Guest Columnist Gerry Keim: Learning the Politics of Managing Around the Globe
What businesses and business schools should know
By Gerry Keim
Businesses operating in countries around the globe continually face threats and opportunities from possible changes in public policy. Adjustments in the “rules of the game” can affect both current business operations and future plans. In fact, a recent survey reveals that many senior executives view public policy changes as an even more important strategic concern than actions by their rivals in terms of new services, products or technologies. However, most senior executives admit they are ill-prepared to operate or to compete in the political arena. So, what can they do, and how can business schools help?
Doing nothing now expends no resources, but once policies change, the cost to make modifications may be very high. One alternative is simply to invest in monitoring the political environment, which may enable businesses to anticipate changes and adjust operations over a longer period of time. A second alternative is to monitor the political environment and to try to affect potential public policy changes. This approach involves the greatest up-front costs, but may also have the largest benefit in terms of affecting the outcomes of policy change.
Either of the last two options requires some knowledge of how the public policy process operates in countries where one does or is considering doing business. Lobbyists, as well as professional, trade, or umbrella associations, can provide some knowledge of the public policy process in a particular country or state or trading bloc for a fee. However, a business that relies totally on outside suppliers will likely have no more information or any better chance to react to or to influence policy change than any other business. This means little competitive advantage.
Political Expertise for Competitive Advantage
Successful business leaders do not rely solely on outside agents for marketing or supply chain expertise. Leaders who seek to create competitive advantage combine their acquired acumen in these areas with their knowledge of their own organizations’ idiosyncratic resources and capabilities to craft unique responses to marketing or supply chain threats and opportunities. The same possibility exists for competing in the political arena. And to the extent that outside suppliers are part of a business’s political strategy, knowledge of the political process also will enable more effective contracting and monitoring of these suppliers.
Business schools help by adding faculty who conduct research and teach courses on institutional differences in political systems and cultural norms and on the tactics and strategies businesses can employ to represent their interests in different countries. More b-schools need to add such faculty.
Also, The Washington Campus, a nonprofit consortium of US business schools, offers short programs in Washington, DC, for MBA students, managers, and executives to learn more about how the public policy process operates and how organizations can participate more effectively when policy affecting their interests is considered. The underlying premise is, “Democracy is not a spectator sport,” to quote a former White House official.
Learning to Operate in a Political System
At the W. P. Carey School of Business, we have a required core course in business political strategy in our executive MBA program. In addition to classroom sessions, our EMBA students spend several days at the state Capitol, talking with legislators, executive branch officials and lobbyists who represent a wide variety of interests. They also participate in a two-day role-playing exercise in which every student plays an elected official, a regulator or someone from the advocacy community. After the state-level experience, we go to Washington for four days at The Washington Campus. Our EMBAs rate this as one of our most valuable core courses.
The Washington Campus is attracting more international students eager to learn about the US political system and how to operate in it. New course offerings for consortium members to understand how other countries’ political systems operate are being planned. Other b-schools can participate in these offerings.
Learning to assess the threats and opportunities that may arise from potential changes in public policy and developing capabilities to represent organizational interests in political processes wherever firms operate are important components of successful strategy. These must be coupled with the recognition that a fundamental difference in doing business in different countries is that the institutional settings in which public policy is made, enforced, and changed vary significantly. By offering learning opportunities centered on public policy processes and political strategy, business schools can help prepare current and future business leaders to compete effectively in different locales around the globe.
Gerry Keim is chair of the Management Department and associate dean for international programs at the W. P. Carey School of Business at Arizona State University and chairman of the board of The Washington Campus in Washington, DC.