State Revival - Interacting with the state as a partner and counterpart of businesses

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State revival focuses on the renaissance of the state (including governments, regulators, political parties and politicians) both as a strong partner and as an antagonist of businesses. The COVID-19 pandemic and the energy crisis following the Russian invasion of Ukraine have changed the relationships between the state and individual companies. Now the state is interfering more strongly through regulation as well as by financing more and more services and industries. It's becoming a more influential stakeholder for many enterprises under conditions of uncertainty. Communication leaders need to rethink the positioning of their companies in political debates. Apart from strengthening public affairs activities, activities of state actors must be monitored so that communicators can serve as primary political advisors to the board.

The state as the “new superstar”?

The relationship between the state and the economy is constantly in flux. Its history is marked by several turning points. For example, while state interventions into the market were popular and successful after World War II, the belief in continuous modernization through welfare state control entered a deep crisis at the end of the 1970s, as historian Philipp Sarasin wrote in his book 1977. As a result of this crisis, the state retreated to a supervisory role in the Western hemisphere.

The logic of a free market with the state as its watchdog worked well for many years. But in the early 2020s, the state–economy relationship faced another turning point. COVID-19, the Russian war in Ukraine, and climate control, as well as rising nationalism and protectionism in key countries have returned the state to the spotlight. Due to its important role during the pandemic, the state has already been called the “new superstar” by mainstream media.

The trend State Revival describes precisely this resurgence of the state (e.g., governments, regulators, political parties, politicians) as a strong partner and antagonist of enterprises.

“When the strategic agenda of business is directly impacted by the state dealing with existential crises and managing fundamental change, there is a need to monitor political debates even more closely and to significantly foster the ability to provide expertise for key political decision-making, including at very short notice. With governments driving change on a national, regional, and global scale, the political environment is characterized by a mix of opportunities and challenges ranging from private public partnerships and research funding to increased regulation and an overall more political view of business activities and their impact. In order to deal with this new reality, companies need their communication and governmental affairs departments to define and promote their own political interests without getting overexposed in complex debates which are not limited to the economic sphere.”

Prof. Dr. Christof Ehrhart, Executive Vice President Corporate Communications & Governmental Affairs, Bosch, and Adjunct Professor at Leipzig University

Two important observations

For companies, the state will become an even more influential stakeholder. Opinion building related to decisions in this realm (for example, through public affairs and lobbying) will be strategically more important than in the last decade. Two key developments underline this:

Lately, the state has once again been interfering more strongly with the economy. Be it through subsidies and financial backing for specific industries, regulation in terms of energy supply and wages, as well as by extending the social welfare system. What can be observed is a polarized public debate about questions such as ‘Who deserves welfare?’ or ‘What does systemic relevance mean?’. While some players appear to be “too big to fail”, many actors and sectors feel overlooked by the state.
However, the state not only regulates, but also creates new demands and markets. It is becoming a more influential stakeholder for many enterprises. Now it is not just a regulator but sometimes a customer, too. For example, the markets for vaccines, refugee housing and integration, and military supply have exploded due to huge state spending. It has been shown recently that these interventions are often decoupled from consumer requests, innovation, and healthy competition. Regardless of any political evaluation of these activities, such interventions are changing the rules of the game for branding as well as for corporate and marketing communications.

Imagine a state pendulum

The relationship between the state and business can be viewed as a pendulum. After a long period of neoliberalism with almost no state intervention being the standard in the Western world, the pendulum is now moving back in the other direction towards more state control (neodirigism). While debate often addresses the two extremes (or ways to break out of the pendulum), the idea of the pendulum shows that there are probably many realistic situations in between.

A few things to keep an eye on

To help their companies to be in a good position for further action, communication leaders should observe three particularly relevant fields of action in the political sphere:

Strengthening the role as political advisor for top management: Top executives will increasingly need information and advice on governmental affairs. For communication leaders, it will be worthwhile to strengthen corresponding resources. This will help to enact the important role as an internal political advisor, which is much more about listening to fragmented discourses and creating internal scenarios than about traditional lobbying.
Repositioning companies in public debates: Communication leaders should raise the question why their company is indispensable for the public good or the overall system. It can also be helpful to be on the radar of politicians when it comes to the distribution of funding or public procurement. Thus, current stakeholder maps, communication strategies, and budget allocations need to be future-proofed.
Building a relationship with the state on a global scale: The relationship with state actors will be particularly important to global companies. Communication leaders should strengthen functions such as governmental or public affairs in emerging markets as this can become a competitive advantage. But be cautious: Diverging perceptions of collaboration practices around the world can trigger role conflicts and reputational risks which requires strategic approaches.

Key facts about the 5 trends

State Revival: The state is experiencing a renaissance. Governments, regulators, political parties and politicians gained in importance both as a partner and as an antagonist of businesses. After a period with almost no state intervention in the economy (neoliberalism), the pendulum is now moving back in the other direction towards more state control (neodirigism). Multiple reasons such as the pandemic or the Russian war against Ukraine have prompted this trend. The state is interfering more strongly in the economy – both by providing subsidies and accelerating the growth of specific markets by means of high spending.
Scarcity Management: After years of abundance, Europe has to get used to scarcity. Whether in raw materials, energy, personnel or products – there are shortages in many areas. This development is being exacerbated by demographic changes and geopolitical upheavals. Price increases, inflation and bottlenecks are the result. Many companies have to adapt their value chains and processes in order to achieve their long-term corporate goals. But scarcity offers opportunities as well. Rare products or services raise profitability for those who can deliver. Additionally, in times of scarcity, innovative and more sustainable solutions are increasingly developed for which there was previously no market.
Unimagination: A third world war, widespread blackouts or computers striving for world domination – today many unimaginable incidents are considered for being possible someday. However, companies cannot prepare for every future scenario. Rather, it is important to take precautions. Organizations must adapt their structures and processes and empower their employees in order to remain capable of acting even when the unimaginable happens. On an individual level, psychological stability and robustness are needed. This can be promoted through training on ambiguity tolerance, resilience and improvisation.
Augmented Workflows: AI-based technologies will enable new forms of interaction between humans and technology in the next few years. They promise to improve productivity by performing routine tasks, to reduce human error, and to generate insights that improve decision-making. As exciting as these prospects are, they may also be problematic. The prospect of augmented workflows challenges us to think about questions such as: Who delegates tasks to whom when humans and AI collaborate? How do outputs change if an AI makes suggestions – and who is responsible for them?
Parallel Worlds: New technologies are increasingly enabling us to create and immerse ourselves in extended versions of reality – so-called parallel worlds. This can make abstract concepts more tangible for consumers. More and more companies are recognizing the potential of these technologies, for instance for product launches. Behind this is also the idea of creating a worldwide "Metaverse" in which the real and virtual worlds are combined in a single environment. So far the Metaverse is primarily a vision. If and when it will arrive and what it will look like is anybody’s guess. Due to the increasing possibilities of 3D technologies, this trend should not be misjudged by communication experts.

Methodology

Sources & screening: First, information sources which provide relevant insights into the professional discourse in the areas of management, technology, and society were monitored and screened. These sources primarily include recent publications from scientific journals and conferences in the respective domains, but also selected newspapers (e.g., Economist Science and Technology), magazines (e.g., Harvard Business Review, Wired), social news sites (e.g., Reddit Science), blogs and websites (e.g., ReadWrite, The Next Web), whitepapers, and corporate trend reports.
Trend profiles: Each potential trend was systematically documented in a trend profile consisting of a brief description and several criteria estimating the trend’s relevance to corporate communications. Specifically, the research team assessed the impact of the trend on the corporate communications function, processes and management.
Scoring: Based on the criteria detailed in the trend profiles, a scoring method was developed that was used to rate each of the trends.
Selection: These trends were first discussed among the Communications Trend Radar team during a workshop. Each team member then voted individually for the top trends in the areas of management, technology, and society. We proposed five trends for 2023 (depicted below) based on the outcome of this process.
Reflection: These trends were examined further and later discussed with communication leaders during an online workshop in November 2022.
Report: All trends were analyzed and described in more detail in our publication - the Communications Trend Radar.

Research team

The Communications Trend Radar 2023 project was conducted by a research team of the Leipzig University, the University of Duisburg-Essen and University of Potsdam.

from left to right:

Stefan Stieglitz is Professor at University of Potsdam. He is head of the SAP-endowed chair of Business Information Systems and Digital Transformation.
Daniel Ziegele, M.A. is a research associate at the Institute for Communication and Media Studies at Leipzig University, Germany.
Sünje Clausen, M.Sc. is a research associate at the chair of Digital Communication and Transformation at the University of Duisburg-Essen, Germany.
Ansgar Zerfass is Professor and Chair of Strategic Communication at the Institute for Communication and Media Studies at Leipzig University, Germany.

Downloads

Download Communications Trend Radar 2023