How To Build A Post-Brexit Business Strategy

Author

David Lancefield

December 15, 2016

by David Lancefield

Following Brexit, the British government and the E.U. will spend the next several years negotiating a divorce that balances their economic, political, and social interests. The terms of exit and the trade deals that will follow will be unprecedented in their complexity, and there are no clear rules to follow. Nor is there a certain timetable. The negotiations were supposed to be concluded in two years, but the High Court’s recent decision mandating that Parliament must be involved, and the ongoing Supreme Court hearing, calls that into question.

What should you, as a leader of private enterprise, do in the meantime? As you define your post-Brexit strategy, you may find yourself leading amid ambiguity — not just in the external world, but in your own organization. More than 100 C-suite executives have told us that the challenges they have faced since the referendum are different from any they’ve dealt with before. You can build an effective post-Brexit strategy around these basic principles:

1. Develop a course of action that will be robust under many scenarios. Scenario planning, which involves gathering information and analyzing potential outcomes, will give you more confidence in charting a course. First, think about the possible big-picture effects. Then take an existing element of your business — for example, a strategic priority, critical program, or value driver — and think through all the possible ways it could be affected by those larger changes.

Consolidate your many alternative futures into just a few. Each scenario should be a plausible story that demonstrates how this situation could evolve; they should all be mutually exclusive. Most important, each should have a counterintuitive aspect, something you can learn from. As you put these themes together, consider the unintended consequences of actions that many others are overlooking, but that are relevant to your business. Having articulated these alternative futures, look into the impact each of them could have on your company.  Highlight any risks or opportunities involved, especially those that are more elusive.

Finally, instead of devising a separate response for each scenario, bring your colleagues together to consider these questions: What strategy could we adopt that would be robust under any of these scenarios? What investments could we make now to ensure that whatever scenario comes to pass, we will be glad we made that choice? And what can we do now to influence the development of the preferred scenario?

2. Rethink your global footprint. The aftershocks of the Brexit vote provide an opening to launch soul-searching exercises to examine the map of countries where you manufacture and sell your portfolio of goods and services. These exercises can also help you reconsider cost allocation, to adjust expenses to match your new global needs. Focus on strategic objectives: making the most of your capabilities, ensuring access to markets where your capabilities can help you stand out, managing regulators, finding suitable labor pools, and providing opportunities for innovation.

3. Encourage a diversity of perspectives within your company. It’s particularly important to be inclusive in addressing the challenges of a post-Brexit world. Employees will hold a wide range of views about the risks of your post-Brexit strategy and the direction your company should take. This diversity of perspective is a strength, not a weakness, of your enterprise. Give a large group of trusted managers and employees the task of developing a course of action in Europe and the U.K. Then encourage them to question one another’s biases and assumptions.

To make your prospective pool of decision makers as large as possible, draw in people with a range of experiences, professional backgrounds, interests, and areas of knowledge. Include advisors with deep sets of intelligence in areas as diverse as economic development, political engagement, devolution, immigration policy, industry trends, and customer data. Ask open questions to make sure that responses are not exclusively what people believe management wants to hear.

4. As a leader, be transparent and choose your words carefully.In difficult periods, executives must be cautious about what they say and the stances they take. They should express sincere compassion and be on guard against statements that may ruffle feathers throughout the organization. No matter what your perspective is, allow people to communicate their views freely. If people express fear or concern, offer tangible aid whenever possible. Avoid language that can be perceived by employees as callous or threatening; for example, even low-key statements such as “We’re thinking differently about next year’s budget” could be heard in a menacing way. Be similarly self-aware when interacting with customers, suppliers, and shareholders.

5. Develop your company’s “foreign policy.”As the global environment shifts, multinational companies will have to become adept at navigating the changing regulations, consumer preferences, and cultural mores in regional and local markets. If the aftermath of the referendum propels you to move into foreign territories that have their own evolving post-Brexit characteristics, you will need to integrate your company with the local society and government. If your enterprise doesn’t yet have these capabilities, you may need to build them. Use the expertise you have gained in your current business locations to collect on-the-ground intelligence (for example, from observers within local governments) that can inform strategies designed to minimize risk. Instituting a well-resourced corporate foreign policy is an excellent way to buoy your localization strategy.

One critical aspect of your company’s foreign policy is your thoughtful engagement of issues related to Brexit, trade barriers, and globalization. The Japanese government, and some U.S. officials have encouraged businesses to speak out publicly about Brexit, even if it takes them out of their comfort zone. This type of encouragement is unprecedented, and it may lead a number of companies to take positions on Brexit or other geopolitical issues before they have developed true diplomatic skills. The more prowess you have as a company with a foreign policy, the more powerful and nuanced an effect you will have.

6. Prepare for further expressions of public antipathy to the establishment. Business leaders need to recognize the public’s ongoing resentment of income inequality — and of generous executive pay and high dividends. Your employees will be worried about pension deficits and the potential impact of economic uncertainty on their job and wage prospects. We may also see the rise of conscious capitalism, more attuned to the needs of the people business serves and employs. Pay particular attention to attitudes about immigration. Borders will be tighter, and moving people across them will be harder, in terms of both managing the regulations and navigating public opinion. If migration of labor is part of your business model, you’ll have to consider these issues now.

By taking these steps, you can keep your business healthy while also addressing some of the political and social issues that the electorate has raised. A process like this can catalyze innovation and growth even in the midst of turbulence. You will gain new insight into the strengths of your company: your distinctive identity, your capabilities, and the dedication of your people. You’ll align your company with the devolution of power that appears to be occurring in many countries. One of the surprising long-term results of Brexit may be a higher level of connectivity among citizens, government, business, the environment, and society at large.

For more insights, check out “Business Beyond Brexit.”

 

This article was written by Strategy& from Forbes and was legally licensed through the NewsCred publisher network.

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