Understanding Business Diplomacy
by Margery Kraus, President and CEO, APCO Worldwide
As featured in Foreign Policy Magazine
January/February 2006
In today’s global marketplace, business is invariably affected by the political environment in which it operates – an environment shaped by the interplay among governments, consumers, nongovernmental organizations and the media. Understanding this interplay can mean the difference between success and failure in the marketplace.
But all too often, business decision-makers are out of touch with what is percolating below the surface in countries and regions where they operate. They are unprepared for shifting landscapes resulting from elections, coups, civil wars or other political events. Companies caught off guard risk short-term reversals and disruptions; in extreme instances, they can fall victim to nationalization of assets and loss of capital investments.
Around the world, governments train their professional diplomats to help them prepare for and negotiate through regulatory, legislative and administrative changes that affect their interests. We believe the “tools of diplomacy” can also be used by the business community.
Business diplomacy is the art of thinking strategically about the range of influences within an operational context and moving to protect commercial interests. It starts with understanding the universe of political possibilities and analyzing their potential impact on corporate assets and operations. It starts with thinking strategically about how foreign policy could impact a company’s interests – and, with the benefit of that perspective, undertaking the necessary outreach and action to protect those interests.
Business diplomacy is about defending interests and building opportunity. It’s thinking ahead, anticipating potential outcomes and taking the steps necessary to protect interests. Business diplomacy involves skillful analysis of the context within which a commercial entity operates, combined with astute networking and relationship building with major players and influencers – key parliamentarians, political opposition, media elite and nongovernmental organizations.
The art of proactive diplomacy is no longer the unique domain of governments. It is the practical necessity – and opportunity – of the business community as well.
APCO Worldwide specializes in providing high-level business diplomacy services to clients. APCO staff, with a wide range of contacts and experience, operates every day at the nexus of business, government and the media. We leverage our expertise to help companies meet the challenges of doing business in a complex global environment. We provide strategic advice on market entry, corporate positioning, economic policy, energy, corporate social responsibility and governmental relations. We assist clients in designing proactive strategies and help pre-position them to withstand a variety of influences and consequences.
How a company plans for and engages in political issues that affect their business can provide the critical difference between success and failure. Investing in sound business diplomacy can help build the support needed to prevent costly commercial disruptions, reversals and losses, and contribute to a healthy return on investment.