Based in Colombia, Nicola Montorsi represents the leading public affairs consulting firm FIPRA in Latin America, working in crisis and reputation management, stakeholder engagement, and change management. CW Executive Editor Natasha Nicholson talked with Montorsi about how companies can best handle crises and protect their reputation, particularly in emerging economies.
Natasha Nicholson: How is handling a corporate crisis different in emerging economies versus mature ones?
Nicola Montorsi: First of all, in emerging economies such as the BRIC countries [Brazil, Russia, India and China] or CIVETS countries [Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa], companies tend to align more to global trends and standards of markets such as those in Europe or the U.S. In a time of global downturn, the areas that are in economic expansion, like Latin America, are receiving more aggressive investment attention. However, when a crisis strikes, if processes have not yet matured and decision makers haven't gained experience and appropriate training, there is no room or time for improvisation. For example, several local companies might experience rapid growth. They quickly go international, often merging very diverse organizations and operating in multiple markets for the first time. The experience I'm frequently Facing is the tendency for the local management, with little experience in living and working outside their home country, to underestimate the complexity of an intercultural context and a larger, wider and more diverse organization, where codification of processes requires a greater degree of care.
Managers risk making serious mistakes when they apply home rules or one-size-fits-all approaches that don't solve the problem, and often make things worse. There is a high risk of the investment failing and for the company to be seen as a negative player by the whole community. The same goes when companies from mature economies parachute their business developers into merger activities, and impose their own policies and processes to a cultural and operating environment, which just don't fit in it.
NN: What makes some companies more vulnerable to crisis in emerging markets?
NM: Some sectors are more prepared to face a crisis than others, because of major risks that are inherent to their industry. But also the size matters. Some companies are growing rapidly, or rapidly downsizing. Those companies frequently...