Art and Science of Policy Engagement

Public policy is crucial in shaping business outcomes, especially in dynamic markets like India. For businesses, anticipating and adapting to policy changes is a strategic necessity. From evolving compliance frameworks to the impact of geopolitical shifts on regulation, engaging with public policy is vital to an organisation’s long-term success. At a recent India CEO Forum session in Chennai, Rameesh Kailasam, CEO of IndiaTech.org, shared insights on navigating the complex interplay of public policy and business strategy. He focused on how to forecast policy changes, mitigate regulatory risks and leverage opportunities to influence policy in favour of industry.

The Art and Science of Policy Engagement

Policy advocacy blends art (persuasion, communication and strategic positioning) with science (data, law, economics and structured analysis). Effective engagement requires both logic and adaptability, as seemingly irrational arguments can sometimes influence policymakers. A compliance-driven approach alone is insufficient; success requires understanding the broader stakeholder ecosystem and adopting a flexible, situation-based strategy. Companies must define their policy DNA, balancing compliance with industry interests. This involves identifying alignment and conflict with emerging regulations, proactively engaging in policy discussions to shape favourable outcomes and developing a socially responsible strategic stance.

Understanding Your DNA in Policy Engagement

Advocacy extends beyond government affairs—it is embedded in daily interactions, from negotiating with management to aligning internal stakeholders. Recognising this dynamic helps professionals navigate policy issues more effectively. Thus, effective policy engagement begins with understanding one’s inherent approach to advocacy. Some common approaches include:

• Mercenary Approach: A purely professional stance, representing any industry (whether pharmaceuticals, tobacco or liquor) without personal bias.

• Arms Dealer Approach: Engaging with multiple stakeholders, sometimes advocating for opposing interests.

• Child Approach: The simplest form of lobbying, relying on persistence and persuasion, much like a child negotiating with parents.

• Human Approach: Advocacy guided by personal values, where individuals may refuse to represent industries that conflict with their ethical beliefs, such as tobacco, liquor or even FMCG.

Balancing Compliance and Advocacy

A compliance-driven mindset ensures that businesses follow the law and identify specific risks. However, it can also limit their ability to proactively influence required policy changes. Effective engagement requires a broader perspective, understanding diverse stakeholders and adapting approaches while upholding core principles. Policies can be classified as good (beneficial), bad (needing mitigation), or ugly (requiring opposition). Policies with a significant ‘ugly’ element demand resistance, while those with a mix of good and bad may be more easily manageable.

Policy Analysis Fundamentals for Businesses

• Labour Policy: Labour policies govern worker rights, employment terms and welfare conditions. In this context, pressure from the unions may hinder necessary reforms. Specifically for platform companies like Ola, Uber and Zomato, there are potential challenges in terms of rules requiring them to add drivers to their payroll, and from state government welfare levies for gig workers.

• Finance and Tax Policies: These policies influence business operations through taxation, compliance and sector-specific levies. Issues such as retrospective taxes on online gaming, inconsistent GST rates for hybrid versus EV cars and higher compliance costs for online travel agents compared to offshore businesses can create significant operational hurdles.

• Technology and Environment Policy: Policies affecting technological advancement and environmental sustainability can lead to regulatory conflict. Examples include the ban on BS-IV and BS-III vehicles, the complex mix of EV incentives and disincentives and China’s tech restrictions that disrupt global supply chains.

• Security, Political & Geopolitical Influences: Policies shaped by security and geopolitical concerns can disrupt operations. For example, governments may block companies based on their country of origin, geopolitical tensions can limit FDI and access to rare-earth metals or a defence contract might be blocked if the goods, say, are sourced from China.

• Market Access: These policies govern domestic and international market opportunities, shaping how businesses can enter or expand in various markets. Trade barriers, domestic procurement rules, restrictions on multi-brand retail and online agents, and mental health policies that affect employee welfare, are all key examples of market access challenges.

Stakeholder Engagement in Policy Influence

Effective stakeholder engagement is vital for shaping policy, influencing regulatory decisions and aligning organisational objectives with the broader ecosystem. The first step is stakeholder mapping, which involves identifying the full spectrum of influencers, both within and outside government. These include industry bodies, advocacy groups and non-profits. Additionally, conducting a perception analysis is crucial to understanding how different stakeholders view the organisation, which informs a targeted outreach strategy to maximise impact.

Stakeholders generally fall into five categories – negative (strongly opposed due to ideological, political or commercial reasons); negative neutral (leaning towards opposition but open to discussion); neutral, (unbiased and willing to assess proposals objectively); positive neutral (generally supportive but not fully aligned); and positive (strong advocates for the organisation’s position). Engagement strategies should focus on a defensive approach, which aims to protect and strengthen relationships with neutral, positive neutral and positive stakeholders and a conversion strategy, which seeks to shift negative and negative neutral stakeholders towards neutrality or alignment through dialogue and evidence-based engagement.

Challenges in Policy Influence and Adaptability

Navigating the policy landscape presents several challenges, particularly when engaging with policymakers who come with varying perspectives and levels of expertise. A rigid approach is often ineffective; instead, a balance of subject matter expertise and adaptability to unexpected developments is necessary. Stakeholder positions can also be unpredictable, requiring a dynamic and flexible approach to policy advocacy, particularly in the face of uncertainty.

Influence Strategies and Best Practices

To shape stakeholder perspectives, organisations can adopt two primary strategies:

• The Fear, Uncertainty and Doubt (FUD) Strategy: Often used in software sales, this strategy introduces caution by emphasising potential risks.

• The ACE Model (Advocate, Collaborate, Educate) involves three key strategies: Advocate by promoting policy positions through direct engagement and lobbying; Collaborate by building alliances to foster broader consensus; and Educate by using data-driven insights to influence informed decision-making.

Practitioners should also keep in mind the following general government affairs principles:

• Resistance is Inevitable: Every policy initiative faces opposition.

• Understanding Opposition: Knowing why stakeholders oppose an initiative is as important as engaging allies.

• Adaptability is Key: Regulatory and political environments are constantly evolving.

• Interpreting Responses: A no should be viewed as not yet, with persistence being essential to moving forward. Conversely, a yes requires caution and thorough due diligence in execution to ensure the decision is effectively carried out.