#XynteoLife: What’s business got to do with democracy?

13 Sep 2019

The UN International Day of Democracy was set up to review the state of democracy across the world. We sat down with Halvor Heggenes, insights advisor, and asked him where he saw the link with democracy and business.

Halvor – the last few years have been marked by political division – at least in Europe and the United States – and widespread concern about the rise of populism. In Europe, we’re used to thinking of liberal markets and liberal democracies going hand in hand. But the UK’s Hansard Society’s 2019 audit found that 54 per cent of people agreed with the statement ‘Britain needs a strong ruler willing to break the rules’, with only 23 per cent opposed.

Should business be concerned by an eroding social contract?

I ascribe to the view of the physicist, Richard Feynman, that democracy is a trial and error system of governance, and that living in a democracy is the closest we can get to the scientific method.

You’re allowed to try things and make mistakes. Based on your performance the electorate forgives you or replaces you. The people always hold you accountable.

Democratic systems are malleable, and at times volatile, but as long as the underlying institutions remain robust, the system will reach an equilibrium that represents the interests of most stakeholders in a more representative way than other systems of governance.

What does democracy have to do with business?

At its most basic level, democracy is a decision-making procedure, a relationship between people and leaders, and in the case of businesses between directors and employees, as well as other key stakeholders.

Business can gain from looking at democratic practice.

First – engaging a wide range of stakeholder is vital to building social license to operate

Involving other stakeholders in decision-making can reduce adversarial relationships an build public understanding of business decision-making. The recent decision by the Business Roundtable to redefine corporations as serving not only shareholders but ‘all stakeholders’ is evidence of this thinking once gaining traction.

Second – similar to how political parties benefit from diverse constituencies, business too can benefit by diversifying its stakeholder engagement to support innovation and increase adaptability 

Future-fit companies are the ones always ready to adapt to a changing world. This involves thinking about the future and listening for weak signals. Our own collaboration work at Xynteo is rooted in this principle of engaging not just stakeholders with different interests, but also unique perspectives that give our work a better understanding of the system as a whole. When minority rights are safeguarded, society benefits as a whole – business is no different.

Finally – it’s also true that democracy needs business

Healthy democracies need healthy economies. Of course, business has a vital role to play as an economic motor but it’s increasingly important for businesses to think about their social impact. At Xynteo we talk about an economic model that serves the many as well as the few. The classic example is Henry Ford driving the price of his Model-T low enough so that his workers could afford one, but the same principles are at play in for example’s, much of Unilever’s sustainability work. 

 Creating democratic institutions and managing multiple voices can be tough, but much like democratic countries, business thrive by drawing on the participation of a wide net of stakeholders. It makes the whole system more robust and healthier for everyone. 

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Halvor joined our Oslo office four years ago, having worked and studied in Russia and Central Asia looking at energy policy and resource extraction and the different approaches to governance in the region. At Xynteo, he is currently working on a project, led by our partner, Scania, to develop the European bioeconomy and accelerate sustainable alternatives to fossil-derived products.