Business people often understand globalization better than anyone else — the products, services and capital-converging economics, politics and society — but they are often so preoccupied in the competitive struggle for profits to consider the wider picture, failing to recognize that the biggest challenges cross the boundaries of the private, public and not-for-profit sectors. This requires closer collaboration among a much wider group of often uncomfortable stakeholders, involving a more holistic and inclusive mindset on the part of business leaders and their chief communication officers (CCOs).
Massive changes in the business environment — stakeholder empowerment yet polarization, greater transparency yet less trust — are raising expectations and responsibilities for boards of directors and the whole leadership team. CCOs in the future need to be equipped with new skills, including collaborating internally and externally, building a new set of relationships and truly engaging with stakeholders. Few leaders feel relaxed outside their comfort zones, and most organizations are not structured to create a culture of collaboration and stakeholder orientation.
The new normal must be navigated, negotiated, networked and have a narrative built around it. This is essentially “corporate diplomacy” and occurs when corporations embed the value of collaboration deep into their culture, extending the reach of their relations to include a broader ecosystem of stakeholders who affect the sustainability of the business, the broader stakeholder community and society.
Doing the right thing is complicated in today’s marketplace. Relationships with stakeholders operating across countries, especially in high-context societal cultures, remains a challenge. Unfortunately, there are far more questions than answers concerning culturally contingent aspects. Sometimes it seems as if business exists purely to enrich the small elite, yet with its resources and expertise, business can help fix the world. According to the Champion Brand Index, the results of a recent global study conducted by APCO Worldwide, 94 percent of those surveyed agree that companies are able to shape a better society. But how can they fuse economic and social value, and with whom should they collaborate? There is a dire need not only for “integrated reporting,” but also a more dialogic and diplomatic approach to stakeholder engagement.
CCOs need to consult and coach their CEOs not only to adapt, but also to anticipate change, realizing that nothing less than a multidimensional mindset is required. For instance, law and economics, which are key foundations of corporate governance, need to embrace ethics and responsibility. Reputation building simply for the purpose of delivering high-brand value could threaten the values and culture of the organization. As risk becomes more complex, transparency more radical and reputation more costly, the mission of “corporate diplomats” becomes more relevant. Through better alignment with stakeholder values and expectations; acting in an authentic way; building attachment with customers; and advocating for issues important to them, businesses can embrace innovation and are freed up from fighting fires and “managing” crises, thus ensuring resilience.
Organizations’ wider impact to society does not sit simply in the corporate responsibility department. The optimal approach is to embed “external engagement” deeply into the decision-making at every level. Unlocking value in relationships is a key to success in business, and only those companies that realize they must first champion their stakeholders’ interests if their stakeholders are to champion them, will find the true business value in their relationships. Paul Polman, CEO of Unilever, says that “what we give to society to make it better is our business model, starting at the top.”
Organizations need to identify key relationships, tune into relationships (meaning “deep listening” as diplomats describe it), measure the effect of such relationships and report on them. Focusing on relationships with stakeholders in the context of the business model and how they create sustainable value helps support better integrated thinking and decision making, in turn leading to better governance and improved performance.
The “relationship” is the last driver of sustainable business value that business gurus have not really emphasized. Public relations has often been omitted from the stakeholder-management literature, despite being at the forefront of raising awareness on the need to develop mutually beneficial relationships. Perhaps CCOs need to consider a shift toward a multi-lateral governance approach in which the decision-making process embraces the interests of the organization, specific stakeholders and those of the wider network. Integrated External Engagement (IEE) needs to be connected to corporate strategy and have world-class management techniques applied to it, including dialogic and diplomatic skills.
As Professor Mervyn King, chairman of the Global Reporting Initiative, said, “In the changed world of the 21st century, a company has to know the legitimate and reasonable needs, interests and expectations of its stakeholders in order to inform its strategy, short, medium and long-term. … How the company makes its money impacts financially, socially and environmentally, because business is at the junction of all three. Central to all of this is the company’s relationship with its stakeholders, as its stakeholders make up society, which is the ultimate licensor of the company.”
A single business cannot solve all of the world’s problems, so one approach is to partner up. Collaboration is often a catalyst that changes the entire system. Success is predicated by identifying clear goals and employing professional facilitators. A good example is the World Economic Forum’s involvement with G8 governments, the African Union and 50 local and global corporations to enhance food security in Africa.
There is a true involvement imperative for CEOs to exert leadership on the public stage, a mix of stagecraft and statecraft leading to statesmanship, forging relationships with multiple, interdependent stakeholders, especially in this collaborative economy. The narrow focus on the demands of the financial community is no longer viable given today’s complexity. The task of the CEO and heads of others organizations (including public sector and NGOs) is to reframe the narrative, raise the bar higher, anticipate the future and create it in a new spirit, but it will require leading for stakeholder value. So as we look ahead 30 years to year 2044, the world is crying out for a new cadre of “corporate diplomats.”
Dr. Roger Hayes is senior counselor at APCO Worldwide, based in the London office. He specializes in international strategic communication with a particular interest in emerging countries, especially in Africa and Asia.