The Era of Strategy… Protection, Preparation, and Progress
By: Luis Manuel Hernández G.
An investor, an entrepreneur, wants, among other things, to achieve their goals and ensure they comply with relevant laws, policies, and regulations.
In recent days, a series of unprecedented actions were carried out by the U.S., aimed at banking institutions that do not align with international standards. While this adds to issues of infrastructure, talent, patents, and logistics, we now also add the topic of service providers.
This alert —whether to act or not act in business— is something we must promote so that ecosystems can demonstrate reciprocal compliance and alignment with international standards.
We must also address the dependency of value chains, their service providers, and the interconnections that exist within economies.
This is one of those topics we have assumed is under control, but it’s clear that most of the time we “leave compliance decisions to the experts.”
If we sit with this idea for a moment, we must accept that transforming these challenges into opportunities for the organization leads us to rethink our strategy.
In general, we hear a phrase very similar to this:
“I need to pause. I can’t make investment decisions right now due to market uncertainty.”
Currently, much of the border region is acting and understanding the cost structures in business due to tariff issues, and there’s a relatively small sector trying to understand shifts in demand patterns; here we see some leaders protecting the business, preparing, and focusing on what they do well.
If you think compliance is expensive, try non-compliance.
Paul McNulty, Former US Deputy Attorney
Compliance, Risk, and Value Chains
In Baja California, as well as across the entire border region, it’s very common to manage and control potential currency and exchange rate adjustments to develop strategies and mitigate risks; what we seek is greater certainty within the business with minimal risks.
According to FinCEN (Financial Crimes Enforcement Network) in the U.S. —similar to the UIF in Mexico, but we could say at a deeper level— it integrates higher anti-corruption mechanisms and more efficient filters in terms of time, effectiveness in the severity of actions, and a broad reach of its consequences.
For this agency, it’s not necessary for a crime to be committed in order to pursue an investigation.
We must understand that negotiating the USMCA will be very difficult given the networks being built within the U.S. government. While we are in the red on energy issues and failing to capture nearshoring opportunities, let’s understand that service providers are also part of this equation.
Diversifying value chains is, in itself, an important act to strengthen markets, supplier networks, solid financial structures, and operational visibility.
For Baja California, let’s accept that current actions revolve around value chains, manufacturing, new markets, and commercial activity.
I invite the state of Baja California to look for ways to protect the general balance sheet and the compliance of the companies currently coexisting.
A company’s current assets are tied to its future sales. We often look at what we have without seeing that companies’ planning is about making the best use of those assets.
Talent, Leadership, and the Silent Risk
Baja California, in my view, has a group of high-level advisors who can protect companies’ investments, covering areas such as talent, foreign trade, regulations, banking, environmental, legal — and this is where I believe we fall short in promotion.
A few days ago, I sat with a couple of good friends whose service is stronger and more robust than what they can even express, and various organizations could be the link in a state development plan, as seen in some other states.
According to Shubham Singhal from McKinsey, you must not only be aggressive in improving your balance sheet and capital position but also in rapid growth.
Any organization and company must evolve to generate current and relevant strategies, not focused on past glories.
Let’s remember that companies have a shared mission. This is where the employment contract operates under two mutual investments: companies develop talent, and talent commits to a shared mission.
This model is becoming extinct, and here is where we must challenge what we require versus what is being offered. Soon, we will see a talent drain — not massive but certainly very silent.
This silence is due solely to an action known as “quiet quitting.”
Quiet quitting is more than a loss of personnel; it’s a massive talent loss. Massive because if the leader enters that mode, so does their team.
Even though this phenomenon is visible, what’s most severe is often not understood: people stop providing ideas, improvements, and projects because they know they won’t get anything in return.
This model is not exclusive to employment. Let’s also consider that many leaders have opted for quiet quitting; the difference is that these leaders, who are natural promoters, enter into more aggressive schemes than just job hunting: they engage in strategy frameworks that are often more aggressive and have multiplier effects due to their credibility, track record, or a combination of both.
For this reason, when a leader who, due to their performance, we used to call an A-class person —that is, very good— leaves, spaces open up that are filled by B- or C-class people, meaning less experienced.
As Warren Buffett says, “A players hire A players or sometimes a B; you need to be careful when your leaders are C or D, as they will hire and do business with E or F individuals.”
This is when strategies and missions no longer align, and goals are not achieved.
