This piece first appeared on November 1st in Medium
I recently came across a post on LinkedIn urging members to refrain from talking politics on the site. The logic being that political discourse has no place on a social network targeting business professionals. Judging from the number of likes and positive comments, it is a popular view; though one that is seriously myopic. Conventional wisdom holds that business and politics are the oil and water of free markets — they don’t mix. The uncertainties of Brexit in Great Britain and America’s presidential election are evidence of that. But while they may not coalesce, these two worlds regularly collide, and business people who choose to ignore this fact do so at their own peril.
Consider a study out of Harvard University’s School of Business, which concluded that the U.S. political system is the nation’s “single biggest barrier to competitiveness.” Nearly two-thirds of business leaders queried believe the current political environment is obstructing economic growth, and there is general agreement that the federal government “has made little or no progress on our most important economic policy priorities.” Yet concerns such as these are hardly confined to the United States. According to a recent McKinsey and Company survey on globalization, “executives are likelier than ever to believe that geopolitical and domestic political instability will affect global business and their own companies in coming years.” This is the biggest increase in a given trend McKinsey has experienced in more than a decade.
For those who have been paying attention, this should come as no surprise. Most enterprises are, after all, social systems — heterogeneous aggregations of individuals and groups who both influence, and are induced by, each others’ behaviors, as well as their shared environments. As such, they are also apt to be hierarchical. Like Russian nesting dolls, they not only contain smaller subsystems, but are also parts of larger social structures. A company, for example, is an association of people who work together for a common purpose. Its subsystems may include finance, marketing, and human resources departments. At the same time it is a subsystem of an industry that, itself, operates within the context of economic, political, and cultural structures. So companies must be prepared to handle all sorts of disruptions that can emerge on various levels.
If all of this seems complex, that is because it is. Social systems are essentially complex systems, which comprise multiple parts that interact in unplanned and unpredictable ways. This was recently the case when Mars, Incorporated, makers of the candy Skittles, and Italian confectioner Ferrero, which manufactures Tic Tac, took to Twitter after each was, through no fault of its own, abruptly drawn into separate controversies surrounding Donald Trump. Indeed, what may disturb some members of LinkedIn is not the actual clashes between business and politics, but the complexity they engender. Such intricacies can be tough maneuver since they don’t conform to most peoples’ desire for control; nor to their need for clear lines between cause and effect. Consequently, many businesses try to avoid what they cannot readily manage.
The bad news is they may have little choice but to deal with such matters. The impact of politics, particularly the ugly parts, are getting harder to evade. Social media makes it easy for disgruntled citizens to register outrage and rally liked-minded critics around punitive actions. Watchdog groups on both sides of the political spectrum routinely monitor business activity to gauge if firms are toeing their preferred lines. And there is an assortment of mobile apps for keeping tabs on companies, such as BuyPartisan, which enables consumers to analyze manufacturers’ allegiances by scanning the bar codes of products to see to what parties they have donated.
The better news is that recognizing political realities, and at times even embracing them, may not be as onerous as once thought. According to the 2016 Edelman Trust Barometer — an annual audit of institutional credibility — participants believe corporations are more capable than government of keeping up with complex times. Moreover, 80 percent of those surveyed want companies to take the lead in tacking pressing problems. Plus several studiesfrom Drexel University have found that consumers can be quite tolerant of corporate activism — even when they disagree with it — as long as they believe an organization is upfront and honest about its motives.
But effectively addressing political controversies cannot be achieved by dodging them, since they are not going away any time soon. To the contrary, several prominent Republicans are already signaling that if Hillary Clinton makes it to the White House it will be business-as-usual on Capitol Hill. Additional turmoil arises from the fact that political tensions are tightly linked to social and economic anxieties. Thus, many companies will have to concurrently confront issues of racism, sexism, homophobia, and inequality. And it is only a matter of time before these difficulties are augmented by the rise of machines, the graying or populations, and the warming of the planet.
Granted, it is easier to think of these and similar predicaments as if they are distinct and detached. Yet that is not only naive, it is dangerous. “Global risks are interconnected, and that can create unexpected consequences,” notes the World Economic Forum’s (WEF) latest report on the subject. Such risks include damage to corporate reputations and loss of market share. And with a faster pace of change and more complex interconnections, the WEF warns that “the stakes have never been higher.”