of big businesses, it is no longer enough to focus solely on operational efficiency and revenue growth; they also need to consider the potential impact of geopolitical events on their operations, supply chains, and profitability.
The Role of a Political Director in Modern Business
To succeed in this new environment, big businesses need to have a clear understanding of the political landscape in the countries where they operate. They need to be able to anticipate potential risks, develop contingency plans, and devise strategies that can mitigate the impact of political uncertainty on their operations and revenue. This is where the role of a political director comes in.
A political director is someone who understands the complexities of government operations and can help navigate the intricacies of political decision-making. Unlike a lobbyist, whose primary aim is to influence policy decisions, a political director works from within the organization to help identify risks and opportunities, develop strategies, and build relationships with key stakeholders in government.
Some of the key functions of a political director include:
– Monitoring political developments in the countries where the business operates to identify potential risks and opportunities
– Developing contingency plans to mitigate the impact of political events on the organization’s operations, supply chain, and profitability
– Building relationships with key stakeholders in government, including elected officials, regulatory agencies, and political parties
– Educating the business on the political landscape, including the current policy agenda and priority areas for government action
– Representing the business in various government forums and advisory bodies to ensure that its interests are represented and that it has a voice in political decision-making
A Case for the Need of a Political Director
The case for the need for a political director is particularly strong in the current environment, where political instability is on the rise and the risks to businesses are evolving rapidly. For example, a recent survey of FTSE-listed companies found that economic and political uncertainty led to more firms issuing profit warnings in the third quarter of 2020 than in any comparable period since the global financial crisis.
While some executives may feel that they have a good grasp of the political landscape, the reality is that it is becoming increasingly complex and fast-moving. In today’s world, businesses need a dedicated expert who can help them navigate the intricacies of the political environment and offer strategic advice that is tailored to their specific needs.
The Benefits of Having a Political Director
Having a political director embedded within the business can bring a number of key benefits, including:
– Improved risk management: By having a political expert on staff, businesses can better anticipate and manage risks related to political instability and uncertainty.
– More effective engagement with government: A political director can build relationships with key stakeholders in government and help the business understand the political landscape.
– Enhanced strategic planning: With a better understanding of the political risks and opportunities, businesses can develop more effective strategies that take into account the political environment.
– Improved reputation management: By having a voice in policy debates and forums, businesses can better manage their reputation and demonstrate their commitment to responsible and sustainable business practices.
– Better alignment with government policy: By staying ahead of policy developments, businesses can better align themselves with government priorities and potentially benefit from government support and initiatives.
Expanding on the Topic
In addition to the need for a political director, there are other trends and developments that businesses need to consider as they navigate the uncertainties of the modern world. Some of these include:
– The rise of interventionist government: In recent years, governments around the world have become more interventionist, using policy tools to achieve social and economic objectives. This has implications for businesses, which may need to adapt their strategies and operations to comply with new regulations or to take advantage of government support programs.
– The increasing importance of sustainability: Sustainability has become a major focus for businesses in recent years, driven by a growing awareness of the impacts of climate change, social inequality, and other global challenges. Governments are also playing a role in this trend, with many countries introducing regulations and incentives to encourage businesses to adopt more sustainable practices.
– The impact of technological innovation: Technology is transforming the way businesses operate, with innovations such as artificial intelligence, automation, and blockchain having the potential to disrupt traditional industries and create new opportunities. Governments are also playing a role in this trend, with many countries investing in research and development and offering incentives to encourage businesses to adopt new technologies.
– The importance of diversity and inclusion: In today’s world, diversity and inclusion are becoming increasingly important for businesses, driven by a growing awareness of the business benefits of having a diverse workforce and by public pressure to address issues of social inequality. Governments are also playing a role in this trend, with many countries introducing regulations and initiatives aimed at promoting diversity and inclusion in the workplace.
Summary
To navigate the uncertainties of the modern world, big businesses need a political director who can help them anticipate and manage risks related to political instability and uncertainty. This expert can help businesses develop effective strategies that take into account the political environment, build relationships with key stakeholders in government, and stay ahead of policy developments. In addition to having a political director, businesses also need to consider other trends and developments that are shaping the modern business landscape, including the rise of interventionist government, the importance of sustainability, the impact of technological innovation, and the importance of diversity and inclusion. By staying aware of these trends and developments, businesses can build resilience and succeed in a rapidly changing world.
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Once upon a time the world was flat, as Thomas Friedman said, and CEOs didn’t need to check their phones over dinner. Now, it’s one crisis after another: All bets are off when it comes to supply chains and trade routes, auditors allege “material uncertainty” over the accounts and boards note election dates in rich countries. “Government relations” is no longer a corporate backwater.
The war in Ukraine, Brexit, the protests provoked in France, the Trump presidency followed by Biden’s Inflation Reduction Act: they were all products of politics, of voters and leaders behaving in ways that did not fit the the globalization paradigm. Executives who weathered the 2008 financial crisis and the Covid-19 pandemic were already daunted by the challenges of the energy transition, diversity, and AI. Now they also have to worry about politics. It’s not just governments that need a foreign policy anymore: every big business needs it too.
If you are going to shift your supply chain away from China, where are you going? India, Vietnam, Morocco? What risks are insurable? What activities can survive political turmoil? This is a war game of the kind that generals used to do. Economic and political uncertainty led to more FTSE-listed companies issuing profit warnings in the third quarter of last year than in any comparable period since the global financial crisis.
Speaking to executives at corporate conferences in the US and UK, it seems to me that no leader can overcome every challenge. Instead, big business needs something like a political director. He is not an ex-politician selling a contact list that will expire when his party loses office. Instead, this would be a technocrat who understands that the government is a constant triangulation between parliament, party and press; that politicians rarely get ahead of public opinion on any issue; that, unlike business, there is no simple end result. And he should be someone who can forge a new era of cooperation between two sides that often downright despise each other.
In recent years, Western industry and governments have not had to worry much about each other. Aside from the financial crisis, they largely operated in silos, with little mutual understanding. But governments are becoming more interventionist. Biden’s chip and energy legislation is not just forcing other countries to respond; Technological advances will make regulation a hallmark of this decade. When even the creator of ChatGPT calls for security measures for the AI, it is a turning point.
Meanwhile, climate change is affecting the way nations think about farming, construction, and travel. Genetic testing is still largely unregulated; New gene editing techniques have the potential to permanently alter future generations. These issues are being discussed by eminent scientists, but politicians must also enter the fray to do battle with business experts and innovators. Are governments capable of meeting the challenges? They have been notoriously clumsy and slow to regulate fast-moving technologies.
Upping your game will mean working together with the business instead of getting caught up in lobbyists. The “revolving door” often gets a bad rap: when former German Chancellor Gerhard Schröder became president of Nord Stream 2, it was arguably the worst kind of cronyism. But it hasn’t hurt Kyriakos Mitsotakis, the quietly impressive Greek prime minister, to have spent a decade in finance. Experiencing what it’s like on the other side can foster more respect and less naivety that leads to regulatory capture.
Business leaders often find politics completely bewildering, like a whole new language. In the UK, I am not surprised that so many executives are horrified by politics and prefer to stay out of it. Five prime ministers in seven years have made wild political swings, despite wearing the same party tag. David Cameron accidentally created Brexit, Boris Johnson had no plan for it, and Liz Truss gave the nation the “idiot cousin” in the form of higher mortgages. Even before that, business people who entered government often went under.
For its part, the government must stop treating trade relations as mere theater and find ways to listen. At different stages of my career, I have sat on different sides of the table in meetings between CEOs and government ministers. I have seen CEOs fail to communicate clearly, not understanding what is and is not in the government gift, and I have seen ministers fail to realize that no one will say anything useful if their competitor is in the room.
Businesses will also be affected by trade-offs that governments make between the economy and national security. It is possible that this could change which institutions can really fail. Banks, insurers, energy companies, railways, universities: theoretically self-employed in many countries can end up being protected in practice. Was the Fed’s decision to bail out uninsured depositors at Silicon Valley Bank a sign of things to come?
A political director would need tolerance for ambiguity. The level of uncertainty is exhausting and may be why the average age of new CEOs is falling for the first time. Former US Lieutenant General and National Security Adviser HR McMaster once described the post-Cold War period as a “vacation from history”. But now, geopolitics is back with a bang. The bosses must organize their own generals, who can bear the dirt of politics.
https://www.ft.com/content/c0a9ede9-b724-47cc-a469-1407f1d19dd1
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