APCO CEO Kraus Navigates Complex World of Business Diplomacy
Managing stakeholder relationships and reputation is increasingly important for companies as the connection between business, governments, and NGOs is redefined by changing public perceptions and new information technologies, Margery Kraus, president, founder and chief executive officer of APCO Worldwide, told the Fletcher community. Kraus visited The Fletcher School on April 11 and delivered a lecture entitled, “Business Diplomacy - Translating Political Skills to the Business Environment,” as part of the International Business Program’s Global Speakers Series. APCO is a leading international communication consulting firm based in Washington, D.C.
APCO’s primary business is what Kraus described as “business diplomacy.”
“To us, business diplomacy is how a company builds relationships in the same way that a government uses its embassies. We help companies to build, defend, and monetize their reputations and relationships,” said Kraus. Often threats and opportunities come from unexpected directions, because “there is almost nothing one touches that doesn’t have implications somewhere else,” she said.
Kraus remarked how much education like that provided by The Fletcher School is preparation for the kind of interdisciplinary work that APCO handles.
“The strategist has to be able to step back and look at the bigger picture, and the Fletcher program does that,” Kraus added.
“We at APCO are building on the new paradigm of how business, media and government interact,” Kraus said. “Companies need to understand what role they play in societies beyond their goods and services.” As expectations are changing, she emphasized that corporations must understand what the public and government may now expect of them.
“There is a growing idea that the relationship between business and government is changing. There is a sense that business can do a better job than government, but that they aren’t living up to certain standards,” she said. “Boundaries of the responsibilities of businesses, NGOs and governments are completely blurred.”
This new understanding was also shaped by advances in technology. “The Internet made transparency and accountability much more important, and there are implications for what companies do because the audiences are converging.”
However, Kraus pointed out the importance of carefully managing these new perceptions. “Business is caught in a field of rising expectations,” said Kraus. Handling these new expectations to construct a reputation is difficult, “especially when the definition of ‘responsible’ varies from place to place,” she said.
“Many companies don’t think about their Return on Reputation (ROR),” Kraus cautioned. “If two companies are identical from a financial point of view, the company that has a strong, positive reputation will receive much greater value from the financial markets.”
Managing issues that can affect a company’s reputation can be especially difficult for companies based in emerging markets who are beginning to move into developed markets like the United States or Europe. “The new companies from emerging market countries are often solely focused on their Return on Investment (ROI) ignoring the softer variables that could ultimately have a direct impact on their bottom line” Kraus said.
APCO plays a major role in helping these companies understand the changing landscape of reputations and expectations. “We help companies coming out of emerging markets understand what it means to go global, and how to operate at the highest levels and standards so they will be sustainable,” said Kraus.
APCO’s understanding of these dynamics influence how it handles its own global expansion. Historically, the company strives to grow organically in new markets by hand picking the best local talent and embracing the local laws, customs and ways business is conducted.
“We always have a ‘glocal’ approach,” said Kraus. “If you only know the global trends you can fail locally, but if you only have local knowledge global trends can pass you by,” she said.
Similarly, its employees parallel the diverse missions of APCO clients, “Our people match the stakeholders we work with – diplomats, elected officials, and professionals from the business and NGO communities,” Kraus explained.
“We want to be the place you go when you can’t afford to fail,” she concluded.