CEOs Must Embrace Political Savvy Amidst Increasing Government Intervention in Business
Corporate Leaders Should End Political Outsourcing
By Gautam Mukunda / Forbes
Today's business landscape is no longer the same as it was a decade ago. With political crises like the Israel-Iran War, the Trump tariffs, the Russian invasion of Ukraine, and the COVID-19 pandemic, it's clear that government actions can dramatically impact the economy. And with the rise of politicians like Bernie Sanders, Alexandria Ocasio-Cortez, and Elizabeth Warren, it's evident that business leaders can no longer ignore politics.
Many US CEOs have traditionally delegated their dealings with government and international relations to lobbyists, tasked with pushing for lower taxes and deregulation. But those days are long gone. Now, a successful CEO needs to be hands-on when it comes to questions of government and politics.
Take the tariffs imposed by Trump's administration, for example. While Trump's support for tariffs might have been a consistent political position, many companies were caught off guard, causing significant stock market drops. On the flip side, politically savvy companies like Apple saw an opportunity and moved part of their iPhone production from China to India, safeguarding against the continuing deterioration of the relationship between the two countries even before Trump returned to office.
But why were so many US companies caught off guard by the tariffs and the subsequent tensions between the US and China? It seems that US business has been trapped in an outdated political paradigm—one that assumes a government deferring to private sector interests with limited intervention. In reality, the 2008 financial crisis and the rise of new political forces like Sanders, Warren, and Ocasio-Cortez have shattered this paradigm, making it clear that the business world must adapt.
So, what can be done? universities, boards, and CEOs themselves need to adapt to this new reality. Business schools need to make politics just as central to their curriculum as every other mission-critical skill. Boards need political sophistication within their own ranks and to make it a key part of their evaluations of future chief executives. Meanwhile, CEOs must move up the learning curve fast. The political world is not waiting for them anymore.
Here are a few approaches that can help business leaders gain the political savvy they need to succeed in today's environment:
- Engaging in Experiential Learning with Policymakers: Programs like the Carson Scholars at Michigan Ross immerse future leaders in the public policy process by facilitating direct interactions with policymakers, senators, regulators, lobbyists, and policy advocates.
- Integrating Political Leadership Discussions in Executive Programs: Executive leadership programs, such as Yale’s Global Executive Leadership Program, incorporate substantive discussions about political leadership and current events, broadening CEOs' perspectives on different governing approaches and their implications for business and markets.
- mastering Organizational and External Political Dynamics: Business training can include mastering organizational and external political dynamics, such as stakeholder power mapping, influence techniques, and navigating office politics ethically and effectively. Courses like Udemy’s Office Politics Mastery focus on such skills, which are critical for executives aiming to secure support for initiatives, defuse conflicts, and build alliances within and outside their organizations.
- Understanding Economic Policy Context: Given the complexity of fiscal policies influenced by political pressures—like government spending priorities, debt constraints, and trade tensions—executives benefit from training that explains macroeconomic trends and the political drivers behind them.
- Training on Operating at the Political Interface: Specialized courses focused on political awareness prepare executives to effectively interact with elected officials and public institutions, enabling them to navigate political complexities, frame business interests persuasively, and build constructive government relationships crucial to business success.
In conclusion, by combining experiential exposure to policy environments, executive education integrating political and economic analysis, skill-building in influence and political navigation, and specialized political interface training, businesses can prepare future chief executives to lead effectively in an environment where government actions significantly shape global economics. This strategic political literacy will enable them to anticipate government moves, engage proactively, and secure a competitive advantage for their organizations.
- In the evolving business landscape, understanding politics is crucial for CEOs, given the influential role of government actions, as shown by events like the Trump tariffs and the Israel-Iran War. (finance, business, politics)
- To succeed in today's world, CEOs need to adapt by incorporating political skills in their repertoire, including engaging with policymakers, mastering organizational and external political dynamics, and training on operating at the political interface. (business, politics, general-news)
