The Commander in CEO

A recent joint document by consulting firms Eurasia Group and KMPG concludes, amongst many things, that we need to recognise that “politics influences the business environment more than it has for decades” and that “global companies are assumed political entities and CEOs de-facto political players.” These, they argue, are key arguments to propose the need for international firms to have CEOs operate as Chief Geopolitical Officers, and establish the corresponding capacities, so company structures not only effectively navigate a changing business environment, but also successfully face up to geopolitical opportunities and challenges.

Of course, the idea of the private sector taking advantage of political shifts at domestic and international levels, to safeguard their own interests and objectives, is not new. Political analysts have long utilised this to obtain opportunities to provide consulting services at a variety of levels. But the role of international and global corporations has changed. They have become political actors that maintain political agendas while also representing the largest economic entities. After all, lest we forget that in 2017 69 of the top one 100 wealthiest economic entities were corporations, not countries.

Not only are corporations key global economic players, with increasingly undetachable political agendas. We must also acknowledge the existence of a revolving door between CEOs and top political appointments in developed and developing countries. Whether we look at Donald Trump in the United States (not the only one, remember Hoover, Truman and Bush), Sebastián Piñera in Chile or Mauricio Macri in Argentina, it is undeniable that top business roles are seen as stepping-stones to political careers, and therefore the public will expect a CEO to behave like a politician, even when he is not holding a government position.

To this we must add the change in the pace of global politics. While it’s true that some political processes still play out over months and years of negotiations (I am looking at you, Mercosur-EU deal), today we increasingly see politics move to the beat set by social media, whether via viral content, expediting key global geopolitical events, or via a late night presidential tweet. A clear example of this are Trump’s tweets on migration and tariffs on Mexico, which preceded the official White House statement in late May 2019 and caused US stock futures and global stock markets (including the shares of Asian and European automakers) to tumble. Traditional pre-social media responses like “no comment” or “our company does not take political positions” have now become obsolete. Business leaders are expected to respond in accordance to the new rules: rapidly and in an informed manner, in accordance to their well understood role in domestic, regional and global politics.

Of course, the growing role of corporations, as well as the change in political pace brought about by social media, are not the only elements of changing world dynamics. The international system is going through a complex transition with high levels of uncertainty and fast transformations, as well as with shifts that involve geoeconomic and geopolitical reconfigurations at the global level. We are witnessing a crisis of the globalisation process and of global governance and, particularly, of the hegemonic model that sustained them. Therefore, we had better be prepared to face new seas of uncertainty, challenges and unexpected opportunities. As Peter Katzenstein and Lucia A. Seybert argue in their book Protean Power: Exploring the Uncertain and Unexpected in World Politics, power is not necessarily based on an actors’ ability to exercise control in situations of calculable risk – it is based on the actors’ agility, allowing them to adapt to situations of uncertainty.

In this context of global instability, the capabilities needed to navigate turbulent weather become as important as those of other world leaders holding public office. Companies should then understand that their CEOs are Chief Geopolitical Officers, because the old traditional government/public affairs teams just won’t cut it anymore. They cannot be the face of the corporation in times of emergency. Navigating the volatility of an uncertain global dynamic requires the direct involvement of leadership, not just the expertise of technical teams. And this leadership must not only assume its role in full view of the public, but must also be proactive in generating the internal conditions of their own companies so they can adapt to and exploit uncertainty. This can be done not only via establishing geopolitical forecasting capabilities, but also by analyzing and understanding how their business model can be thrown off track by geopolitical events, how resilient the company may be in the face of geopolitical turbulence that may lead to the loss of one or more key clients, or simply how agile is the structure to identify, adapt and overcome to new geopolitical challenges.