Daniel Diermeier

The regulatory environment of today’s corporations is undergoing dramatic changes. The stakes for effective regulatory management have never been higher. Board members rank regulatory and compliance risks as their top concerns, and every day another company makes the headlines with a new corporate crisis. We now live in an ever-faster-moving news cycle, driven by intense competition between 24-hour news channels, wire services, and online news providers. And the rise of the consumer-generated media has started to shift the balance of power from companies to customers and other stakeholders. Transparency is increasingly in demand, and companies and regulators are forced to respond ever more quickly to the scrutiny of the public. These risk factors are further amplified by the globally integrated supply chains that cannot be effectively regulated by national regulators. The global reach of companies has been matched by the globalization of activist organizations. Concerned about regulatory gaps, nongovernmental organizations (NGO) that try to have significant social impact increasingly will shun public institutions; instead, it will target a multinational company with global operations. How should regulatory managers respond to these changes? How do they adopt a strategic mindset that resonates with senior managers and the board? How do we develop the capabilities to anticipate problems and manage them proactively?

Over the past decade, the social contract between companies and society has changed. Associated with different concepts such as corporate social responsibility, sustainability, or corporate citizenship, this trend comes down to the observation that companies are held accountable by values other than shareholder value maximization. Indeed, companies are more and more taking over the roles of governments, whether in education, public health, product safety or environmental management. Is this just a fashion, or a luxury that will be swept away by the financial crisis and hard economic times…or are there deeper trends at work that will shape business environments for the years to come? How do leaders adapt to these changing demands, and what approaches are most helpful in navigating multiple vocal constituencies? These and other issues will be the focus of this session.

All economies are defined by formal and informal norms and regulations that structure market competition. These “rules of the game” vary significantly across countries. Many barriers to imitation and entry, for example, originate from specific legal rules or government policies that favor some capabilities over others. These rules, and in many cases, their enforcement, are not fixed, well-defined constraints, but are determined, implemented, and interpreted by legislatures, government administrative agencies, judicial institutions, public sentiment, and ethical consensus. The resolution of ambiguity and direction of change is neither exogenous nor divorced from strategic considerations. Rather, the process involves interest groups interacting within a system of institutions that includes but is not limited to the various branches of government, the media, and nongovernmental organizations. Both competitive advantage and industry profitability are affected by this interaction. Therefore, business strategies often must include actions to influence the outcome of the process. The analysis and development of successful strategies to shape the rules of the game to an organization’s advantage constitute the domain of meta-strategy.

Business, it seems, has entered the age of crisis. Every day another major company enters the headlines, and usually not in a flattering context. These trends are further amplified by an ever-faster-moving global news cycle and scrutinized by activists, interest groups, and an increasingly skeptical public. Crises have been frequently conceptualized as threats, but they can also provide opportunities. Seizing such opportunities requires a close connection to the company’s position in the marketplace and strategic frameworks for effective crisis response.

Reputation has moved to the top of the agenda for many CEOs and senior executives. What used to be a “nice to have” is now increasingly considered a core asset that needs to be protected and actively managed. Reputational damage can hurt a company in many ways. New (especially user generated) media and increased globalization have only accelerated this trend. Daniel Diermeier introduces new approaches to reputation management that add rigor to a notoriously vague and undefined area. He will discuss strategies, processes, and metrics as well as the integration of reputation management with business practices.