Influence, Relevance and Growth for a Changing World: How to Survive & Thrive with IRG(tm) Beyond ESG

By Fernando Napolitano

Governments are struggling to respond the needs of the people. The media have lost their traditional equidistance. The public impression of competence, and the trust it engenders, has tilted in favor of corporations putting pressure on them to proactively engage. The Influence, Relevance & Growth (IRG) system based on 10 quantitative parameters offers corporations a new operating model to adapt to a societal context in which policymakers need to be continuously and deeply informed about complex, technologically intensive, and ethically charged issues. This book is designed to help CEOs and top management align companies and prepare business students for a more realistic perspective of society and how the corporate world can compensate for the overshadowing primacy of politics.

• Language: English
• Publisher: EGEA Spa - Bocconi University Press
• Release date: Oct 30, 2023
• ISBN: 9788831322966

Book preview

Introduction

The world today is characterized by an imbalance among four key democratic constituencies: governments, corporations, the media, and non-governmental organizations (NGOs). Among these four pillars, the public impression of competence and influence, and the respect it engenders, has tilted in favor of corporations, according to recent surveys such as the 2023 Edelman Trust Barometer.¹

Governments are struggling to respond to new crises and people’s needs, while the media are mostly polarized and have lost the traditional equidistance that once made them reliable and trustworthy. NGOs have a more limited purpose, fulfilling specific roles and providing services.

The inability of governments to intermediate effectively between diverse and often conflicting interests has turned up the pressure on corporations to engage proactively for the common good and to fill some of the voids left by an ill attended policymaking.

Corporations need a new operating model to adapt to a societal context in which policymakers need to be continuously and deeply informed about increasingly complex, technologically intensive, and ethically charged issues. At the same time, corporations need a more educated general public to set the expectations for how a business can operate in today’s world.

The Influence, Relevance & Growth (IRG) system offers insight and a methodology for companies to manage this new complex environment. By virtue of the trust enjoyed today by corporations, IRG helps them understand if they are fit and aligned to respond to this heightened level of expectations.

The IRG methodology was developed by Newest in collaboration with Kearney, a top management consulting firm, and Symanto, an Artificial Intelligence company specialized in insights generation.

Based on 10 quantitative parameters, it assigns a score from 1 to 30 (perfect score), allowing an organization to identify where it needs to improve in order to reach a score of 20. In fact above this threshold (according to the IRG metrics) the company can be considered able to express its influence and play a relevant role, ultimately contributing to overall economic growth.

This approach allows a corporation to adapt and transfer knowledge to both policymakers and the community at large to help address the most pressing societal issues and those related to its core business.

Far from suggesting that corporations get involved in politics, the IRG’s goal is to help companies adapt to this new, out-of-sync environment and help them to inform policy. In particular, organizations will be able to better define the boundaries of possible actions and to avoid being drawn into politics, which remains the core business of elected officials.

This book analyzes what has driven the rise of business and proposes a pragmatic and measurable set of actions to help companies adapt to societal changes, support policymakers, manage new stakeholder expectations, and continue to generate economic growth while protecting shareholder value.

The Russian Federation’s invasion of Ukraine and military maneuvers around Taiwan, have added an unanticipated layer of complexity for policymakers and a business world already grappling with the Covid-19 pandemic and climate change, among other issues. Combined with other fundamental transformations in international and national society, a new vision of the Western world will be critical. Value chains will have to be redesigned and new legislation conceived. How the business world interacts with policymakers in these unprecedented times will be critical to the continued success of Western society, and to those elsewhere who aspire to its benefits.

The book is divided into six chapters: Chapter I provides two brief overviews: of the IRG and of the current state of Western society; Chapters II and III explain the background and need for this approach; Chapter IV illustrates the early Stages of Corporate Social Responsibility (CSR); Chapter V analyzes the evolution – and the limits – of the overstretched adoption of ESG (Environmental, Social, and Governance criteria) for corporate decision makers, while Chapter VI expands on the methodology of shaping the influence, relevance & growth of corporations in a rapidly changing world.

From the end of World War II to the present day, the book examines critical moments marked by the rise and fall of the primacy of politics, leading to the high level of trust that corporations enjoy today. The history presented here is neither mechanistic nor deterministic, and a full accounting of past events helps to identify measurable solutions while acquainting us with the admirable strengths and the perils of our own culture.

¹ 2023 Edelman Trust Barometer.

1Business as Usual: The Twentieth Century

1.1 The Influence, Relevance & Growth of Corporations in a Changing World

In the West, we are out of sync with our four key democratic constituents: governments, corporations, NGOs, and the media.

These play a critical role in democracies, where there is a system of separation of powers and of checks and balances.

In a democracy, the people express their sovereignty through a process of free elections. The winners, in turn, are legitimized to form a government that will implement the platform or set of policies on which they were elected. The government represents the executive power and acts in the name and on behalf of all citizens. From this legitimacy comes the primacy of politics, the duty to make proposals to Parliament, the legislative power, and to provide a vision and to implement policies that effectively mediate between divergent or conflicting interests in a synthesis that promotes social cohesion and the economic development of a country. Competence and in-depth understanding of the issues at hand that need to be regulated are, among other things, necessary traits of the primacy of politics. Furthermore, being democracy a delicate construct, it requires informed citizens, and it asks from its political leaders for good faith and restraints, and a willingness to put the collective interest before politics, party, or personal gain.¹

Corporations are large companies or a group of companies authorized to act as a single entity and recognized as such by law. A company can be publicly listed, state- owned or held privately by its shareholders. Companies are essential to the creation of wealth, jobs, and to the well-being of all stakeholders, not just shareholders. To compete and excel companies hire the best and the brightest. As we will see, over the past 30 years, corporations have grown in size, competence, and financial strength, largely monopolizing the pool of available talent at the expense of the public sector and governments in democracies. To fulfill their mission, companies need a stable and predictable environment, as well as traits of openness and alignment with the structural changes that have occurred in society to play a leading and informing