Using Strategic Intelligence for Growth in a Polarized World

Using Strategic Intelligence for Growth in a Polarized World

We live in a time of increasing polarity when it comes to geopolitics: Both domestic and international issues are viewed through lenses of culture, experience, history, and more, and we see the challenges of trying to appease the public when it comes to the strategic choices made as a business. 

Of course, in countries like the United States, where the political divide is interwoven into the  cultural identity, often being tied to “who I am” rather than just, “this is how I vote”, it is increasingly challenging for businesses to make the right choices. Polarity is proving a material business risk,with recent examples like the backlash against Target in 2023 for selling Pride merchandise, or that of Bud Light and Dylan Mulvaney in 2023 as well.

Sadly, it seems many businesses are only approaching these challenges by looking in the rear-view mirror. They begin to examine things at the tail end of the chain of events, whether a PR crisis, political backlash or strategic misstep, asking “What just happened?”. This can be a cultural outcome of being in a protectionist and defensive posture, failing to look at the horizon and planning for it well. It can also be an outcome of being corporately comfortable. 

Part of corporate comfort relates to decision makers, as it is getting harder and harder for leaders to cope with the volume of information and decisions that are brought before them, and it is understandable that they are divorcing themselves or embracing cognitive dissonance to cope with the mental load of what is asked and required of them. That said, a reactionary posture is not optimal for the business and its stakeholders and there is a better way: understand what is here, understand what is coming and prepare for the coming future. Plus, with good systems in place, your decision load will be lighter, and far less reactionary. This is the opportunity of using strategic intelligence and strategic thinking to create a better, optimal business operating environment.

Ultimately, this is about creating resilience for your organization. As Deloitte positions it,

“Organizational resilience is the capability of an organization to be prepared for disruption and to adapt and thrive in a changing environment. It isn’t purely defensive in orientation. It is also progressive, building the capacity for agility, adaptation, learning, and regeneration to ensure that organizations are able to deal with more complex and severe events and be fit for the future.”

From my own work, one client, a top firm in fast moving consumer goods, was evaluating a high-risk country for potential market entry. Risks for this firm included geopolitical stability due to shifting powers within the political system, as well as the intersection of that risk with an emerging economy, among others. Based on the work I did with my colleagues (as well as other work), the firm decided to enter the market and has established themselves to a significant consumer base: given the company’s resources, they have promise and opportunity to disrupt incumbent players, as well as opportunity to drive new adoption of products and shape consumer consumption of their goods. While still grappling with the “what ifs?” of a high-risk country, the company decided to move forward, based on all the information available, as well as considering the potential future that was possible: in the time since the move, some of the external factors are more favourable, while some are more challenging, yet, my client saw more signal than noise. It doesn’t mean they will never go unscathed, yet, if they create forward-looking plans based on the current and emerging environment, they are well situated to handle the future, and that’s a lesson all businesses need to consider.

It is that forward looking posture we need today. Whether you’re framing this as strategic foresight, futures, strategic intelligence, anticipatory systems, competitive intelligence or in some other cladding, we’re talking about “How do we create that future we want?”, “How can businesses begin to apply more of a strategic intelligence lens to their activities?”, and, “What kind of business environment can be created by considering the possibilities?” 

In terms of process, there are several elements to do and consider. 

  1. Zoom out to understand
  2. Map it out: What factors, drivers, constraints or paradigms are attached to your critical assumptions?
  3. Creating Systems for Success
  4. Ratifying Corporate Political Responsibility versus possible futures: Using “what if?” thinking to imagine the future
  5. How can you impact the political environment? Contextualize and prioritize possible futures based on constraints, including the political environment.

Zoom out to understand

While day-to-day operations are important, there is arguably no greater opportunity than to pause, and zoom out to understand the larger macro environment and its relationship vis-à-vis your organization. Whether you use an environmental scan or some other tool as a starting point, the primary focus is to ensure you lay out clearly where you are, what’s happening in your external and internal environments, and to ensure you do not have blindspots or areas where you are missing context.

Fundamental to this viewpoint is understanding the core assumptions of your business. While there are other factors that will deserve consideration, these core assumptions need to be plain, first to build resilience and then to build opportunity.

Understanding the implications of this, as well as what your contingency plans are (and the implications and opportunity costs of those plans themselves), can help prepare you to be a more resilient and competitive enterprise. 

One further element of zooming out is to look at current issues and problems as well: these may be attached (or not) to your core assumptions within the business. To help with the approach, as Dwight D. Eisenhower stated, “If a problem cannot be solved, enlarge it.”

Map it out

To map out your core assumptions, consider every aspect of the business, and bring in functional team members to help shape the exercise. Tools like Wardley Maps, Cynefin (or even the two used together) or others may be useful for this effort. Where resources are limited, you may have to prioritize the most critical elements of the business first: we cannot boil the ocean. Through this activity, we are looking to understand the core assumptions and the factors, drivers, constraints or paradigms connected to them. 

Interestingly, recent research from the Capital+Constitution (C+C) project shows there may be some blindspots in core assumptions when it comes to the United States. The research found most respondents take political risk into account in making investment allocation decisions when focused outside the United States, but as many as 40% reported they typically do not consider political risk at all when deciding about investments in the U.S.: that’s a potentially significant blindspot, laden with assumptions that could be quite problematic. Looking at illustrative issues like the 2018 U.S. steel tariffs, which then grew some companies, while hampering many more, shows the importance of not underestimating political risk of the U.S.

Another example issue that required mapping might be sitting on your bathroom countertop: In 2019, Refinery 29 published a piece on mica and the use of child labour in the production of the sparkly element of many makeup products. Two example firms using the material made vastly different decisions: Lush Cosmetics, in response to concerns about its supply chain that emerged in 2014, made a push towards synthetic mica, and announced its products were mica free in 2018. The company made a push aligned with their values: “For us, it was to do with the sourcing practises behind natural mica. It became clear that we couldn’t get the transparency that we wanted in our natural mica supply chains, so we decided synthetic mica was a better and more ethical option for us.”

On the other end of the spectrum, L’Oréal said in an official statement, “We believe that discontinuing the use of Indian mica would further weaken the local situation…” and that “L’Oréal is committed to the continued sourcing [of] natural mica from India in order to allow already impoverished communities to keep generating income. To do so, L’Oréal ensures traceability and transparency of its whole supply chain to guarantee fair and responsible mica.” The brand says it only buys from suppliers who source from independently-verified, gated mines where children are not present.       

For L’Oreal and Lush Cosmetics, they clearly had core assumptions regarding child labour in the production of their mica products, as well as the political ramifications to their decisions, both in India and otherwise. To their credit, each went through and examined – through their lens of what the organization deemed to be right – and made decisions on that basis. As of 2023, L’Oreal continues to source mica from India, as well as the U.S.

Whether or not he would deem L’Oreal or Lush as being “right” is unknown, on this front, Edward Freeman offers the following:

“The 21st Century is one of “Managing for Stakeholders.” The task of executives is to create as much value as possible for stakeholders without resorting to tradeoffs. Great companies endure because they manage to get stakeholder interests aligned in the same direction.”                                                                                 

The tradeoffs in question are a comprehensive evaluation, and involve an array of external and internal stakeholders across the business, including legal, HR, supply chain, executive leadership, PR, marketing and others, to generate a well-grounded decision in context. As they projected forward on “what if?” and “How could we shape the operating environment, and how might the operating environment shape us, and what implications might come forward as a result?”, it is clear that contextually, they arrived at two very different places.

While there are a litany of frameworks and tools useful for walking through exercises like these, one particularly useful asset for decision making on a variety of topics is the model of Risk Response Categories (via Crispin Piney/PMI). An ongoing issue in most jurisdictions of the world is the topic of clean air, and this model has some utility for the discussion. 

According to Harvard research, clean air can improve our cognitive function in the workplace. This is an investment that costs approximately $40/person. This quickly outweighs the cost of absenteeism and presenteeism, especially given improved cognitive and physical outputs, especially over the lifetime of an employee. Additionally, studies also show that clean air has long-term benefits, such as potentially helping to prevent Dementia, and lessen Volatile Organic Compounds (VOCs), which can cause health conditions like cancer. Additionally, it creates greater equity for those who may have compromised immune systems by creating a safer space.

The cost of inaction is also an attack on balance sheets and on equity: According to 2016 research from the OECD, the risk of outdoor air pollution would be 6 to 9 million premature deaths a year by 2060 and cost 1% of global GDP – around USD 2.6 trillion annually – as a result of sick days, medical bills and reduced agricultural output, unless action is taken. In Britain alone, in a 2020 report, it was found that by mitigating 17,000 annual deaths attributable to poor air quality, the U.K. could gain almost 40,000 productive years, which is estimated to provide a £1 billion economic gain in the first year alone. On average, workers in the U.S. were absent due to illness or injury 2.6% of the time in 2022. By improving conditions for workers, it also can help reduce knock-on impacts of illness, like requiring medicine and hospital visits, which may impact employer benefit costs.

Referring back to the framework, the top row detailing “Mitigate” and “Enhance” are both applicable in this situation. The issue is not “is the air dirty”, but rather, “How dirty is it?” Thankfully, ASHRAE (with standards like Standard 241 and others) can give us guidelines, among other organizations. Certain jurisdictions, including Belgium, are also updating laws to give employers guidance on the issue. 

With any issue, there are leading bodies, emerging best practices and laws and other mechanisms we can use to help us gain context on new or emerging topics, especially in areas where we may not have internal expertise. This is also useful to help us identify external experts, too, as they may be involved in the creation and work of these efforts. This is where knowledge translation efforts are important, as contextualization of this knowledge and bolting it (as appropriate) to our strategic efforts is needed.

When it comes to clean air, moving forward with improvements to improve air quality will have a positive net result on employee health and safety: that’s very pro business, and arguably, should be close to apolitical. 

Creating Systems for Success

Organizations need to also evaluate what systems and processes they will use to gather insights and make decisions: that is, what is going to be your intelligence and data system, and how will it work?

In a time with more data than ever being produced, from a variety of sources, creating systems that work within the organization are paramount, including how we consider political risk and responsibility. 

Beginning with “what matters?” and “what will matter” is a great frame. In the competitive intelligence world, we often use the terms “key intelligence topics” (higher level) and “key intelligence questions” (the specifics). Often, there is information already in your organization, and it is methods of gathering, organizing and analyzing data that matter. There is also a lot of exciting technology emerging that can help, but it’s important to nail the process first, and then add technology to speed the process: digital transformations are notoriously challenging, even in the best circumstances. Examples like that from Unilever, which deals with data sources, actions, innovation inputs and organizational capabilities provide one example that may serve as useful inspiration for readers.

It is also important to monitor thresholds for risk and opportunity as well, including when it comes to politics. As Condoleezza Rice and Amy Zegart shared in HBR:

“While the probability of a single political risk affecting a company’s business in a particular city tomorrow may be low, the probability that over time some political risk somewhere in the world will significantly affect its business is surprisingly high. Add up a string of rare events, and you’ll find the overall incidence is not so rare after all.”

As your firm watches thresholds, considering your direct and indirect business interests and their political environments through mechanisms like the Global Conflict Risk Index may be worthwhile. Further on the political strategy front, Michel Ferrary offers four postures that can be associated with stakeholder theory. Of the four, proactive offers a great lens, as it works to “not to be caught off-guard by its stakeholders and studies the stakeholder environment before making decisions (Frooman, 2010)”. Proactive can understand what is likely to come, and be prepared for the potential implications and responses required.

Building in early warning mechanisms can help organizations to be more resilient and not caught flat footed. With an excellent system in place, driven by smart humans working with technology, it enables you to see what is happening now, as well as what is coming. It allows you to prepare for Black Swans and Gray Rhinos alike.

Ratifying Corporate Political Responsibility versus possible futures

Of course, it is naive to suggest there aren’t special interests and political pressures at play to get organizations to make certain choices. Why did Chevrolet kill the electric car in 2003, after all?

The tension here is obvious, and yet, there are easy wins (like clean air) that are clearly more apolitical. It’s impacting operations, and we have agency to impact it, and we’re going to make positive changes to help our stakeholders.

Much of the news in the headlines is complicated and full of polarizing issues. The truth of these situations is leaders must be extremely comfortable and aligned with what their corporate values are (and are not), in order to make informed decisions.

A simple examination of macro trends, especially with how our world is changing, demonstratse the necessity of moving on critical issues and solutions as much as possible.

For instance, look at the topic of heat: Miami, Athens, Phoenix and other major cities around the world have officials in charge of heat, and September 2023 was globally our hottest month ever (so far). You may see in your core assumptions that “our workers can function well for their full shift”, and yet, heat can have a material impact on that. OSHA suggests using a wet-bulb globe temperature metre on site for businesses, and yet, you don’t have to look far to see many examples, often shared on social media, to find stories of workers being impacted by heat. Certain sectors are also more impacted: for instance, agricultural workers are at least 35 times more likely to die of heat than other workers, according to the National Institutes of Health, and there’s no lack of delivery worker videos being aided by homeowners on social media as they’re dealing with dehydration and worse. Heat even kills more than other natural disasters, according to NOAA data.

If we come back to, “Our workers can function well for their full shift”, we begin to see the obvious disconnects with rising heat, that – without correction – may have negative impacts on workers, production, supply chain, and more.

Even for businesses not directly impacted by heat in their operations, the core assumption of “we can get to our clients as needed” is being impacted today; particularly if you’re getting to those clients by plane. Once heat hits a certain temperature on the ground, planes are unable to create enough lift to safely get off the ground, and materials like rubber tires begin to be impacted by melting, and even the runways themselves can suffer structural damage.

Changing the paradigm through innovation is one way to deal with heat: for example, in 2018, the Mercado Central de Pescados – Mercamadrid, one of the largest fish markets in the world, used a coating from Selena Group on its roof, lowering the building temperature by seven degrees Celsius, which lowered cooling costs, reduced losses of cost of goods sold and increased the comfort of the work environment.

Organizations should recognize what opportunities and role they have to play in helping fight heat as a broader problem. The Erb Principles for Corporate Political Responsibility, this can be a helpful filter to help firms understand their opportunity and responsibility to engage authentically.

On the topic of heat, this might include lobbying efforts, increasing investment in green spaces and use of innovative materials like the Mercado Central de Pescados, among other choices.

How can you impact the political environment?

While the sample issues of clean air and heat have a variety of political weight at the current moment, the point here is to convey that thinking about “What if?” can provision ways for us to create paradigm shifts that allow us to shape a better internal and external future: one where businesses can operate profitability and in a sustainable manner. Of course, that doesn’t mean there will not be resistance, especially from companies and industries that recognize a shift in the environment means a material threat to how they do business today. That reality, especially in a lobby-heavy political environment, must be weighed in a firm’s decision making, considering what time, money and resources are available and which battles you will take on as priorities. Short-termism, however, for industries and companies alike, is a dire mistake: if we continue to erode our macro business environments (and therefore, our world), we will not be in business for long. It is imperative to think about how to create business sustainably: that is the only path to having a workable future.

Now is the time to begin to plot and prioritize your top opportunities. Organizations need to watch the operating environment, make sense of it and plot the course that makes sense.

While the agency and influence firms and industry associations may have when it comes to government and lobbying will vary, they do have ability to operate within existing regulatory regimes. Within those regulatory regimes, firms can push for what they want, and while there may be political pushback (especially when stakeholders are negatively impacted), this comes back to using strategic intelligence proactively: engaging with stakeholders before making decisions as appropriate, and then aligning decisions with the strategic priorities and values of the organization. 

Consider what future stakeholders may require of you: issues like climate change show a clear delineation in the cares of the next generations, and if you are taking a long-term view, the customers, stakeholders, and suppliers of tomorrow may judge you on the decisions of today.

Photo by CJ Dayrit on Unsplash