Nov
30
2007
(21808) Ram Charan says:
Great business leaders understand the issues that command public attention and position their enterprises on the right side of each. They understand that business doesn’t exist in a vacuum, and since they plan on being around for the long haul, people with know-how address society’s legitimate concerns.
Listen to Outside Voices
Like it or not, this is the era of total business transparency. That means not only do your stakeholders have a say in how your business is run, but so too do various special interest groups. You simply cannot spend all your time focusing solely on your main job of making money. You also have to keep your business on the right side of all the issues that generate public interest.
As tempting as it may be to ignore special interest groups as distractions from your real work, to do so can be very risky. Instead, you need to identify emerging special interest groups, understand their motivations and concerns, build relationships, respond to legitimate concerns and generally manage this kind of societal pressure. And since many of these battles will take place in the court of public opinion rather than in a more structured legal setting, this is probably more like a game of chess than anything else. You always need to be looking a few moves ahead and positioning yourself rather than responding to the potshots they are taking.
The New Rules of the Game
From a business manager’s perspective, the rules of the game have changed. Nowadays, the new facts of corporate life are:
Nothing is off-limits to special interest groups They will be interested in every aspect of your business model from the natural resources you consume to the amount you pay entry-level workers. If you are out of step with public opinion in any area at all, sooner or later it will get publicized far and wide. Don’t think you can hide embarrassing facts away in a foreign subsidiary or elsewhere, because it will most likely come back to bite you at the worst possible moment.
Transparency is a fact of life, whether you agree to it or not. At one time, the media was reasonably selective about what it covered. Today, anyone anywhere can start a blog dedicated to your corporate shortcomings. You’re far better off avoiding doing anything you would be embarrassed about if it came to the public’s attention.
Laws and the courts are always behind rather than in front of public opinion, so don’t try to justify bad actions by saying they comply with all applicable laws. That’s all well and fine, but people will still expect you to be doing more. Legal technicalities just aren’t going to be much help. You’d better be obeying the spirit of the law and not just its more narrow letter-of-the-law interpretation.
Don’t automatically dismiss government intervention as a negative thing because there will be times and circumstances where the government action will be much more moderate than what special interest groups are suggesting. It still makes sense to build sound federal, state and local government relationships.
Never forget the power of hedge funds and other Wall Street entities who can back up what they want with huge pools of capital and sophisticated analysis. Make sure they understand what you’re doing and why. If you fail to do this, they have the power to force you to do some uncomfortable things.
Distinguish what legitimate issues are just starting to emerge and take a proactive approach rather than avoiding them and hoping they will go away. Develop some internal mechanisms that will bring emerging issues to your attention early on while they are on the fringe so you still have time to think about possible ways to handle the issue. If you wait until the mainstream media gets on the bandwagon, it may be too late. A simple way to do this is by spending a few hours on a regular basis with people who come from a wide variety of backgrounds rather than businesspeople.
Know-How
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