Commentary: Politics used to create the stability needed for business growth. That has now changed

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While 2020 is the year of COVID-19, it may also coincide with that period in economic history when politics became the greatest risk for global ...

There are several fresh examples. The UK government has been blamed for its indecisiveness in handling the COVID-19 crisis, which has impacted its GDP as the reopening of many businesses have consequently been delayed.The US is ripping itself into two incompatible factions that will not be reconciled by an election, which will inevitably hurt business and investor confidence.President Donald Trump seems determined to take down institutions like the World Trade Organization .

Not since the Cold War have politicians been so interventionist, when trading with partners behind the “Iron Curtain” was outlawed. From US sanctions on Iran to coronavirus policies that make or break the fortunes of many firms, government intervention is on the rise. This new landscape challenges company leaders who rose through the corporate ranks in a free trade environment where politics created the stability that enabled business growth for decades.They are unprepared for the current reality and uncertainty, which undermines their effectiveness. Leaders need to build geopolitics into their corporate strategy, in three important ways.

The trade war with China is just one way that US President Donald Trump disrupted the global economy. Integration capabilities will thus allow companies to operate as one network, despite rising “Chinese walls” between countries. These capabilities will include diplomatic skills, as well as cultural and historical intelligence – all of which may entail companies investing in their government relations and public policy functions.A new mindset that is less-focussed on operational bottlenecks and more considerate of stakeholders is also required.

 

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