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 / First Quarter 2002 / Issue 26(originally published by Booz & Company)


From New Economy to Siege Economy: Globalization, Foreign Policy, and the CEO Agenda

There is also a strong case for taking another look at the nexus of the Persian Gulf, oil, multinational firms, economic development, and political liberalization. A feudal, nondemocratic, one-product nation, with a regime of precarious political stability, Saudi Arabia is simply too weak a reed for our economic welfare and security to depend on. When you consider that we get 40 percent of our oil from the Persian Gulf, and that the major players in the region are Saudi Arabia, Iran, and potentially Iraq, we are playing dice with our fate.

CEOs in the Siege Economy
The changing context for economic activity — government–business cooperation, globalization rethought and revised, a U.S. foreign policy broadened beyond commercial considerations — raises the question of what specific role American global CEOs ought to play in today’s marketplace and society.

In The Mind of the CEO, I underscored the intense competitive pressures under which corporate leaders operate, and the difficulty they themselves identify in undertaking broader roles of leadership in society. In the wake of September 11, this tension has become even more acute. The economic climate has deteriorated badly, putting excruciating pressure on many companies’ performances. Business leaders’ first concerns will be how to manage their operations in a sharply different global environment. They might conclude that even under the best of circumstances, the war against terrorism will be a long one, and that the uncertainty created will require serious adjustments in their operations. Aside from the immediate security concerns, they may rethink everything from the management of their global supply chains (is it wise to rely on just-in-time inventory deliveries when the global logistical system is subject to disruption?) to the pace of their global diversification (should it be slower or faster?). They will need to reevaluate their ability to assess political risk and to engage in contingency and scenario planning, as well as their competence to deal effectively with a government that is edging into a wartime footing (to be sure, companies’ Washington offices will become more important).

The public framework for globalization, however, is at a delicate crossroads. It is tempting to say that the job of shaping a sustainable form of globalization belongs to the world’s governments. To an extent that’s true, but governments alone cannot do the job. They don’t have the long-term global perspective, talent, or experience — nor do they touch people in every facet of their daily lives. As the leaders of companies that help shape how people live, what they buy, and what they think, business executives can and should help in the conceptualization of a new paradigm of globalization — and in the execution of policies predicated upon it. CEOs would do well to remember that they are the major champions — perhaps the only true backers at this time — of globalization. If they are not out front supporting a revised, sustainable globalization, no one else will be.

In the short term, President Bush may need a business council, made up of the country’s most enlightened CEOs, to meet with him and his cabinet to discuss these kinds of ideas before patterns are too far along to reverse. The administration, focused on the step-by-step escalation of the war on terrorism, cannot do the necessary planning as well by itself. In the end, moreover, a successful foreign policy will require significant cooperation from American firms. They are, after all, the instruments of economic production, investment, and employment, and the source of technological innovation. When it comes to such issues as the environment, labor standards, and human rights — key components of foreign policy these days — the objectives of the U.S. cannot be fully achieved without the reinforcing actions of American companies.

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  1. Joel Kurtzman, “An Interview with Rosabeth Moss Kanter,” s+b, Third Quarter 1999; Click here.
  2. John Micklethwait and Adrian Wooldridge, “Globalization Is No Fait Accompli,” s+b, Third Quarter 2000; Click here.
  3. Randall Rothenberg, “Jeffrey E. Garten: The Thought Leader Interview,” s+b, First Quarter 2001; Click here.
  4. Jeffrey E. Garten, The Mind of the CEO (Perseus Books/Basic Books, 2001)
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