How to build geopolitical resilience in your business

How to build geopolitical resilience in your business

Resilience has been an important topic for businesses (and individuals) in the last few years, and it seems that need is not going anywhere soon. As we write, the weather is getting colder, placing the rising cost of gas into stark reality; the British Pound has plummeted to a historic low; and as if in some form of sci-fi movie, NASA has tried its hand at diverting an asteroid away from Earth. Granted, that was more to see if they could do it, and it turns out they can.

For businesses and business leaders, it is a frightening time. However, it's when things are difficult that opportunities truly arise. When everything is going well, it's a question of riding the wave, but those who keep their eyes open will find ways to thrive when things are hard.

As the late Queen Elizabeth II so famously said: "When life seems hard, the courageous do not lie down and accept defeat; instead, they are all the more determined to struggle for a better future."

Therefore, how can you build geopolitical resilience within your business in the face of fragmenting global order?

What business leaders worry about the most

According to McKinsey's recent survey of global economic conditions, geopolitical resilience and risk are at the top of the CEO agenda. For those who have already gone global, the question is if or how they can remain that way and thrive simultaneously.

For those who have yet to explore international market expansion, there is also a question of whether it's feasible. There are pros and cons to developing a global business - on the one hand, there are great opportunities. However, there are greater complexities involved than when you're dealing with a single market, and your exposure to external shocks is not necessarily greater but different.

Market Expansion: How Do You Know You Are Doing It Right?


McKinsey states: "According to the US National Intelligence Council's Global trends 2040 report, in the next two decades, competition for global influence is likely to reach its highest level since the Cold War: ‘No single state is likely to dominate all regions or domains, and a broader range of actors will compete to advance their ideologies, goals, and interests.' Amid these challenges, the value of resilience is on the rise."

With this in mind, they launched the Resilience Consortium in collaboration with the World Economic Forum.

Is now the time for market expansion?

For many, logic would dictate that businesses should hunker down in such a volatile climate. Whereas during the early days of the pandemic, that was very much an option, and often an extremely sensible one, the same does not necessarily ring true today. Now is certainly not the time for rash decisions or sudden moves. However, it is a time for laser-sharp, strategic business development.

In some cases, market expansion is an excellent way to help build geopolitical resilience by diversifying your risk portfolio across different geographical markets. For example, some UK businesses will currently benefit from a fall in the Pound's value against the US Dollar or Euro, making their products less expensive in other territories and, therefore, more competitive.

The Pound's current weakness also makes the UK an attractive place for international investors, particularly from the United States. For example, Ted Baker recently agreed to a cut-price £211m takeover by the US group, Authentic Brands Group (ABG), at 110p-a-share (below the 160p-a-share they were contemplating in May).

Is now the right time for market expansion in your business? Much depends on your business itself. However, what savvy business leaders seek is a more rigorous and analytical approach to geopolitical resilience and, therefore, market expansion rather than following the traditional route of intuition and logic.

An analytical approach to market expansion

The purpose of an analytical approach to market expansion when geopolitical resilience is also front of mind is not simply profit but sustainable profit. McKinsey says:

“To address the geopolitical risks of the present—and future—leaders should challenge their organisations on six key dimensions of resilience: business model, reputation, organisation, operations, technology, and finance.”

Your Board and an outside perspective

Resilience starts with the internal structure of your organisation from the Board and C-Suite. At the Board level, your organisation must have a core understanding of the world around them. In essence, a business needs an outside perspective to help appreciate external factors, inform your commercial choices and help gauge your understanding of how your business sits in a new market.

Could your perspective be affecting your business success?

CEOs and what they stand for

Geopolitical resilience isn't just about fluctuating currencies and global pandemics; it's also about sociopolitical sensitivities, values and transparency. Businesses are under ever-greater pressure to showcase their corporate, environmental and social values and to live by them.

CEOs often find themselves in the position of pseudo-celebrities, and their actions (or inaction) in aligning internal and external practices with policy, are directly linked to the resilience of the company's reputation. That level of responsibility can relate to anything from what a CEO posts on their Instagram account to whether they pulled trading from Russia when the war with Ukraine began.

Navigating that course can be an isolating and evolving experience for CEOs, and when you have different geographical territories to consider, decisions may be conflicting.

Discover the benefits of a CEO Whisperer

Organisational resilience and your relationship with your team

External pressures do also affect the internal resilience of an organisation. McKinsey notes:

"nationality and cultural relativism are coming to the fore in discussions around stance, narrative, strategy, and risk appetite. These discussions can take place on multiple levels: between leadership and teams, regional and local offices, or global headquarters."

These are not simple spaces to navigate, but whether you 'go global’ or don't, they are topics that businesses need to consider, to understand, develop and improve their organisational resilience. Much comes from how a business sees itself, how the team sees the organisation, and the company's awareness about how it is perceived from the outside.

Three key areas to include are:

  • Establishing good corporate governance, incorporating multiple viewpoints in decision-making processes.
  • Opening a dialogue between business leaders and relevant parties to acknowledge global stresses, feelings around them and to empower colleagues to provide their views on common purpose and risk. For example, there's a differentiation between a company's approach to trading in Russia during the war with Ukraine vs working with Russian colleagues who may need support.
  • Using targeted initiatives to promote connectivity and cohesion internally amongst your team as well as externally.

Operational resilience and supply lines

Perhaps one of the most prominent challenges in a connected world, whether or not you adopt a policy of market expansion, is the issue of supply and, therefore, operational resilience. Many businesses have found themselves without necessary parts in the wake of the war in Ukraine. Perhaps an unexpected casualty is the luxury boat industry, which has factories in the region.

Protecting and pivoting supply chains is a priority area for operational resilience. Amazon is arguably the master of this with their anticipatory shipping based on troves of valuable client data. As a result, they have built their reputation on expediency and guard it with everything they're worth.

Another area of operational resilience that can't be ignored is ensuring access to relevant talent. Knowing how to scale your businesses and find the talent you need to move forward with agility is a valuable asset in a world of skills shortages.

Why fractional talent is key to a thriving modern business

Resilience, technology and the internet

Technology is front and centre of every business in today's world, and for those who engage in market expansion, it's even more relevant for managing and coordinating companies. However, the more a business grows, the greater the need for staying abreast of technological updates and regional differences.

There are practical differences to consider as well as politically sensitive ones. For example:

  • The different platforms used for marketing to audiences in different parts of the world.
  • Local data compliance.
  • Geopolitical tensions between nations, for example, between China and the USA, resulting in the internet splintering into regional variants.

That's in addition to:

  • Staying up to date in terms of what's available technologically.
  • Knowing where your vulnerabilities are.
  • Understanding what your customers are using in different global regions.
  • Predicting what your capability requirements are or are going to be.

Financial resilience and your business

Circling back to where we started, financial resilience is not the only consideration, but it is considerable in any organisation. When companies expand internationally, there is a lot to consider that will improve resilience, but it does mean staying cognisant of different markets and geopolitical changes. Foreign exchange risks are commonly taken into consideration, but global sanctions and regulatory risks are often fast-changing.

Having crisis protocols in place and remaining aware of geopolitical changes is essential to your business's sustainability, success and progress. Business leaders need to stay switched on about situations and have:

  • Trusted people around them.
  • Systems in place that ensure compliance in one region do not conflict with another.
  • Stay aware of situations for each local outpost of your organisation.

While all of this can sound overwhelming, market expansion's great benefit is that it provides immense opportunity when it’s done well. The foundation is having the right people around you to help make it happen and to build your global business with sustainable growth in mind.

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