Strategy and the Sustainable Enterprise

P D Jose
Introduction to Issues Management

Welcome back! In the last segment, we were talking about the unpleasant surprise that Dow had
after acquiring Union Carbide. But more worryingly for us, Dow's case is not a one-off instance.
Many firms find themselves caught in the crossfires of conflicts that they may not even have been
party to initially. How do you anticipate such events even before they happen?
One approach to evaluating such developments is to analyse issues as they emerge and examine
their implications for strategy. But to understand this, we need to define what an issue is first. An
issue is any trend, event, controversy or public development that might impact the corporation.
Issues may have its origins in social, political, regulatory or judicial environments. When we refer to
managing an issue, we're referring to the approach that a corporate adopts to deal with challenges
to its strategies, plans and assumptions. How do we identify if a problem is an emerging issue? One,
the terms of debate are not clearly defined. Two, the issue deals with matters of conflicting values
and interest and often there is no one correct solution. Three, automatic resolution is not available.
Four, the issue is often stated in value-laden terms. And five, tradeoffs are inherent. An early
anticipation of an issue helps because it widens the range of options that you have. It allows you to
understand the problem better and develop a positive orientation towards issues. It allows for
better identification of the stakeholders, allows you to create opportunities to supply information
earlier and influence the debate when required.

Let me show you an example of an issue that emerged in the recent past. Consider the controversy
over transgenic, or as commonly called, genetically modified plants that brought down an iconic
biotech pioneer like Monsanto in the late nineties. The technology was developed in the early 1980s,
and it was seen as a dramatic breakthrough that would influence every aspect of modern life from
foods to medicine. Opinions about the application of biotechnology vary around the world, but the
strongest opposition to the technology is concentrated within Europe and some Asian countries. A
majority of the Europeans believed that GM foods were risky, not useful and not to be encouraged.
Concerns about genetically modified food and its possible adverse fallouts began to appear in the
mainstream media in the Europe in the eighties and nineties. What you see here is a graph taken
from a study we did many years ago. It maps the number of instances of GM-related news appearing
in the media. As you can see, over a period of time, the number of instances of mention in the news
media about GMO increased dramatically. This also, you can see from the graph, it varies from
country to country. In 96–97, as the genetically modified crops arrived in Europe, particularly foods
derived from them, it provoked a very heated discussion both about the desirably and effects on
human health. Through the 90s and the early 2000, Monsanto attempted to allay the fears of GM
skeptics. However, Monsanto's growing control over the food chain and the implications for health,
environment, competition and accountability made the company the target of repeated protests
and disruptive action.

Global mobilisation against GM foods increased during the mid-nineties when the first GM crops
were being harvested. Global campaigns like Campaign for Food Safety emerged. At the core of
these campaigns were international NGOs like Green Peace, Friends of the Earth and others who
coordinated their movements and set up discussions. In 1990s, scientific studies in Britain showed
that GM potatoes may damage the immune system of rats. Activists unable to influence Monsanto
chose to focus on the retailing industry which is a key player in the food market. Many UK
supermarket chains unveiled plans to ban GM food one after another starting with Sainsbury's and
Iceland, Tesco and other major food chains. This movement spread to continental Europe.

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 Strategy and the Sustainable Enterprise
P D Jose
Introduction to Issues Management

Carrerfour, Delhaize, Esselunga, Marks and Spencer, Migros, Superquinn all of them joined in and by
1999, 24 of the top 30 European food manufacturers had declared GM-free policies.

The Monsanto story gives us a very important insight. It's necessary to watch out for leading events
and map the trends that are developing. Although not every distant rumble may turn into a full-
blown thunderstorm but the big ones might sweep away your company. In this case, Monsanto
ignored the growing media alarm over its roll-out of genetically modified foods. In U.S., it was
successful whereas in Europe, this had disastrous consequences both for its managers and
shareholders. On the other hand, supermarkets seized the initiative and rode out the storm
relatively unharmed.

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