Adapting to geopolitical flux Here are some of the key attributes required for those who are looking to position their companies advantageously during times of geopolitical flux. • Scanning: To understand the global landscape and assess where friction may arise, managers need to figure out how to gather baseline information. What are the trends in important markets? What are the relevant events and policy actions that have consequences for the future of the business? What opportunities might exist during times of flux?
In this light, today’s managers simply cannot afford to ignore the externalities of their business decisions. They have to understand corporate diplomacy and take on different tasks. Indeed, a 2024 McKinsey study found that geopolitical instability tops the list of concerns for global business leaders. Increasingly, managers must scan the environment, gather information and work with government stakeholders. They have to plan for a different type of project team and perhaps different metrics to gauge success. Here, it is interesting to note, as recently reported by Fortune , that companies now set up teams to track political developments so that they can present leadership with options quickly, as and when required. The problem is that not many managers are confident in their ability to navigate the geopolitical landscape. In the 2000s, aspiring managers flocked to business schools to hone their skills in economics, reading financial statements, analysing investments, selling to old and new customers and managing a distributed and diverse workforce. They didn’t spend much, if any, time thinking about how global politics would impact business. Today, as that era’s business students come of age in the corporate and investment worlds, the landscape is vastly different and unfamiliar, with global politics fundamentally transforming the business world. As reported by The Economist in 2023, Canadian Prime Minister Mark Carney noted that the world is at a “moment… where the accepted forces and policies that have been in place virtually all my adult life are changing”. Building corporate diplomacy skills Broadly, corporate diplomacy is about building reputations and relationships with external stakeholders. It involves developing, leveraging and negotiating with influential external parties to create or sustain the company’s strategic objectives. In the context of navigating geopolitical flux, managers must build competencies in dealing with domestic and/or foreign governments, regulators, interest groups and other civil society members. Corporate diplomacy, therefore, involves two principal competency areas. The first is about understanding the intricate relationship between geopolitics and the success of a manager’s company, while the second is about ensuring their company has the “social licence to operate”. The skills needed by managers in each of these areas are detailed opposite.
Two kinds of sources are useful in gathering such information. The first type is former diplomats, senior civil servants and politicians, whose personal contacts and political antennae are valuable to companies. The second type is professional analysts, who rely less on contacts and experience and more on data and analysis. Analysts with knowledge of the history, politics, economics and social factors of a region could complement this with data from government reports, press accounts, company filings, annual reports, blogs and social media. They then forecast how geopolitical factors could influence the global landscape. • Personalising: Not every geopolitical event will have the same impact on all companies. While geopolitical analysis and forecasting provide a starting point, managers must determine which aspects are relevant for their business, as well as how. This requires domain expertise, familiarity with the firm’s operations and strong internal ties.
28 Business Impact • ISSUE 5 • 2025
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