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From Ukraine to climate change, business leaders must use their senses in crises to emerge stronger: Steven Callander

Steven Callander teaches political economy at the Graduate School of Business (GSB) at Stanford University. Speaking to Srijana Mitra Das, he explains how a business can become resilient in times of crisis:

What is the core of your research?

I try to understand the intersections of business and government. I study how governments make policies that shape market competition and how firms that compete in the market also compete in what we call the “beyond market” environment to shape policy. governmental.

How do you define “beyond the market” issues?

We consider it to be anything that is relevant to business and strategy but happens outside of the usual market context – much of what is studied in business schools is about what happens in the marketplace, the way a company engages with customers, suppliers and competitors and the processes in a business. The “non-market” environment is anything beyond this context that concerns businesses — the main part being government policy at the legislative and regulatory level. But it also includes the public domain, which includes opinion, activist groups and society.

Can you discuss an industry facing a “market and beyond the market” intersection today?

The energy sector is interesting. There are a lot of innovations going on there, but the incumbents are very large old companies, while the industry also faces heavy regulation. Energy was regulated from its inception – it was agreed between regulators and big energy companies that consumers would get universal, reliable and relatively cheap service in exchange for official protections that saved companies from competition. The agreement expressed well the circularity between market power and political power – this model worked successfully for a long time, but in the age of innovation, it prevents new creativity from coming to market. Therefore, new players like startups need to think about strategies that apply both to markets and beyond market factors in order to get their innovations to consumers and build competitive and successful businesses.

Have the “non-market” issues themselves changed in recent years?

We are seeing great changes in terms of public opinion regarding corporations and their own participation in the public domain. Businesses have always interacted with government, but now they must engage with public opinion. Important steps in this regard include the Me Too movement, Black Lives Matter and the “99%” or Occupy Wall Street (OWS) movement which has raised the issue of economic inequality. Previously, companies felt it was in their interest not to take sides. But in recent years, companies have been forced to take very public positions on social issues.

“The environment ‘beyond the market’ has changed in recent years – companies need to engage with public opinion now. Important steps in this regard include the Me Too movement, Black Lives Matter and the ‘99%’ movement OWS which raised the issue of economic inequality.. Companies used to feel it was in their best interests not to take sides, but as the Disney case shows, companies are now taking public positions.

—Steven Callander

Consider the Disney Corporation, which for decades apparently successfully used its popularity to sway policy makers in its favor. They were able to translate their public support – bolstered by the jobs and businesses they created – into political power which, in turn, aided their economic model. Recently though, Disney has felt compelled to take a public stance on some social issues. Now they find themselves at odds with a political party in Florida. So it’s an interesting case study to follow.

Business is going through an era of crises, from the pandemic to the invasion of Ukraine and climate change – what are your key insights for effective leaders today?
My key insight is “meaning making” – it is very important for leaders of organizations to make sense of a crisis for all their stakeholders. People are often confused in a crisis and don’t know what to think. The number one job of an effective leader is to make sense of it, which is actually a very powerful opportunity – if you can make sense of a crisis in a way that works for you, so people see the situation. from a point of view that suits you, you can come out of a crisis stronger than before

An interesting example is McDonalds. Many companies have recently withdrawn from Russia, but McDonalds has announced that it will sell its Russian business and not return. Some companies have taken advantage of this moment to not only express the difficulties of doing business in times of war, but to express that they do not want to do business with such a state because it is not in line with their values. They gave meaning to a crisis, helping to build their reputation for holding certain values ​​and standing up for what they believe is right.

“We need institutions where expertise can help the huge problems we face – I doubt Davos will meet that need, but we certainly need to leverage expertise better”

—Steven Callander

You also work on the power of the expert or the “referential council” – how effective is a gathering of referential expertise like Davos today?
We are living in a time around the world where expertise is being questioned – it is clear however that expertise is valuable and can help us make better decisions. What we are wrestling with is how to create institutions through which expertise can be harnessed to solve the huge problems we are currently facing. Whether Davos is a submission to this institutional need, I doubt – but the world must surely figure out how to tap into the expertise much better than we have.

Opinions expressed are personal