- Covid-19 forced companies to redraw the strategic roadmap, strengthen balance sheets, conduct stress testing processes and refocus on
technology in the past two years. - In 2022, geopolitics forced companies to reassess options as supply chain disruptions and economic shifts led to higher commodity prices and high inflation.
- As we move forward, geopolitical rifts will widen and nationalistic sentiments will continue to grow around the world.
The two fast-paced disruptions come at a time when businesses have already faced the impact of technology, its impact on consumer behavior, increasing insurgent competition and resulting obsolescence.
As we move forward, geopolitical rifts will widen and nationalistic sentiments will continue to grow around the world. It may not lead to another world war, but countries around the world may take sides in some of those events. It will lead to the redrawing of trade blockades and also the emergence of new geographical frameworks for bilateral cooperation, based on mutual interest.
This poses enormous challenges and risks for global companies as they try to balance the interests of the countries in which they operate, the countries where they are headquartered and the stakeholders they represent.
As trade blocks and new state-level alliances tie together, companies are also rethinking markets and partnerships from a strategic lens.
As geopolitics can have potential impacts on the lives and livelihoods of a large community, companies will now have the added responsibility to look beyond their stakeholders and become the force for good overall.
The world has changed dramatically since the pandemic, and companies need to align their efforts in the field with their larger purpose, which must be values-driven. Any misalignment can potentially lead to a reputation hit.
Rise of reputation in managing companies
Recent geopolitical issues highlight a very different trend in how companies approach their business. While shareholder capitalism previously determined the approach of companies, it was stakeholder capitalism that became firmly established in 2022. It is a development that breaks away from short-term thinking and aligns with long-term sustainable value creation that puts significantly more emphasis on brand reputation.
It would be good to understand why. A consumer is now more informed and makes a decision about buying a product based on its core story and track record in sustainability. Likewise, an employee also chooses to work in a company that aligns with his own image of what a responsible company should do. Since employees are a company’s biggest brand ambassadors, CEOs will ignore that at their peril. And this consideration extends to all stakeholders.
The outcome – reputation and communication as fundamental pillars for building resilience in disruptive times – will remain the focus.
Building and communicating a value-driven brand story is crucial during disruption
It is crucial to outline the company’s vision and ensure that it aligns with the way it does business in the field. With geopolitics emerging as one of the biggest risks facing global businesses, companies have a responsibility to engage more with local stakeholders and also build deeper relationships with governments. The goodwill it generates will thwart unexpected geopolitical developments in a VUCA world, potentially damaging.
The power to imagine some of these issues is invaluable. It is therefore important for companies to stress test the reputational risk plan for emerging issues. Global companies sometimes need to take a stand too. Not only on social and sustainability issues, but also on geopolitics, where lives and livelihoods are at stake. To build a resilient reputation, it is now imperative for companies to have a clear, values-based story, effectively communicated to all its stakeholders.
Shubham Mukherjee is a communications strategist and reputation architect.
Contents