Leadership, Business and Politics:
Three for the Money

by Herb Rubenstein


Often business people think "focus, focus, focus." That means:

  • Get the product out
  • Have zero defects
  • Hire the right people
  • Establish the right processes
  • Strive for constant improvement
  • Provide great customer service
  • Keep accurate financial records
  • Conduct robust business and strategic planning
  • Always have adequate capital and cash flow
  • Sell, Sell, Sell

Solid leadership and entrepreneurship is required to design, plan, execute, evaluate, and improve every part of your business (or educational institution or non-profit organization - as this article applies to these groups as well). So, now that we have said everything that needs to be said about leadership and business, "What's Politics Got to Do With It?" This article answers that $64,000 question. In this article we discuss an area given far too little attention among small businesses, "external politics." We leave the issue of internal politics to another day and another article.

Defining Politics in the "Business" Environment

"Politics" means two different things. Internal politics focuses on how your business is governed, how decisions are made, how personal relations among employees are handled, and to what extent all of the people in your company feel they can participate in improving the company, set policy, and have the authority to make and execute decisions on behalf of the company.

Good internal politics makes every employee, in Charles Handy's words, feel and act like a "member." Quoting one of the longest standing marketing slogans, by American Express, "Membership has its privileges," good internal politics requires making sure that every employee is sufficiently acknowledged, honored, included, and involved in the business to feel privileged to be a part of the company. Many companies do that quite well, or at least try to do an adequate job in this area.

Where most businesses drop the ball is in the area of "external politics." External politics is the development, nurturing, and expansion of relationships outside of the company. This means developing good working relationships with government officials, (elected and appointed), interest groups related to your business, the media and stakeholder groups including those in the immediate geographic location of your business. External politics is going beyond having great relations with your customers, investors, advisors, supply chain providers and government regulators who directly oversee your business. Small businesses often ignore the entire "external politics" arena and often wonder why their competitors get invited to places where significant numbers of potential customers gather and they don't. The best evidence that small businesses ignore this vital area of business development and intelligence gathering is to ask yourself and your employees, "Who is in charge of "external relations" or "external politics" in our company? You will get looks of disbelief, confusion and bewilderment because in all likelihood not only is no one in charge of this key area, no one in the organization has ever even discussed this area in any strategic sense.

There is the need, even if you only have a few employees, to have someone in charge of your company's external relations effort. This will likely take only a few hours a week of someone's time to manage. A "best practice" for your company's new "external relations" effort would be to have the head of the company inform all employees that this is a high priority and get everyone in the company involved in this effort. To get everyone involved, the leader of the effort must delegate specific areas of responsibility to develop and improve the company's relations with specific groups. Employees can also suggest groups that the company should pursue for the long term advantage of the company, in addition to those people and external organizations where one seeks to improve the company's relations with them for short term gain.

Ten Reasons in a Nutshell

If you are not convinced already why small companies like yours should expend some of your scarce financial and human resources on external politics, we provide ten reasons to undertake this activity in a systematic and intensive way:

  1. These external groups can become customers.

  2. These external groups can become referral sources or channels for new customers.

  3. Employees will personally benefit from and gain satisfaction from identifying external groups of interest to them and serving as your company's Ambassador to these groups.

  4. By doing this the company will be able to gain valuable intelligence in the marketplace, regarding competitors and new business opportunities.

  5. The reputation of the company, CEO, and employees will be enhanced by this effort.

  6. The successful recruitment of employees, investors, members for your board of directors and boards of advisors will be improved by the expansion of the company's successful efforts in external politics.

  7. The company's ability to influence local and state level policies, purchasing practices, and regulations that affect the company will be increased by successful practice of external politics.

  8. The company's sales and marketing activities will be enhanced by the increased company presence in the external world.

  9. The company's ability to enter in joint ventures, strategic alliances, and expand supply chain resources will be enhanced.

  10. The company will be better able to learn about the resources and assistance available from government agencies, favorable tax and loan programs and access public resources in a manner that would not be possible without a successful external relations effort.


The best example of the success of this strategy was the creation of a position by Ted Turner when his CNN was a small company. The position was "Director of Middle East Relations." I had the privilege of working with the gentleman who held this position for many years ago. He served as Ted Turner's Ambassador to the Middle East in the 70's, 80's and 90's. Due to his great relations with every middle eastern government and media executive in the region, when the wars started up in the 1980's throughout the region, each country turned to this Ambassador and invited CNN into the region. Revenues grew rapidly for CNN and Ted Turner's efforts at external politics paid off one hundred fold.

Small companies must start their investments into external politics in a small way, but great dividends can be achieved. The way to start is to put the item "external politics" or "external relations" on the agenda for the next employee meeting, the next board meeting, or on your "to do" list to jog your memory that this might be an area you have ignored. The payoffs often come slowly, but over time they are as cumulative as compound interest. Be sure to put the words "external politics" or "external relations" into the job description of one of the company's employees, possibly your own. I think you will find that over time, the work is enjoyable and return on investment is very high.

Herb Rubenstein is an attorney and the CEO of Growth Strategies, Inc., a leadership and management consulting firm and co-author of Breakthrough, Inc. - High Growth Strategies for Entrepreneurial Organizations (Prentice Hall/Financial Times, 1999). He teaches entrepreneurship at Colorado State University and leadership at the University of Denver. His email address is herb@growth-strategies.com and he can be reached at (303) 278-1878 in Colorado. His websites are www.growth-strategies.com and www.herbforcongress.com .

Many more articles in Creative Leadership in The CEO Refresher Archives


Copyright 2006 by Herb Rubenstein. All rights reserved.

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