It does not require a CFO to know that the financial costs of a crisis can be much greater than the resources needed to proactively manage issues before they do damage to the business.
Today, the operating environment – economic, political, social – is often changing at a faster pace than a large business can keep up with. The flow of issues across borders and the integration of global markets means that events anywhere in the world are impacting businesses and the bottom line. External stakeholders, particularly regulators and activist organizations, are exerting greater influence across industries, sometimes in unexpected ways. More and more C-suite executives are recognizing that companies must proactively engage on these fronts through IM to keep up with today’s fast-paced world. But why do global corporations so often stumble in trying to incorporate IM into their operations?
Simply put, most corporations often avoid the task of developing their own IM capabilities and processes that fit their specific needs, company culture, and global footprint.
With the sheer volume and variety of issues global companies need to manage these days, IM may seem like a necessary and critical function, but it is the perceived overwhelming nature of the task on a global scale that can in fact orphan it from day-to-day business operations. This is why more often than not businesses end up firefighting than fire preventing.
But it doesn’t have to be that way.
What’s the real challenge?
In our experience working with a variety of global clients on issues and risk management, there are three obstacles tied to business goals which prevent companies from institutionalizing and operating effective and efficient issues management:
- Sourcing Information: Companies flounder trying to monitor the entire world for meaningful information inputs. It’s easy to become overwhelmed at this stage, hard to measure outcomes and effectiveness, and managers are prone to Monday morning quarterback missed signals
- Prioritizing Information: Monitoring quickly turns into a data collection treadmill, information overload, and substantial time reviewing and managing information rather than taking action on it
- Sharing Information: Key findings are not integrated into ongoing business planning often siloed within a narrow set of functions
So how should these challenges be tackled? Below we share our philosophy in making your organization’s IM processes efficient and effective.
Stop Trying to Capture It All
“You can’t boil the ocean” is the adage that cautions not to take on more than can be accomplished, and the same can be said for IM in terms of having the right inputs and knowing what to do with the information when you have it.
In our careers, we have spoken with many corporations who are looking to set up a full-scale issue-monitoring program encompassing all of their operations and markets. Business leaders want to ensure that they simply “know what’s going on” in their markets and will not be caught off guard by a policy decision that has been brewing, a shift in social opinion, or changes in the political winds.
Companies can and should use external resources such as trade associations, industry newsletters and consultancies as their “eyes and ears” to collect and interpret important intelligence in the field. But often the most valuable information can come from within the businesses and the daily interaction employees have with external stakeholders. Fully utilizing internal resources is often overlooked by organizations and it’s a major mistake.
In addition to assessing information sources, organizations need to think deeply about the type of information they are seeking to collect based on areas of the most significant impact to them.
Four questions can help get us there:
If we understand our top business drivers, critical assets, known and potential threats, and most important or vulnerable relationships, we can then target our monitoring to those areas where we can proactively influence issues and have meaningful impact.
Organize – and Prioritize – for Action
Capturing information from within and combining it with external inputs can be incredibly valuable in validating important issues and closing gaps. Effectively managing and communicating this information, however, is the only way to unlock its value to the business. This requires a system of filters, priorities and processes that works for your company and its culture.
Information flow is often THE challenge and a major vulnerability in itself, but a system designed to encourage information sharing utilizing own resources can be the best tool to help identify and manage issues before they become a crisis.
In terms of filtering and reporting issues, a starting point is looking at issues in three categories or “buckets” of risks and opportunities relevant to the business, its operations and license to operate. These are:
- Reputational: the classic view of IM in a PR context, looking at the issues that impact public perception and expectations of a company, as well as act as a company’s “insurance policy” when needed
- Operational: the “nuts ‘n bolts” of IM that are an important part of a holistic enterprise-wide approach to risk management. Whether it’s changes to food labelling guidelines or mandated energy performance standards for electronics, regulatory and policy issues can be slow-burning but ignite quickly and directly impact a company’s ability to innovate and operate
- Macro-environmental: the lofty science of political risk that once seemed confined to analysts and board rooms has now become a staple in modern IM in a dynamic and often unstable world
These categories not only help us to better account for what matters to the business and aid in reporting, but they also broaden the traditional sphere of coverage to include issues and forces influencing the business that emanate from outside the industry and traditional stakeholders. These include factors influencing strategy and competitiveness, not just contentious issues affecting reputation and public profile. Developments and trends across policy, regulation, social issues, and economics with both direct and indirect impact to the corporation are all important. Think Brexit, the rise of global populism and protectionism, and increased regulation on information and technology.
A clear system to categorize and organize this information connected to the bottom line for the business, accompanied by some simple tools, enables better sharing and reporting. Corporate managers and frontline employees across business units and around the world need to be on the same page on what matters for the organization and know what issues should be captured and shared. Methods of reporting and reporting criteria are consistent.
Where we see companies most commonly struggle to institutionalize an effective issues management system is in the failure to integrate IM across the corporation and beyond those functional departments that take the lead.
The underlying challenge for most companies is breaking the functional and geographic silos to facilitate information sharing across borders, while also ensuring the right information is efficiently communicated upwards to leadership, and that action is taken in a coordinated, integrated manner.
We have observed that companies successfully integrate IM by:
Some Practical Steps Moving Forward
The above outlines some of the common obstacles to effective global IM and useful approaches to tackling them. But where to begin? For organizations who have created a successful IM process it has been a journey, and we’ve identified some of the key steps on this path to an embedded IM plan that yields results:
- Bring a cross functional team together to train and raise awareness on issues management and discuss the internal and external challenges to taking a more proactive approach to managing and influencing the external environment. Consider several scenario-based exercises to provide concrete examples of how the organization would identify and act upon different real-world issues.
- Assess current issues and categorize across three buckets: reputational, operational, and macro-environmental. Determine a baseline understanding of probability and impact to the company. Designate the issues with which the company will fully engage, seek to mitigate downside risks, selectively monitor with identified thresholds for action, or periodically reassess. Establish a cross-functional team to own and manage each issue.
- Incorporate issue management into strategic planning efforts. Issue strategies should routinely support strategic planning and forecasting. In future planning meetings, take 10 minutes to brainstorm external factors and potential developments that may increase risk or change the assumptions in our plans. Discuss steps to include into planning that involve both offensive engagement and defensive preparedness around these forces of influence and uncertainty external to the firm.
- Develop clear and objective thresholds for local managers to report issues to the corporate level. A list of ~10 criteria based on potential consequences for the organization provides early warning and puts the company in a position to get ahead and act on issues before they have a material impact. It also removes the hazard of individual judgement in deciding what to escalate up the management chain.
Re-imagining issues management is a process in itself that cannot be done overnight, but it is an important exercise to conduct for ensuring an efficient and relevant IM program that supports your organization’s global growth.
Contact us to find out how we can get you started on this journey.
Larry Cristini, Senior Advisor | Interel
Larry has more than 15 years’ experience advising executive teams on anticipating and managing strategic risks.
As Director of Corporate Advisory Services at the geopolitical consultancy Eurasia Group, Larry helped business leaders navigate political developments and integrate political risk into corporate planning and strategy. Prior to Eurasia Group, Larry was a senior consultant in the Reputational Risk and Crisis Management practice at Marsh Inc. where he developed preparedness programs for clients across a variety of sectors. He headed the group’s scenario planning and crisis simulations team, and served on a 24/7 response team, providing real-time support.
Larry has lectured on political risk and crisis management at the School of Advanced International Studies at Johns Hopkins University and The George Washington University in Washington DC. He has an MBA from George Washington and BA in political science from Providence College.
Jason C. Jarrell, Head of Global Practice | Interel
Jason has extensive experience advising senior-level corporate executives on global public affairs strategy development and working with organizations to build or strengthen international capacity. His international background crosses the private and public sectors, with more than fifteen years of experience in corporate public affairs, diplomacy, trade, knowledge management and executive education.
Before joining Interel, Jason headed the international practice at the Public Affairs Council in Washington where he led executive programming and research on international public affairs management. He has also held senior-level consulting positions overseas, developing and leading strategic communications and government relations programs across multiple markets in Eastern Europe, and Central Asia for a diverse client list including global blue-chips and international non-profit advocacy groups.
Earlier in his career Jason worked for international public affairs in Europe, the Anglo-Russian oil & gas company TNK-BP, and the U.S. Department of State. Jason has an MPA and MAIS from the University of Washington and has lectured on foreign policy and international public affairs.