About Corporate Diplomacy

Corporate Diplomacy is the way in which a company manages its strategic relations and protects its interest in an ever more complex environment. At the core of a successful diplomatic strategy is knowing what your interests are and knowing what the interest of your counterparts are (intelligence). Where aligned, use the alignment for strength – where opposed, make sure the opposition is contained and diminished.

Diplomacy is often considered synonymous with ‘being nice’. It’s not. It isn’t entirely “the art of telling people to go to hell in such a way that they ask for directions (Winston Churchill)” either. It is understanding your own interests extremely well, understanding the other’s interests at least as well – and making sure your own interests prevail.

A company can only survive by managing its external relations carefully. This requires a core strategy that drives its Public Relations, its Public Affairs, its marketing and its leadership’s external engagements. Managing this core strategy is Corporate Diplomacy.

Relatively few companies know what Corporate Diplomacy is and consequently even less have used this tool deliberately. Corporate Diplomacy has not yet really gained a foothold in general management practice. Gradually, however, it is gaining in importance. Already, leading management schools offer courses all over the world. It is more than just a trend; it is a necessary development.

What is behind the concept of Corporate Diplomacy? In general, Corporate Diplomacy is defined as the ability to develop business interests through the creation of strategically significant alliances with external key figures, including government, analysts, media, non-governmental organizations (NGOs), interest groups and other stakeholders, thereby efficiently and successfully implementing corporate goals.

Corporate Diplomacy is a further development, a combination of already existing resources. What is known as public relations, networking, relationship management or corporate social responsibility, all are elements of it. In simple terms, the principle of Corporate Diplomacy is a company-oriented, diplomatic approach to help corporations to consolidate their position, to gain influence, to implement company objectives and to achieve an increase in value by using tried and tested methods.

A key component of Corporate Diplomacy is the focus on strategic alliances. It is increasingly building on the establishment and expansion of significant partnerships with external stakeholders, which should form a professional, reliable and, above all, far-sighted network that supports the business activities. Key figures, decision-makers and opinion leaders must be involved. Corporate Diplomacy can be applied independently of industry. Depending on the company, industry, and country, the influence of certain key figures will vary and the strategy will have to be adapted accordingly. In general, however, one should keep close and good connections with governments and authorities. The group of opinion-makers, which can include non-governmental organizations, the media, interest groups, analysts, but also individuals, is decisive as well. If these groups are opponents it could turn out to be a serious disruption to the day-to-day business process or even the cessation of business activity. Even competitors are key in building an effective Corporate Diplomatic strategy – as even competitors can have a shared stake in certain developments. The task of Corporate Diplomacy is to define these groups and to develop strategies that promote the communication with the different groups.

The utility of Corporate Diplomacy for certain branches is more obvious than for others, there are companies that seem to be more vulnerable because of the nature of their activity or the geographies in which they operate. The impression that the size of a company plays a role deceives, as multinational corporations are simply more often mentioned in the media. Consequently, it would be a fatal mistake if smaller firms or other industries were to ignore the importance of Corporate Diplomacy. Alliances and partnerships with external stakeholders have a strategic importance for every company. A non-existent or badly placed network can mean the end of a company in an out-of-control situation, especially for smaller companies, since here mostly the financial resources are missing in order to compensate for losses.

Good deals and loyal, reliable customers belong to the most important, if not the only source of a company income. Corporate Diplomacy ensures that this source does not fail and even continues to grow. However, it must be taken into account that Corporate Diplomacy cannot be equated with public relations, marketing or sales. Where the products are praised on the one hand, Corporate Diplomacy has an acting role and integrates key figures, external stakeholders, and develops solutions that will lead to a sustainable win-win situation for all parties involved. Nor can it be reduced to Public Affairs – as it entails a strategic approach to a wider set of actors.

There are many examples where the lack of a well-functioning strategy of Corporate Diplomacy in foreign countries led to massive difficulties. Too often, managers of internationally active companies see themselves as a sort of external institution that has little or nothing to do with the local business and civil environment. The foreign market is, to a certain extent, degraded to a pure source of revenue. This behavior is risky. Political and economic changes, environmental problems, displeasure among the population, non-governmental organizations calling for boycott are all problems that can suddenly be faced. Negative campaigns in social and print media can have disastrous economic consequences. But it does not even have to be the extremes, because strikes or other forms of personal mobilization can also seriously disturb and weaken business activities. A good reputation can be destroyed in a very short time. The lack of strong partnerships with external key figures can lead to a fatal end, caused even by small political or economic changes. If the managers show in addition to that an “undiplomatic behavior,” retreat is often the only solution. This would be the time to give a serious consideration to Corporate Diplomacy.

Corporate Diplomacy is, therefore, much more than just a distinctive form of polite communication, although this is presumed to be the case. The right form of communication and the building of strategic partnerships with external key figures are necessary factors to be able to act successfully in the long term. Thus it can be confirmed that Corporate Diplomacy opens doors and gates and increases the chance that they remain open. Regardless of size, industry, legal form or nationality, whoever wants to remain successful in the long term will have to refer to Corporate Diplomacy, sooner or later. Corporate Diplomacy adds value, strengthens the market position, increases influence and promotes and consequently secures sales and profits.

In the future, it will not be the size of a company that will decide about success or failure. The one who has the best professional network, reliable relations and who is able to work with stakeholders, environmental activists, NGOs, decision-makers and opinion-leaders, has the best chances to become and remain successful. Sustainable strategic alliances are crucial. Corporate Diplomacy fosters alliances with external key figures in order to implement corporate goals efficiently, successfully and sustainably.