Washington Is Changing. Companies Have to Change With It

06/04/2015 03:05 pm ET | Updated Jun 05, 2016

(Image via Shutterstock)
Image via Shutterstock

Digital technology transformed business models for the media, manufacturing and sports industries. Now shifts in how Washington works require that companies adopt new, technology-driven government affairs strategies. Here are some of the signs of the transformation underway in Washington: a decrease in Congressional action; increased complexity in regulations; the growing relevance of social media; and the proliferation of information services and access to new information.

For businesses of all sizes in all industries, there has never been a more critical moment to recognize these changes and act on them. A recent Bloomberg Government (BGOV) analysis of how companies perceive government activity's impact on their business revealed that no external force outranks government activity in its material impact on shareholder returns. Further, BGOV found that the interconnection between business and government is growing.

And yet despite these powerful realities, businesses are generally unchanged in how they engage with Washington.

The changes taking place in Washington create both risk and opportunity. Executives must adapt. To develop a competitive advantage that translates directly into shareholder value, forward-thinking Washington offices will utilize quantitative, systematic frameworks to inform engagement decisions, adopt new digital tools that provide deeper insights into the nuances of government action, and objectively measure engagement outcomes.

A Decade of Change

For companies engaged in Washington, it's no secret that the dynamics of advocacy have changed.

Congressional action has decreased, calling into question the efficacy of traditional legislative-only strategies. Numerous political scientists have tracked the growing polarization between Democrats and Republicans on the ideological spectrum -- along with the shrinking number of moderates. Since 1970, the two major parties have increasingly voted along party lines. In the 108th Congress, 498 new laws were enacted. By the 113th Congress, that number had declined by more than 40 percent to 297 enacted laws.

However, this void of legislative opportunities has been filled with increasing amounts of regulatory action -- with review times for "economically significant" rules growing by over 100 percent from 2008-2014. For the 2009-2014 time period, the average number of "economically significant" final rules published annually grew by 30 percent to 55 rules per year compared to an average of 42 in the 2003-2008 time period.

Moreover, social media has undermined conventional voices of power. Twitter, Facebook, LinkedIn, and other social platforms are as important if not more important than traditional media outlets. Hillary Clinton's Twitter account has approximately 1 million more followers than the total number of viewers of NBC's Meet the Press. With these new media technologies challenging Washington's model for media engagement, organizations can now more easily activate employees, vendors, and customers around an issue and accurately track their impact in real time.

Open data has also created new ways for companies to transform risk into opportunity. For example, federal lobbying data has become increasingly more accessible, enabling government affairs shops to have a better understanding of where their competitors are allocating resources. With better insight into the competition's engagement, companies can more effectively employ their resources by either reducing redundancies or surfacing new opportunities. Companies that leverage open data will have better insight into advocacy opportunities.

How to Win in Washington

Transformations in the way Washington does business -- combined with an increase in available data and technology -- require a data-driven, systematic approach to influencing policy outcomes. A successful government relations strategy can no longer only include facilitating meetings for out-of-town executives while monitoring and communicating activity.

Executives quantify performance in all other areas of their business. So what should CEOs be doing in Washington to drive bottom-line performance?

The first critical element is to combine their current Washington resources with a data-driven approach to advocacy. Implementation of sophisticated workflow tools developed by innovative technology companies (full disclosure: BGOV is one of those companies) can bring transparency to the competitive landscape, eliminate cognitive biases, and enable new ways of affecting desired outcomes. These new tools allow organizations to connect the dots with real time alerts on legislative and regulatory action, and enable the tagging and search of contracting opportunities, ensuring advocates don't miss an opportunity. BGOV, for example, objectively evaluates the performance of thousands of lobbying firms every quarter to help companies find their optimal external advocating partners.

Secondly, the implementation of a systemic, repeatable engagement process is a necessity. BGOV has developed the following high-level framework to help CEOs and government affairs professionals gauge Washington activities and quantify maximum value:

  1. Identify a universe of all direct and indirect government related issues posing opportunities or threats to the company's business.
  2. For each issue, derive an expected value based on probability of occurrence and present value of incremental cash flows or cost savings.
  3. Define a fixed set of issues to engage on, taking into consideration the expected value, thresholds for materiality, and available resources.
  4. Understand and draw from a portfolio of levers, including internal and external options, to allocate resources accordingly.
  5. Conduct an ex-post evaluation of engagement activities to quantify results, make necessary adjustments, and justify resource requests.

What happens in Washington today is more important than ever for the business community. And while executives can allow continuation of traditional engagement practices, those who recognize existing shifts and implement a systematic engagement process that leverages data and transparency tools will drive material business value.

Don Baptiste is co-founder and head of Bloomberg Government, an online subscription service that provides news, data, references, analysis, and workflow tools. Tony Costello is the director of Government Affairs Research at BGOV. They will speak at the Techonomy Policy conference June 9 on "Doing Business in DC." Kate Caison, a research associate, contributed to the research and writing of this article. To attend, you can register here.

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