Policy Sweet Spot: Navigating and Influencing Emerging Markets Policies

How can businesses help shape policies that promote open markets and entrepreneurship? This is the topic I was asked to explore for the International Academy for Leadership, an initiative by the Friedrich Naumann Foundation for Freedom. In my experience helping do this in global emerging markets for over 20 years, I often see companies easily identify key issues that are affecting their businesses but struggle to navigate unfamiliar markets local policy environments. Carefully understanding the nuances, developing strategies and implementing plans underpin success in supporting governments to overcome unintentional barriers to business, economic growth, and other opportunities.

When doing this, it is important for businesses to think holistically across political, economic, and social considerations in each market. Instead of thinking in silos, in an increasingly complex world, businesses should examine the landscape carefully, think strategically, and leverage all the tools available to succeed in a number of ways.

1. Find the Policy ‘Sweet Spot’

The foundation of any strategy should be based on a deep understanding of the complex web of stakeholders that influence policies and their priorities. Being able to identify ways to align your position within this will be critical to success. Finding a policy ‘sweet spot’ is key, i.e. the intersection between the agendas of government, business and the public. Imagine a Venn diagram where there is a point in the center where these three ‘spheres of interests’ meet and this is the common ground to develop your strategy around. The goal here is to identify win-win possibilities for all.

For many business priorities, this middle ground could focus on economic agendas – to facilitate economic growth, foreign investment, jobs creation and ultimately a high standard of living for society. At Speyside Group, we work with many of the world’s largest tech companies grappling with issues including, for example, data governance and cross-border data flows. When working in emerging markets, there is usually an instinctive desire by government for data localisation given sensitivities around national security. Despite this, these same governments are often striving to become part of a modern global digital economy where seamless international transactions can take place and require the same cross-border data flows. The sweet spot is recognising that there will be a certain degree of data to be kept locally, but much else that can flow cross-border enabling digital growth. The nuance is in where this line should be drawn.

2. Adopt the Right Strategy

After examining the interests at play and identifying the alignments, the next steps is taking the right strategic approach. The context and government priorities will dictate the right approach to support change. Engagements could be done alone or jointly through coalition building with industry players or local experts and allies. Direct engagement can be supported by expert representations to educate and inform about the issues and providing international expertise. Another option is to build relationships through value-added partnership programs to generate goodwill and support impactful change. Along with this direct engagement with decision makers, influencing public debate can also shape public and stakeholder sentiments by bringing to light key issues or opportunities.

Often in emerging markets, governments can be under resourced when developing and implementing policies, which can lead to unintended onerous consequences. Take, for example, the Extended Producer Responsibility law which is intended to reduce waste by putting more responsibility on the producers but because of the way it was drafted jeopardised much of a client’s existing recycling operations. These complications in the recycling protocols would have in fact lowered rate of recycling making the efforts counterproductive. By making the technical case, backed by credible experts, we were able to suggest legislative amendments that allow for these nuances.

Other changes can be based on shaping broader public sentiments to nudge government. In a particular case, we spent 12 months working with trade unions, media and local community officials on state and municipal levels to make the case that certain state assets needed reform which would generate significant economic growth and job creation. This paved the way for our client’s successful acquisition of said assets, which continues to operate and generate economic value today.

3. Build Alliances

Often, we work with large multinationals but what of SMEs trying to influence policy? Many times, they are caught at a crossroads – they may be working on disruptive technology that requires a shift in policy to fully flourish but they do not have the resources or profile to undertake activities to shape policy alone. However, there is value in being part of the debate – getting into conversations, explaining who you are, and educating officials to pave the way to change. In so doing, there are real opportunities for SMEs to influence.

The main question to ask is, if I’m not doing this, will anyone else do it? If the answer is no, a SME may need to take on the risks and do all the work to create the suitable market and policy conditions. However, it’s a real risk. If bigger MNCs are already driving policy changes, a SME could very well adopt a ‘slipstream’ strategy and work with trade associations and other organisations to engage. This could be desirable if there is a close alignment of interests between industry players where the benefits are broader than one organisations priorities, and this is often the case. If there is room to partner with them on common goals, all the better.

None of these insights should be a surprise – often with policy shaping, the approach seems straight forward once you have done the groundwork to uncover stakeholder attitudes and agendas. There are nuances and practicalities that make this seemingly simple process complex and difficult to navigate but whether you lead a big or small firm, to influence well, one must influence strategically.