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How Should Business Leaders Respond To Our Changing World?

6th February 2015 | Gerry Reffo, Valerie Wark

Everything is becoming more integrated, both nationally and internationally. In this article, the authors of Leadership PQ: How Political Intelligence Sets Successful Leaders Apart discuss the rise of international integration and how PQ (Political Intelligence) can make the difference between strong management and strong leadership.

How Should Business Leaders Respond To Our Changing World?

International Integration

Business and government work within an international system that regulates a broad range of issues from trade to employment, from international waters to environmental targets.

In 2012, the OECD predicted that China is likely to take over from the United States as the world’s largest economy in the following few years. India has replaced Japan as the third largest economy. Moves towards closer integration are visible as the world adapts to changes in economic power. South East Asia and Latin America have set up organizations to help them develop closer trading and economic ties. Europe and the United States are negotiating a transatlantic trade agreement.

More integration requires more multilateral government activity on all significant issues – financial, economic, trade, climate, migration. It also means more international regulation that businesses will have to understand and adopt.

Sharing Infrastructure and Services

The PwC 16th Annual Survey of Global CEOs (2013) reported that businesses are looking much more at collaboration with adjacent industries to share infrastructure and co-develop products. Why? To reduce risk and bring costs down in areas like research and development. It’s also more economical than traditional approaches, such as mergers and acquisitions.

How Should Business Leaders Respond to our Changing World?

First, business leaders must understand this more complex ‘political’ environment. It’s not sufficient to rely on government to create a business-friendly environment. Businesses need to be able to work with government to:

• anticipate where the problems are coming from
• exert as much influence on the political world as the campaigning NGOs, Twitter campaigns and media stories that dictate so much of modern government; and
• become part of the solution, rather than one of the problems.

The best business leaders of the future will think about how they can help government strike a balance between responding to the short term and encouraging long-term strategic policies. Critical to success is the understanding that business is part of a wider societal system and that society expects them to step up to the mark.

Isn’t this what public affairs professionals do?

Traditionally business has relied on public affairs/external affairs specialists to help them engage with government. The requirement for this in-depth professional expertise not only remains, but is growing because of political, regulatory and societal changes, and it now engages a wider group of stakeholders. More international regulation means that companies must have a globally coherent policy as well as understanding the national and regional context of the countries they operate in. Research into how public affairs is changing has identified more involvement in strategy and business planning, reflecting the growing impact of political and regulatory issues.

Global companies like Rio Tinto and Vodafone are training their senior leaders to understand their role in this complex environment. Sir John Grant observes that the next generation of business leaders will have to ‘put themselves into the shoes of politicians.’

This is an extract from Leadership PQ: How Political Intelligence Sets Successful Leaders Apart, by Gerry Reffo and Valerie Wark. 

Business & Management, Accounting & Finance, Risk

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