The Italian Elections and the "Politics Business"

Despite the fact that I currently reside in the US, I was born in Italy and lived there for a good part of my life.  My family and childhood friends still live there and the issues that surround the country are hence close to my heart.  This week's elections in Italy have had great resonance around the world and are expected to have quite an impact on the world's economy.  I enjoy politics.  Policy changes can affect business and retail activities.  However, in most instances politics would not be related to this blog.  Nevertheless, the latest Italian elections, when viewed under a strategic, professional and business angle, constitutes an interesting case study for business owners and executives.
 
Let's recap the results with a brief summary.  The elections had a clear and unexpected winner, the Five Star Movement of Beppe Grillo.  Grillo's party won the second highest number of votes and is now the third biggest coalition in the Italian parliament.  It is a remarkable result for a party that was only officially constituted in 2009 and that was participating in its first parliamentary election.  It is also notable that the coalitions that finished first and second, Bersani's PD and Berlusconi's PDL, essentially earned just a few more votes than Mr. Grillo's  in percentage terms and would not be able to form a government without either bowing to Mr. Grillo or partnering together in a "national unity" government.  The latter option would signify a repeat of the uneasy alliance that was caused by Italy's economic crisis and that brought about the technocratic government of Mario Monti in the last year and a half.  Both PD and PDL were eager to put put that experience behind with this week's elections.

The losers were Bersani's PD, Berlusconi's PDL and Monti's centrist coalition.  Bersani's party squandered a giant lead in the polls, relinquishing a great number of votes to Grillo's Five Star Movement.  The PD's coalition is indeed the leading force in Italy, but it enjoys such a tiny relative majority that it is expected to have substantial difficulties in forming a government and actually governing. 

Berlusconi's PDL has been hailed as one of the winners by part of the press, as its chances just before of the election looked extremely bleak.  It is undeniable that Mr. Berlusconi's showmanship, charisma, and sheer political shrewdness, helped the party.  However, we have to remember that the PDL's coalition lost almost 15% of the votes that it had gained in the previous election.  Those votes went to fuel Mr. Grillo's victory.  These result were not the result of the voters' concerns for Mr. Berlusconi's questionable personal behaviour, his legal problems or his political track-record.  This outcome is exclusively a product of a program that did not satisfy the electorate. 

Mr. Monti's coalition suffered the biggest defeat and now ranks as the forth force in parliament.  The meager number of parliamentary seats that the coalition won would not allow it to be a relevant force in the political discourse and in the process of forming a government.

Let's try to pinpoint and understand the reasons for Mr. Grillo's remarkable success and for the impressive failure of all the other parties.  To facilitate the process we can draw a parallel with any random company engaged in any business.  Most successful businesses around the world design, market and sell products based on their customer's preferences and tastes.  The products are then continuously updated and modified, as consumer's tastes evolve, shift and change.  Companies engage in countless activities, like focus groups, surveys, and product trials just to name a few, to ensure that their offering is likely to satisfy their clientele.

Curiously most political parties around the world and especially those in Italy have first formulated their ideas and designed their programs years ago often based on philosophical, social and economic principles, which seldom accurately reflect and represent the views of the majority of their citizens.  These are usually the product of political leaders with big egos and a conviction that regular citizens do not understand what they and their country needs.  These ideas have now grown to become ideologies, which parties consider as foundations that cannot ever be modified.  They rarely tap their constituencies to gauge, design and modify their programs.  Rather they design their programs to respond to the current issues at hand based on those ideologies and then try to convince their electorate that those programs are the best option.

However, electorates evolve and change as consumers do.  The Italian demographic and economic composition for instance is markedly different from what it was 20 years ago when the original PD and PDL parties were founded.  Their ideologies should reflect those differences and change accordingly.  Most importantly the changes should come as a result of an in depth study and conversation with the electorate.

Mr. Grillo's victory was the result of this very strategy.  His party organized countless meetings in squares around the country, called "meetups".  Through Mr. Grillo's blog, the movement encouraged any and every Italian to be part of the conversation and all the points in its program were proposed and discussed in the forum.  The resulting product was a program that reflected the frustrations of a great part of the electorate and that ultimately determined the movement's success at the polls. 

It is obvious that Grillo's Five Star Movement targeted and appealed to a very specific section of the electorate.  Other voters would never grant Mr. Grillo their vote: I count myself among them.  However, the movement's strategy successfully energized and empowered its constituency.  Mr. Grillo made them part of the political process and essentially provided a better "customer experience". 

PD and PDL should take note and establish their own ground operations not just to convince voters, but to get them involved in creating and shaping their political programs.  Politicians at times, especially during crises, will need to push forward unpopular reforms.  However, parties that followed Mr. Grillo's lead and used the business world as a model, would be more likely to ultimately design a product that would satisfy their electorate, a process that would ensure a better experience and a government that would truly represent their voters.  It would be the birth of the "politics business".

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