Weekly Business Insights from Top Ten Business Magazines | Week 307 | Shaping Section | 1

Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since September 2017 | Week 307 | July 28-August 3, 2023

How to run a business in a dangerous and disorderly world

The Economist | July 27, 2023

Listen to the Extractive Summary of the Article

Chief executives have long had to be contortionists, balancing the needs of employees, suppliers, and above all shareholders while staying within the limits set by governments. But the twisting and stretching is now more fiendish than ever. The world is becoming dangerous and disorderly as governments try to manipulate corporate behaviour. Global companies and their bosses find themselves being pulled in all directions.

Few multinationals are unscathed. As tensions between China and America ratchet up.  This contributes to riping up the unspoken agreement between government and business that held sway in America and much of the West after the 1970s. The rules have changed. Governments are becoming more dirigiste, spurred by fragile supply chains in the pandemic, a more menacing China and the dangers of climate change. 

The real front is broader and the stakes are higher. Governments seem to be everywhere all at once. They want to correct the problems of globalisation by winning back manufacturing jobs. They want to enhance national security by protecting vital technologies. And they want to fight climate change by speeding up decarbonisation.  Each aim is worthy in its own terms. But the means to bring it about are flawed, or involve trade-offs. 

Company CEOs need a new approach for a new age.  Some companies are wrapping themselves in the flag, so as to become national champions. That has long been the norm in places like China and India, but it is heading West.  Others hope that by keeping under the radar, they will avoid political flak.  Yet both of these strategies could easily go wrong. Patriotic cheerleading is a problem when you do business elsewhere in the world. And what the boss may see as a stealthy below-the-radar strategy can look to others like sticking your head in the sand. 

What to do? In a fractious world, businesses cannot hide from politics and geopolitics. But the lesson of the wokelash is that outspokenness can backfire. When deciding whether to speak up, bosses of global firms should use long-term shareholder value as their lodestar. The more directly what they say affects their business, the more credibility they have and the less risk of appearing a fraud or a hypocrite.

3 key takeaways from the article

1. Chief executives have long had to be contortionists, balancing the needs of employees, suppliers, and above all shareholders while staying within the limits set by governments. But the twisting and stretching is now more fiendish than ever. 
2. The world is becoming dangerous and disorderly as governments try to manipulate corporate behaviour to pursue their agenda of winning back manufacturing jobs, enhance national security and their fight against climate change. Global companies and their bosses find themselves being pulled in all directions.
3. What to do? When deciding whether to speak up, bosses of global firms should use long-term shareholder value as their lodestar. The more directly what they say affects their business, the more credibility they have and the less risk of appearing a fraud or a hypocrite.

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Topics:  Globalization, Protectionism, National Security