The document discusses the importance of companies engaging with governments and regulators on social and policy issues. It notes that one third of corporate profits are at stake due to regulatory risks, and CEOs spend 30% of their time on these issues. However, less than 30% of companies engage successfully. The document advocates for "connected leadership" and "engaging radically" through four tenets: mapping the issues, defining your contribution, engaging proactively with external stakeholders, and applying world-class management practices. It argues that connected leadership will define competitiveness in the future due to demands from new technologies, populations, and spheres of engagement.
2. Polaroid | A frame on the world
Cycles of anti-business sentiment extend back over 2,000 years
3. Polaroid | A frame on the world
History doesn’t repeat itself, but it does rhyme
4. Polaroid | A frame on the world
CSR has failed both companies and society because the initiatives
are almost always detached from the core commercial activities
6. Polaroid | A frame on the world
One third of corporate profits are at stake
SOURCE: Reputation, Government and Regulatory Strategy
Value at stake globally
is ~$4 trillion p.a.
E.g., Land access rights, community engagement,
reputation risks
E.g., Tariff regulation, access to infrastructure, fiber
deployment, licensing, spectrum
E.g., Pricing regulation, liberalization of sector
E.g., Market access, generics regulation, pricing,
funding of innovation, clinical trials
E.g., Tariff regulation, renewable subsidies,
Interconnection, access rights
E.g., Obesity, sustainability, food safety, health and
wellness, labeling
E.g., Government subsidies, renewable regulation,
carbon emission regulation
E.g., Capital requirements, systemic regulation (‘too
big to fail’), consumer protection
Estimated share
of EBITDA at
stake, Percent
30–40
40–50
45–55
25–30
35–45
25-30
50–60
50–60
Resources
Telecom and Media
Transport, Logistics,
Infrastructure
Pharma and Healthcare
Energy and Materials
Consumer goods
Automotive, Aerospace
& defense, Tech
Banks
7. Polaroid | A frame on the world
30% of value is
at stake
CEOs spend 30%
of their time on
this issue
Less than 30%
engage
successfully
The “30-30-30” phenomenon
8. Polaroid | A frame on the world
The four tenets of connected leadership
1
3
4 2
Map your
world
Define your
contribution
Engage
radically
Apply world-class
management
9. Polaroid | A frame on the world
Map your world1
Illiteracy
Governments and
regulators rate my
company reputation
as positive
21
76
We frequently
succeed in engaging
regulators and
governments
Percent of executives in our survey
Distinguish secular
trends from food
Quantify value at stake
‒ Near term
‒ NPV
‒ Reputation
10. Polaroid | A frame on the world
Define your contribution2
11. Polaroid | A frame on the world
Apply world class management3
My company has
the talent to
succeed in
engaging
externally
16
21
27
30
Our processes
integrate
consideration of
impact on
stakeholders and
consequences for
the business
Percent of executives
Our people are
taught the skills
with society
We quantify
financial and social
impact of our activity
12. Polaroid | A frame on the world
Engage radically4
“We should”
36
64
“We do”
Percent of executives 79
22
Company avoids
external engagement
as much as possible
Company proactively
and regularly
engages externally
Proactively and regularly engage,
regardless of immediate interest
Companies which succeed in
engaging externally
13. Polaroid | A frame on the world
Business will be asked to play a role in solving top social burdens
0.1
0.3
2.0
2.1
0.3
0.4
0.4
0.7
0.7
0.9
1.0
1.3
1.4
2.1
Estimated annual global direct economic impact and investment to mitigate selected global burdens, 2012
Smoking
Armed violence, war, and terrorism
Obesity
Alcoholism
Illiteracy
Climate change
Outdoor air pollution
Drug use
Road accidents
Workplace risks
Household air pollution
Child and maternal undernutrition
Unsafe sex
Poor water and sanitation
Source: McKinsey Global Institute
Selected global social burdens
14. Polaroid | A frame on the world
Connected leadership will define competitiveness in the future
Disruptive
technologies
New theatres of
engagement
More demanding
global population
15. Polaroid | A frame on the world
Uber’s $50bn valuation is predicated on its ability to engage with cities
across the world