The Center for Nonmarket Strategy at IE Business School just published a new case study series on corruption and business ethics.  Entitled "Soft-Solutions", the case series - which is based on two dozen interviews with senior executives at a leading multinational software firm - provides participants with an opportunity to make difficult and morally-charged decisions in a high pressure competitive environment.

In the current issue of The Smart Manager, India's leading management journal, Center for Nonmarket Strategy co-director David Bach outlines the main pillars of nonmarket strategy and how skillful nonmarket management can become a source of competitive advantage.  The article also contains an explanation of the (ia)3-framework David Allen and David Bach have developed to help managers analyze their company's nonmarket environment.

We have frequently used the case of British Petroleum to illustrate the concept of nonmarket strategy and how it can drive competitive advantage.  In 1997, BP's then-CEO John Browne gave a speech in which he acknowledged that climate change was real, highlighted the oil industry's particular responsibility to reduce CO2 emissions, and committed his company on the one hand side to a voluntary emissions reduction and on the other hand to investments into renewable energy.  The company thus took a nonmarket position on a critical political issue to initiate a diversification strategy.  Led by its new "beyond petroleum" slogan, the strategy yielded a significant improvement in the company''s reputation, dramatic emissions reduction, and very solid financial performance.  BP, in short, became the darling of the "green" movement, demonstrating that even oil companies can change.

All that was called into question when a refinery explosion in Texas City, TX in 2005 and two subsequent oil leaks in Alaska reminded the public that BP hadn't moved entirely "beyond petroleum".  That the incidents appeared to have been at least in part caused by cost-cutting and deferred infrastructure upgrades dismayed environmentalists and appeared to vindicate BP critics who had questioned the very idea of a "green oil company".  Browne, in the end, had to resign.

When new CEO Tony Hayward took over last summer he explicitly stressed the importance of operational excellence, but the overall strategy remained nominally unchanged.  Then, a few weeks ago, there was speculation BP could divest its alternative energy business to shore up its financial performance, a move that would pull the plug on its green strategy.  The company quickly responded, denied the rumors, and publicly renewed its commitment especially to wind and solar energy. 

The nonmarket approach would lead us to believe that renewables remain critical for BP.  The reputational cost of pulling out would likely be very high.  It's one thing not to commit.  But it's another to commit and then to un-commit, especially now that everybody is paying attention to global warming.  You can change a market position much more easily than a nonmarket position.  Having said that, the rumors certainly suggest that BP's executives have found it difficult to convince their shareholders that the strategy pays, even if some of the individual investments don't pay much.  

Center for Nonmarket Strategy co-director David Bach was recently featured in a Financial Times portrait. The article is available here.

In this short video clip, David Bach explains what nonmarket strategy is and why its increasingly important for global business.

Center for Nonmarket Strategy co-director David Bach is quoted in today's Financial Times in an article about the Spanish business community's attitudes regarding the upcoming Spanish national elections. Bach argues that lobbying, while traditionally associated with Anglo-Saxon countries, is very much present in Spain. Only the channels tend to be different, as business-government relations in Spain tend to unfold in less formal, more social settings. The full article is available here.

IE Business School is launching the Center for Nonmarket Strategy to create a hub for research, teaching, and consulting on the critical nexus of business and politics.

Content is currently being added to this website. Please stay tuned for the website's formal launch in the next few days.