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The Open vs. Closed business dichotomy

alva’s CEO discusses the importance of businesses listening to their stakeholders:

When we founded alva six years ago, we had a clear purpose. We wanted to find the way to extract intelligence from publicly-available sources to help businesses better understand the views, opinions and expectations of their stakeholders. In turn we hoped that businesses would engage more closely and meaningfully with their stakeholders to create long-term and sustainable value.

Since then there have been a number of publications, such as Connect by Lord Browne and Capitalism for the Long Term by Dominic Barton, whose premise is that for businesses to build sustainable and long-term value, there needs to be active engagement between businesses and society, consumers, regulators, NGOs, the media and other important stakeholder groups.

Incorporating the right business intelligence into your company strategy

Albeit slowly, this paradigm shift is happening in leading businesses across different industries, especially those with complex stakeholder configurations. To make this change, businesses are structuring departments such as Marketing, Corporate Affairs, Regulatory Affairs and Risk to be more responsive to stakeholders. These functions are also becoming more joined up to orchestrate coordinated stakeholder programmes that improve business value. Within this paradigm shift we also see a demand for real-time and rich stakeholder and issue intelligence.

Combining the right organisation structure, a partnership across functions and the right intelligence all enables business to focus on the issues that matter the most for both the organisation and their stakeholders.

However this evolution is not happening across all companies, as shown by the number of businesses that still today end up dominating the headlines for the wrong reasons. These are the businesses that either still need to figure out how to engage with their stakeholders effectively or worse have deliberately chosen to ignore them. And since their reservoir of goodwill is empty, these are the types of businesses that are constantly fighting crisis after crisis.

Running a global business successfully means dealing with multiple challenges, sometimes unpredictable and unforeseeable. This complexity has increased with the explosion of public content. Today everybody has a view and if that view is compounded by many other views, momentum is gained and perception becomes reality, whether the perception is true or false.

Are you an Open business or a Closed business?

In light of the above changes, which are not only affecting businesses but also the socio-political environment as seen by recent events such as Brexit, every business needs to make a fundamental decision, whether to be an Open business or a Closed business. An Open business is one that invites dialogue and engages in addressing multiple stakeholder issues; a Closed business is one that fundamentally acts in isolation and has no interest in engaging with stakeholders in a meaningful way.

The split that we are seeing currently in business draws parallels with The New Political Divide, reported recently on The Economist. The piece investigates how the old Left vs Right split of western politics has now shifted to an Open vs Closed dichotomy. The Open parties are those who welcome globalisation, immigration and free market economics, while the Closed want to pull up the drawbridge, removing immigration and returning to nationalistic policies.

Given that trust in business continues to decrease, it seems right to think that being an Open business will ultimately drive long-term and sustainable value. The right culture, the right organisation and the right intelligence are key ingredients to accomplish this.

Alberto Lopez – alva CEO

Follow Alberto on Twitter (@alvaCEO) and Linkedin for new CEO blogs and opinion.

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