Developing a nonmarket strategy
Understanding the nonmarket context starts with analysis, which involves mapping both issues and stakeholders. Companies need to assess their stage of evolution, how they interact in different arenas (legislative, regulatory, public opinion), and the power balance between stakeholders. The evolving landscape of climate change policy exemplifies the dynamic nature of nonmarket issues, with fossil fuel companies needing to adapt their strategies as stakeholder balance shifts.
The next step is to formulate a strategy: setting clear goals, building influential coalitions, identifying key influence pathways, and planning tactics. This includes setting market-related goals (shaping regulations, influencing standards), defining focal issues and geographic scope, building coalitions with partners (competitors, supply chain players, NGOs, or governments), identifying influence paths to reach decision-makers, and choosing appropriate tactics (lobbying, public campaigns, participation in standards bodies).
Companies like Comcast and Verizon exemplified this strategic approach, employing a mix of tactics such as lobbying, legal challenges, and public relations campaigns to shape the regulatory landscape in their favor in the battle over net neutrality.
Capacity checks can enable an organization to build competencies in areas such as stakeholder engagement, policy analysis, and social innovation. This involves developing human capital through hiring experts, training staff, and cultivating an externally engaged culture. Patagonia’s commitment to being “in business to save our home planet” is a good example of how it guides its nonmarket strategy and empowers employees to make value-aligned decisions.
Companies should undertake feasibility checks to assess the ethics of proposed actions, anticipate responses, evaluate resource requirements, and plan for contingencies. The backlash Google faced after firing AI ethics researcher Timnit Gebru highlights the importance of aligning nonmarket strategies with stated principles.
The final stage, implementation, involves executing the strategy with agility and adaptability. Airbnb’s quick offer of free temporary housing to Afghan refugees in 2021 demonstrates how companies can leverage their resources and stakeholder relationships to respond rapidly to evolving situations.