Business Beyond Ginga: A Roadmap for Brazil

Business Beyond Ginga: A Roadmap for Brazil

Today Rio will lift the curtain on the Summer Olympic Games. In the backdrop of the grandeur will lie collective judgement—both on the games itself and Brazil’s economic future.

For Brazil, 2016 has been an incredibly challenging year – the country’s reputation has plummeted to a dangerous low point. The economy has shrunk 5.4 percent. The country that was leading BRIC growth has fallen fast.

Brazil’s president, Dilma Rousseff, may be impeached, and now the very leader of the impeachment effort has himself been pushed to resignation of his leadership post under accusation of involvement with the ongoing Petrobras investigation.

And now Lula may head to trial.

Just five years ago, Petrobras was #14 on Forbes’ list of the most valuable companies worldwide. Today it is #411—and Uber has surpassed Petrobras in market value. Eike Batista has gone from one of the world’s most admired conglomerate builders to notoriety as the man who both made, and lost, billions.

Our Trust Barometer research shows that the general population across 27 countries ranks its trust of Brazil-based companies among the lowest—at 32 percent—ranking Brazil ahead of only India and Mexico. Compare that to at least 64 percent trust for German, Canadian and Swedish companies.

We’ve seen this before, in the United States from 2008 to 2009. Respected companies like Lehman Brothers, Citibank and AIG—all fell from grace. CEOs were fired, the government swooped in to bail them out, and a financial and housing crisis ensued that would play out for years to come. Nearly 25 percent of African-Americans and Latinos lost their homes. It was a wake-up call that government had failed to set the right guidelines for business and that regulators failed to enforce the law. The entire business community should have paused, reassessed and pivoted—but it didn’t.

Bailouts and a so-called recovery only exacerbated the gap between the haves and have-nots. CEOs went into the bunker, keeping their heads down and waiting for the dust to settle. They focused exclusively on Wall Street, and proceeded to cut jobs, lower wages and outsource—all in the name of efficiency and strong balance sheets.

Eight years of this vicious cycle left the United States with a populist rebellion where the public channeled its frustration and yearning for leadership into the presidential candidacies of Bernie Sanders and Donald Trump.

No doubt: 2016 is Brazil’s equivalent to the 2008 financial crisis in the United States. But Brazil’s story doesn’t need to turn out the same way as America’s did. Brazil can do better.

If Brazilian companies want to play in the global marketplace they must change the playbook and up their game to focus on engagement, transparency and integrity. Brazil can be the BRIC country that breaks out by defining a new Corporate Brazil.

The future for business in Brazil is deeply tied to the regaining of trust. The public has seen magnates like Batista rise on the promise of Brazil’s future only to fall amid scandal.

But the public has also seen Brazilians take the global stage, leading some of the world’s most admired companies, like Carlos Alves de Brito at Anheuser-Busch InBev or Carlos Ghosn at Renault-Nissan. Ghosn earned the nickname “Mr. Fix-It” for his turnaround of Nissan and has been widely credited for a trans-cultural leadership style that challenged Japanese business norms while still honoring the automaker’s heritage. He transparently announced his plan, stressing a culture of meritocracy, opening up dialogue with stakeholders and taking accountability for the company’s success.

Here’s a blueprint for how Brazil can own this moment for positive change, rather than follow in the U.S.’s footsteps:

  • Be a principles-based business that is committed to making business good for society at large.
  • Commit to governance and set a framework for transparent accountability. Appoint internationally-recognized board members and ensure your board has the authority to enact actionable change for transparent governance.
  • Collaborate with like-minded companies, regulators and civic groups.
  • Talk to employees.
  • Get the CEO out of hiding. A CEO must stand for something beyond the numbers—engagement and integrity—and tell the story thoroughly.
  • Recognize that every company needs to be its own media company and push your story through owned, earned and social channels with a healthy dose of paid to ensure you reach the right audience.

Ginga is a beautiful and enviable way to play futebol. It’s not a way to run a trusted business on the international stage. But Brazil can retain its vibrant culture and transcend the trust gap.

Five years from now, Brazilian corporations can be thought of as the best in corporate governance, the best in sustainability practices, the best in employee relations – the very best of what is possible in a country that can no longer hide behind the “developing country” label.

Brazil can win. But only by doing it the right way.

 This blog post is adapted from my to ABERJE in Sao Paulo on August 4, 2016. Full remarks can be found here.

Ken Klassert

Disability Resource Coordinator/SSDI Benefits Adviser/Labor Specialist/Re-entry, Suffolk County Department of Labor

7y

12.6 billion dollars spent on the Olympics. Athletes living on luxury liners so they don't have to stay in the city. At the poverty level people live on the equivalent of 70 dollars a day. Just Google "rio street children" " or "rio death squads". The athletes should be ashamed of themselves supporting this sham. Do you think the poor will benefit from this in any way?

James 'Bim' Beckman

Linking Data Science to Organizational Change. Business/Tech Professor

7y

Brazil has enough of an educated middle class, so that if the people are mistreated the world will hear about it. This makes political corruption far more difficult to perform without exposure. Damn!

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Leandro Silva LS Executive Service Locação e Turismo Ltda

LS Executive Service Locação e Turismo Ltda (Transporte Executivo com Motorista) Rio | SP | CWB | SC | DF

7y

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Kim Tanaka

CEO, Technology Investment Fund

7y

It would help to provide a disclaimer in your article that Edelman is invested heavily in Brazil, with offices in Rio and Sao Paulo. So of course you have a positive outlook. Investors know otherwise. You might as well buy North Korean war bonds.

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