Insights for an Era of Uncertainty
In unstable sociopolitical environments, how can businesses operate justly and effectively through times of conflict?
Guests: Dr. John Katsos, Associate Professor of Business Law and Ethics at the American University of Sharjah and Jason Miklian, Senior researcher at the Center for Development and Environment at the University of Oslo
Hosts: Dottie Schindlinger, Executive Director of the Diligent Institute, and Meghan Day, Senior Director of Board Member Experience for Diligent Corporation
In this episode:
- What’s Driving this Period of Uncertainty? Katsos and Miklian discuss the three confluent trends that contribute to global instability.
- What Strategies Best Mitigate Instability? Katsos ad Miklian break down the three key strategic elements that can best combat instability.
- How can Boards and Companies Implement these Strategies? Katsos and Miklian talk through the best way boards and organizations can act on strategies to mitigate uncertainty and instability.
In this episode of The Corporate Director Podcast, Dr. John Katsos, Associate Professor of Business Law and Ethics at the American University of Sharjah and Jason Miklian, Senior Researcher at the Center for Development and Environment at the University of Oslo take us inside their recent Harvard Business Review article, A New Crisis Playbook for an Uncertain World.
What’s Driving this Period of Uncertainty?
Katsos and Miklian talk through the genesis for their recent research on business operations in conflict zones, a timely topic given the recent Russian invasion of Ukraine and the impact that has on local communities. Miklian summarizes, “What we found academically and on the policy side is that you have companies making tremendous impacts in both areas, but they were largely ignored by scholars. This led us down the path of exploring the challenges that companies face in these difficult places and how do they get through them.”
Their recent article in Harvard Business Review, A New Crisis Playbook for an Uncertain World, breaks down one of the biggest challenges organizations face, particularly in conflict zones: instability. Katsos explains the conditions and trends driving this intense period of uncertainty: “We’re experiencing constant, baseline-level conditions of globalization, climate change, and social inequality that are affecting every business on earth.”
He explains why these issues are driving such intense instability: “This drives uncertainty because all three issues are ramping up at the same time. The crises themselves aren’t new or different, they’re just more widespread and they last longer. Every crisis is global in part because of globalization, but also because climate change and social inequality are already putting stress on every place on earth.”
What Strategies Best Mitigate Instability?
Their article also digs into how companies can best combat the instability that globalization, climate change, and social inequality cause. Katsos and Miklian mention three key strategies: elevating community relationships to true partnerships, looking beyond government authorities for guidance, and making principled, consistent political choices. Tell us a little more about each of these tactics and why they are so important.
Katsos tells us a bit more about each of these tactics and why they are so important: “All three of these strategies work together and build off of one another. It’s all about moving beyond simple corporate social responsibility (CSR) and creating true partnerships with the community. The organization should not exist outside the community or just using it for labor. At every step of growth, the community is providing input. When that happens, the companies end up being way more resilient through uncertainty.”
Miklian expands on the idea of looking beyond government authorities for guidance: “Community is about rethinking the role of business in fragile or difficult societies. This one is about the implementation of that idea. This is particularly important when it comes to foreign firms working in difficult parts of the world. Very often, by relying on just the government for what the company should do or provide, it exacerbates tensions between the company and society.”
Katsos builds off of this: “John: we get the most pushback from companies on the idea of moving beyond governmental authorities to make decisions. There’s been so much talk about companies roles with political choices, especially in the US in the last 18 months. Companies don’t want to take political stands. But, if you have these first two strategies in place, the former stability that led to businesses being able to sit on the political sidelines is falling away. In order to survive, businesses have to take a stand one way or another. They can’t be seen as these apolitical bystanders.
He goes on, “More often than not, everyone understands that everyone has to take a side. Transparency and honesty are key. Even those not on your side will show substantially more respect than if you attempt to sit on the sidelines when those don’t really exist anymore.”
How can Boards and Companies Implement these Strategies?
Miklian discusses best practices for implementing these strategies: “Make the community the true partner with a long term horizon. Everyone has heard that a rising tide lifts all boats, and these strategies can really be win-win. Tt feels obvious. The things that are hard to do are the things companies feel pressured to cut corners on. This scares people on the implementation side when you realize that you can’t control the community. It all comes back to the CEO’s commitment to these principles. Employees look to the CEO for the lead on undertaking these initiatives. Give the employees the space to make progress.”
Katsos adds, “Broaden the scope of who you look to for advice about the company. Using traditional metrics like financial statements and regular reporting is great. ESG regulation and reporting is either here for your organization or coming soon, and a lot of directors have figured that out. But the issues we’ve discussed, globalization, climate change, and social inequality, these things are not going to stabilize any time soon. The crises may change, but they won’t go away.
He goes on, “This becomes the biggest fundamental issue for long-term planning. With instability, long-term, you have to invest in the communities in which you operate. You need a 5-10 year window of a strategic plan, and if the community is not the key partner, you’re sunk. As directors have the conversation with the C-suite, the community needs to be at every single step. You could even consider bringing them onto the board. Everything that the company does that affects the community, they need to have a role in.”
Also in this episode…
Katsos and Miklian discuss the development of their forthcoming book: Ready for War, which is an expansion of their HBR piece. The book will provide a narrative deep dive into how companies are facing crisis, complexity, and conflict and succeeding through it.
Resources from this episode:
- A New Crisis Playbook for an Uncertain World by John Katsos and Jason Miklian
- Don’t Look Up directed by Adam McKay