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  • Mallory Lalanne

How can SMEs emerge unscathed from inflation and crises?

Clash between the US and China, pandemic, war in Ukraine, disrupted world trade... business leaders need to review their management tools and be diplomatic.

When Xavier Desmaison and Alexandre Medvedowsky published their book (Stratégies d'entreprises dans un monde fragmenté) on the risks linked to the pandemic and the war in Ukraine in September 2022, they were well aware that the tensions linked to the pandemic, the war in Ukraine, and the clash between the United States and China would require a change of pace. "It is imperative to change the compass and the strategic course. A leader must master the tools of management and must also be a specialist in international strategy in order to understand the risks that surround him or her," explains Alexandre Medvedowsky, President of ESL&Network, who has 22 years of experience in strategic consulting and influence strategies for business leaders, governments and states.

Adapted monitoring tools.

To emerge unscathed from these new pressures and threats, intelligence tools, product analysis, competitors, regulation, technology, and data protection have become very important. Companies must therefore evolve their managerial tools to take account of these changes, for example by creating a community manager support, by setting up monitoring devices in digital spaces, and possibly calibrating responses in terms of communication or asset protection. "When you want to establish yourself on a market and not find yourself in difficulty, you need to have identified your main competitors, the decision-makers, determined your strategy and know what the essential element of the competition is, i.e. the price or the quality of the product," the author explains. The objective is precisely to remain clear-sighted, to reduce the margins of uncertainty, to identify the interests of the entity, and to defend them. This monitoring and the analysis that follows will help them to decipher geopolitical situations, define the attributes of their leadership and their relationship with risks, and make the right decisions. Should they continue to partner with Chinese companies? Should we stay or leave Russia? Despite the sanctions linked to the war in Ukraine, there is still a lot of business being done in Russia," adds Alexandre Medvedowsky. Of the 75 international groups established in Russia, only 15 have left permanently. The others have stayed. The immediate response of closing down and leaving Russia was not necessarily a good strategic decision.

"Business diplomacy is very useful."

Demonstrating diplomatic skills.

In the panoply of qualities that the leader must master, diplomatic competence and soft power - defined in 1990 by the geopolitologist Joseph Nye as "the ability to seduce and attract" - becomes crucial. To put it plainly, a company must integrate into its network of interactions the administrations, opinion leaders, and micro-companies that gravitate around it. To put it more bluntly: the issue of stakeholder relations has become a strategic matter for business and not just for communication and influence. "Business diplomacy is very useful. Companies need to be equipped and have the capacity to go and discuss, negotiate, find common ground. These elements of dialogue with governments, states, and competitors have become fundamental. We spend our time accompanying companies, SMEs, or ETIs, dealing with diplomatic issues, and sometimes even recovering debts in unlikely countries," reports the expert.

Companies must also be able to review their strategy and their alliances, and realise that they are evolving in a framework where competition and collaboration with their rivals are intertwined. "Co-operation' is more than ever on the agenda," insists Alexandre Medvedowsky. The contemporary economy is no longer just 'transactional'. It is increasingly 'relational' in the sense that performance depends more and more on the quality of the relationships (open, interpersonal, dialogical) between the players. It was by following this logic that Casino decided to join forces with Amazon to develop digital skills and not be left behind in the race to digitalise, even though the American giant could be seen as a direct threat to the company's existence. In order to succeed, and to make the famous "post-Covid world" a breeding ground for value creation, managers will have to deal with a fine mix of communication, negotiation, and understanding of the interests and functioning of the other parties. What kills companies is their certainty," says the expert. In France, we are too often convinced that our logic and intelligence will impose themselves. That's not how it works. The world needs to rely on the objective reality of facts. Facts are more important than reason," concludes Alexandre Medvedowsky.

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