SOURCE: The Boston Consulting Group

The Boston Consulting Group

January 25, 2010 18:01 ET

Boston Consulting Group Urges Business Leaders to Rebuild Government Relationships as Part of the Corporate Recovery From the Great Recession

A Study by BCG Shows That Chief Executives Are Not Yet Doing Enough to Nurture Links With the Political Elite, as Protectionism and Other Forms of Government Intervention Emerge to Threaten Business in the Coming Decade

DAVOS, SWITZERLAND--(Marketwire - January 25, 2010) - Many of the business leaders gathering this week for the annual World Economic Forum in Davos need to build stronger links with politicians and state officials as governments strive to reassert power and influence over the corporate world, according to a study by The Boston Consulting Group.

The authors of a new book, which identifies the strategies companies should deploy to accelerate out of the "Great Recession," warn that chief executives "ignore politics at their peril." Chief executives have "little choice" but to get closer to governments amid a slowdown in the 30-year trend toward economic deregulation, privatization, and trade liberalization.

David Rhodes and Daniel Stelter, senior partners at The Boston Consulting Group, argue that a deep understanding of politics will become an essential feature of a new managerial mindset for the postrecession era. Business leaders will need to influence government policy even more than they do today, anticipate (and thereby benefit from) government spending plans aimed at revitalizing struggling economies, and help shape government views on regulation. But many businesses have not yet engaged sufficiently with governments.

In a survey of major companies for their forthcoming book, "Accelerating Out of the Great Recession: How to Win in a Slow-Growth Economy" (McGraw-Hill, February 2010), the authors found that business executives expect the rising tide of government intervention to act as a brake on growth and the global economy.

Executives at more than 400 companies with revenues greater than $1 billion were surveyed, with the following findings:

-- 81 percent expect an increase in government regulation

-- 81 percent believe that regulation will be a restraint on growth

-- 75 percent expect an increase in trade and financial protectionism

-- 71 percent expect an increase in labor protectionist measures

-- 64 percent believe that growth will be more difficult

The BCG partners contend that the relationship between businesses and governments will be critical to agreeing on policy solutions that stimulate sustainable economic growth.

According to Rhodes, "In the future, a chief executive's decisions will not just be based on business criteria. They will have to take into account what government wants -- or, in some cases, demands. Clearly, executives should focus on what they know best: growing their businesses in difficult circumstances. But they ignore politics at their peril. Company leaders need to learn politics well and lobby hard."

"In a world in which long-term fiscal and monetary stimulus policies become the norm, businesses will have to become even closer to government -- either through lobbying or by anticipating where the government plans to spend money," added Stelter. "This is not good for the long-term health of business or the economy. But business has little choice."

To learn more about the survey or the book, or to arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About the Survey

Survey results are based on an online questionnaire of 434 business managers in seven countries. All respondents represented companies with at least $1 billion in global revenues in 2008, from all industries except financial services. The survey was commissioned by The Boston Consulting Group and administered by Grail Research from August 24 to September 1, 2009.

About the Authors

David Rhodes is a senior partner and managing director at The Boston Consulting Group and the global leader of the firm's Financial Institutions practice. Since joining BCG in 1985, he has worked primarily on projects involving major strategy and organizational change in large financial institutions, working with clients in Europe, Asia-Pacific, the Middle East, and the United States.

Daniel Stelter is a senior partner and managing director at The Boston Consulting Group and the global leader of the firm's Corporate Development practice. He is also a member of BCG's Executive Committee. During his 19 years with BCG, he has participated in and directed many projects throughout Europe with a focus on corporate finance (including M&A, IPOs, due diligence, strategic alliances, and joint ventures) and strategy (including portfolio strategy and value management).


About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 68 offices in 39 countries. For more information, please visit www.bcg.com.