Can business leaders help Iran become a "good country?"

Is Iran a good country? This important question is being asked of business leaders as they try to justify market entry plans to board members, shareholders, and the general public. As Iran’s post-sanctions economic opening gains momentum, the question is gaining a new urgency. Critics of the Iran Deal are doubling down on the claim that investing in Iran will further enable the “bad behavior” they see as characteristic of the Iranian state. For the most part, major multinationals have brushed aside criticism, noting that their activities in Iran are consistent with the sanctions relief granted as part of the JCPOA nuclear deal. But the question of whether Iran is a good country remains, as does the question as to whether there exists any obligation for Iranian and international business leaders to try and make Iran a better country.

Simon Anholt has made it his mission to understand which countries are good and what “good” really means in this context.  Having spent twenty years advising heads of state and governments around the world, Anholt developed a specific formulation of what makes a “good country.” In a popular TEDTalk with nearly four million views, he describes how earning the mantle of a “good country” requires a “government and people who care… and who think outwards instead of only thinking selfishly.”

To examine what it means to be a country that cares, Anholt developed the Good Country Index, which uses data from organizations like the United Nations and the World Bank, weighted by GDP, in order to measure the relative outward contributions of 163 countries across 35 indicators. In 2016, Iran was ranked a dismal 136, between Zimbabwe and the Ivory Coast. By way of comparison, Sweden ranks first in the index, the United States ranks at 20, Turkey at 56, and Saudi Arabia at 89. Why does Iran compare so poorly, particularly for a country of its considerable wealth and proven talent? What can be done to improve its standing?

Anholt notes that Iran has a low ranking, “simply because it is not doing very much in the areas which we have been able to find reliable measures for.” He sees two explanations here. On the one hand, Iran has willfully downplayed any obligation to contribute to the global community, positing economic and cultural self-sufficiency as a kind of resistance to foreign aggression. On the other hand, the global community isolated Iran, necessarily impacting its ability to make contributions towards a greater good. Anholt concedes that when being “subjected to a tough regime of sanctions as Iran has been, it basically negates the ability to do good. This is honestly a very serious punishment.”

The seriousness of the punishment relates to its self-reinforcing nature. Iran was sanctioned because it was seen to be a “bad” country, allegedly fomenting conflict and undermining the international order—which has bearing on the “International Peace and Security” category included in the index. But as a result of being sanctioned, Iran’s ability to contribute to other key categories such as “Prosperity and Equality,” “Health and Wellbeing,” “Science and Technology,” “Culture,” and “Planet and Climate” was diminished. Iran’s contribution to global trade fell dramatically. Pharmaceutical exports suffered greatly. Participation in global science and technology research was stymied. Cultural exchanges were made impracticable. Efforts to tackle climate degradation were hampered. Worst of all, the Iranian state seemed to stop caring about its diminished means to engage with the world, adopting instead the language of a lonely, but determined, resistance.

At the same time, Anholt sensibly explains, “There is a risk under sanctions regime that people can start blaming that for everything. One thing I am not saying is that without sanctions Iran would be in the Top 10 of the Good Country Index. It wouldn’t be very high up. In the end, countries either have or don’t have a habit of cooperation and collaboration internationally.”

Overall, Iran’s low ranking reflects both local and global culture. Longstanding antagonism between Iran and the West warped incentives for collaboration. This antagonism is an example of what Anholt sees as the “simple diagnosis of what is wrong with the world.” In the face of 21st century challenges and the realities of globalization, countries continue to operate like “17th century nation states” with behaviors akin to “self-interested and competing tribes.” Anholt contends that today’s global challenges, which include issues such as economic crises, climate change, armed conflict, public health and so forth, “are beyond the capability of any individual nation to tackle. So clearly cooperation, not competition, has got to be the order of the day.”

Such a description of global challenges and the need for cooperation are commonly given lip service by politicians and business leaders seeking to demonstrate their conscientiousness.  But Iran’s recent history offers an encouraging example of how cooperation can be achieved in a very consequential way.

The JCOPA nuclear deal between Iran and the P5+1 was agreed largely because of the “win-win” philosophy adopted by the negotiators. Underlying this philosophy was the important realization made by all parties that their negotiating positions needed to take into account not only what was in the best interests of their own citizens, but also in the interests of the global community. This realization is an example of what Anholt calls the “dual mandate” and it is the fundamental cultural value he believes lies at the heart of a good country. The dual mandate posits that “anyone in positions of power and responsibility, including business leaders, have got to understand that they are responsible not only for their own people and their own territory but also every man woman and child on the earth and every square inch of the earth and the air above it.”

For a policymaker or business leader, such a mandate might come across as so expansive as to be almost banal. But Anholt is a practical person. He is adamant that adopting the dual mandate is feasible because “cooperation and competition are mutually beneficial and not mutually exclusive” in this worldview. For example, while relations between the US and Iran remain contentious, implementation of the nuclear deal has emerged as an area of limited collaboration. Moreover, in the framework of the Good Country Index, countries can compete for power and influence, but are encouraged to do so by supporting the greatest good. 

Observers of relations between Iran and the West will note that at a political level, the barriers to further collaboration remain high. Western governments and the Iranian state have a mutual suspicion that is unlikely to give way to broad collaboration. But the triumph of the nuclear deal was the setting in motion of a series of political, economic, and cultural processes, which can help Iran to slowly become a better country, at least as measured by the Good Country Index.

Anholt makes it clear that countries can rise in the Good Country index relatively quickly. The measures are taken each year, and new policies such as lower tariffs, improved visa rules, and greater charitable giving can all boost a country’s ranking. But while the actual outward contributions of countries are relatively easy to improve, fixing the reputation of a country takes much longer. He believes that "[even] if a country changes dramatically, it may well be a decade or a generation for the world to get the message.”

Prior to the Good Country Index, Anholt developed a first-of-its-kind index called the Nation Brands Index. Published in partnership with GfK, a world-leader in market research, the index measures the global brand capital of major countries. In discussing Iran, Anholt notes an important relationship between the Good Country Index and the Nation Brands Index. Just as Iran ranks low in the Good Country Index, “Iran has always ranked 50 out of 50 countries in the Nation Brand Index.”

Anholt sees Iran’s negative reputation as both a product of falling contributions to the global community as measured in the Good Country Index, but also as “predominantly the consequence of anti-Iranian propaganda.” He “hesitates to sound like a conspiracy theorist” but feels the consequences of how Iran has been portrayed is clearly reflected in the Country Brand Index. “The picture of Iran I get back from the nation brands index around the world is almost comically different from the Iran that many know.”

For Iran’s policymakers, business leaders, and their international peers, the question is how to slowly and carefully resuscitate Iran’s reputation. While plenty of countries that have questionable reputations remain destinations for trade and investment, for Iran, a different standard has emerged. Many of the world’s largest companies, and particularly banks, have been hesitant to engage with Iran commercially, due to concerns over reputation risk. In effect, improving Iran’s global image will be fundamental to truly achieving the promise of sanctions relief.

Looking to this challenge, Anholt believes that the business sector “will play an important role in this effort because they, above anyone else, should understand the direct causal relation between national behavior, national image, corporate image, and commercial outcomes like export performance, talent recruitment, and tourism.”

As Anholt explains, the Good Country project is “all about is trying to move from a culture that is fundamentally competitive to one that is fundamentally collaborative.” The inspiration comes in part from the world of business and the manner in which industrial groups began to work on better cooperation in the 1970's, developing the concept of “cooptition.” While companies remained essentially competitive, they developed the capacity to work together to develop new technologies or solve shared challenges when it was in the benefit of all parties. While business forged ahead with this new culture of collaboration, Anholt believes that “the public sector has been lagging generations behind.”

Anholt argues that “if you are struggling economically, it is essential to have a good national image” so as to attract trade and investment. This may explain regular statements from Iranian officials about the desirability and preparedness of Iran’s marketplace for foreign investors. But such proclamations will make little difference. “The only way to earn a good national image is to take corporate social responsibility to the national level to be regarded as a country that does good as a matter of course,” notes Anholt. The commitment to repairing Iran’s reputation must not be superficial. It would be easy to try and counteract the “propaganda” that makes Iran look bad with propaganda that paints a positive image. But to affect lasting change, Iran needs to earn a better reputation by being a better country.

This is why the Good Country Index is potentially instructive. It identifies the key areas of focus by which Iran’s government and its business community can focus their commitment beyond their own borders.  For business leaders, the clarity of the model should be empowering. So long as the company can confidently assert its commitment to supporting Iran’s outward contributions to the world, the near-term reputational concerns should be minimal. Engagement of the country becomes part of a larger trajectory towards excellence.

Altering Iran’s course will be difficult, but alerting the course of its companies and their international partners will be easier. Anholt points to the potential for Iranian consumers to drive the change from a grassroots level by making demands of both local and foreign companies whose products and services they buy. Anholt thinks the demands is simple, “They should say, ‘We don’t want you to be selfish, we want you to be good.’” 

Why is infrastructure investment critical for Iran's post-sanctions success?

Transportation, communications, and energy infrastructure have dominated the agenda for foreign investment in post-sanctions Iran. French construction giants Vinci and Bouygues have signed deals to support airport expansion in Tehran, Mashhad, and Esfahan. Leading French telecom company Orange is reportedly seeking acquisition targets in the Iranian market. Italian State Railways has signed an agreement to help to develop Iran’s high-speed rail network. Belgium’s Port of Antwerp has signed an agreement to help develop Iran’s Bandar Abbas Port. German industrial giant Siemens has signed agreements to support the modernization of Iran’s power plants. Norway’s Hemla Vantage plans to construct a new liquid natural gas terminal in the Persian Gulf. The British Photovoltaic Association aims to coordinate construction of a 1 GW solar power plant. Major investment in the oil industry is also pending, with the new projects nearly ready to go tender.

These types of projects fascinate Parag Khanna, who is “obsessed with infrastructure.” Khanna is a global strategist who advises governments and companies on the interplay of geography, economics, and technology. He is a prolific thinker with best-selling books and popular TED talks. But despite his role as a public intellectual, Khanna has a decidedly commercial outlook, and his work primarily involves advising stakeholders in emerging markets to “help domestic companies globalize at a very low cost, so globalization can be more inclusive.” 

Globalization is at the top of Iran’s post-sanctions economic agenda. The country's sanctions-imposed isolation from international markets was concurrent with the period in which these markets saw unprecedented levels of integration and interconnectivity. Intensive infrastructure development in energy, transportation, and communication connected the traditional economic powerhouses of the West with new centers of influence in the East and South. Today, as the recently signed deals demonstrate, Iran is eager to be included in these networks and to make up for lost time. 

Inclusive globalization is a central theme of Khanna’s latest book, Connectography. In Connectography, Khanna challenges the common view of globalization as being driven by ideologies (such as capitalism) or by institutions (such as the United Nations or the World Bank). Instead, he argues, it is actually functional and physical infrastructure that drive global change.  In this theory, infrastructure is “foundational” in a very literal sense and “functional geography” is more important than “political geography”. Rather than focus on how the world is organized across political borders and alliance, we should focus on “how we actually use the world” through infrastructure.

Khanna’s insistence on a functional idea of power echoes the dominant theories of international relations from the early twentieth century—before the Cold War focus on competing ideologies. In these early theories, a nation's might was measured purely by its military means. The importance of "hard power” had not yet been supplanted by the influence of “soft power.” Whereas in the past the ability to use a large army to secure territory was the sine qua non of global power politics, Connectography states that the ability to use transport, energy, or network infrastructure to “connect” territories now determines relative power between states. The “tug of war” between security and connectivity is at the center of current competition among global superpowers. Khanna points out that “Infrastructure is being posited as a rival public good to security. While the United States offers security, China is providing the global public good of infrastructure.” These two countries are competing not about “capitalism versus communism or democracy versus authoritarianism,” but instead “it is really a debate about whether security or connectivity will determine relations between countries.”

The juxtaposition of security and connectivity offers a unique way to understand Iran’s agreement to the JCPOA nuclear deal. In the deal, Iran sacrificed its ability to develop a nuclear deterrent (what many states consider the ultimate guarantee of national security) in exchange for sanctions relief and a broader opportunity to reconnect with the world both politically and economically. Of course, most analysts saw the choice facing Iran as a simple one between a possible military invasion, and the ability to build improved economic and political relations. But Khanna thinks that in security versus connectivity debate “there is a very subtle spectrum we have to understand. Increased connectivity in the sense of physical linkages, supply chain integration, and trade interdependence are part of the cause of diminishing tension in the traditional geopolitical sense. But there are many reasons why there is less tension overall.” Khanna challenges the traditional view of security as the protection of a nation-state's borders. He makes a compelling case that today the only salient concept of security is the protection of connectivity itself. This connectivity is how states project their power in the global system. 

One year after the nuclear deal, many observers are wondering why Iran and the United States have not developed closer ties. One explanation might be that the United States, not having lifted its primary sanctions on Iran, has little to offer in the way of connectivity. It is telling that Iran joined the China-led Asian Infrastructure Investment Bank (AIIB) in April 2015, several months before the JCPOA agreement was reached. Khanna sees AIIB as a key example of connectivity being used as the currency of power. “AIIB is an example of a new institution that quickly gained 60 members and which by the end of this year will have 100 members. It will be almost as large as the World Bank and it has a mandate to topographically engineer the planet, particularly in the Eurasian landmass where more than half the world’s population lives. These infrastructure projects will influence more than anything else being done by a Western state.” 

Khanna’s theory suggests that if the West only offers Iran the diplomatic connectivity of a nuclear deal and not the functional connectivity of infrastructure, then normalized relations will have little value. This is why the European push for infrastructure projects is critical, and why the United States must ensure that these projects get off the ground. Ideological harmony with the West is not a priority for Iran. Rather, Iran’s imperative is developing its transportation, communications, and energy networks in order to enable full participation in what Khanna calls the “global urban network civilization.” 

For a country of its size and economic means, Iran is hampered by insufficient infrastructure. To get a sense of how far Iran lags behind more developed countries, a comparison with France is instructive. Iran covers 1.6 million square kilometers. France is less then half the size, covering about 650,000 square kilometers. Iran’s population of 82 million is about a fourth larger than that of France at 66 million. But in almost every category of infrastructure, France matches or outpaces Iran as seen in data from the reputable CIA World Factbook.

In terms of transportation, Iran’s rail network comprises of just 8,500km, whereas France boasts nearly 30,000km in a system with much higher quality rolling stock. Iran’s lack of a strong rail network creates reliance on domestic flights for intercity travel. Iran has 319 airports, but only 140 have paved runways. Of France’s 464 airports, 294 have paved runways—a much higher proportion. Iran’s connections by sea also lag behind. The country’s merchant marine includes just 77 tanker, transport, passenger, and cargo ships. France’s logistics capacity relies upon a merchant marine of 162 ships. Even in energy infrastructure, France can compete with Iran, despite not having Iran’s immense oil and gas reserves. France has 15,000 km of gas pipelines, 3,000 km of oil pipelines, and 5,000 km of pipelines to transport refined products. Iran barely outpaces France despite being much larger, with 20,000 km of gas pipelines, 8,500km of oil pipelines, and 8,000 km of pipelines for refined products. While France produces 586 billion kilowatt-hours of electricity annually, Iran produces about half that amount. In the area of communications, roughly 31% of Iran’s population are internet users. In France, the figure is 82%. France has about 1 million more fixed telephone lines despite having just four-fifths of the population. 

Despite the long road ahead for Iran to build the infrastructure needed for robust economic growth, Khanna is fundamentally optimistic about Iran’s ability to reconnect with the world. He has general confidence “in societies that are young, urbanized, where the unemployment level is not too high.” Khanna saw encouraging signs in all three areas during his fact-finding visit to the country in 2015, where he felt an “energetic spark” in the “last great emerging market.” He believes that “Something exciting is happening from a geopolitical standpoint because after Iran there are no big un-integrated countries remaining.” 

In the chapter on Iran in Connectography, Khanna focuses largely on the dynamism of Iran’s young population. This is a surprising interlude in a book mostly focused on pipelines, energy grids, and internet cables. In speaking with Iranian youth and young entrepreneurs, Khanna's confirmed his belief that “connectivity is a fundamental human impulse.” Khanna explains, “As human beings, we do not primarily seek or prize or value nationhood or ethnic enclaves more than the prize connectivity.” The evidence for this impulse is easy to find when looking to the two-thirds of Iranians who are under the age of thirty. The constant engagement on social media, the increasingly cosmopolitan outlook of the urban middle class, the confidence of young people to seek education and opportunity across borders, the tide of “re-pats” returning to work in Iran, and the desire of new entrepreneurs to provide world-class goods and services in Iran all represent a mindset of connectivity. The key question remains whether the state can deliver the necessary infrastructure to harness this energy. Will the power-brokers invest in functional infrastructure that would unleash the potential of this new generation?

Khanna acknowledges that “In the case of Iran there is a very strong national interest in having state-owned enterprises owning and operating infrastructure assets.” The Iranian approach is part of the larger doctrine of the “resistance economy." Iran has prioritized developing domestic economic capacity to avoid reliance on foreign imports. The call for a resistance economy took on new significance in the face of international sanctions when self-reliance was the answer to an economic attack by the West. The mindset of the resistance economy, which sees connections (physical or otherwise) with suspicion, is increasingly at odds with the aspirations of the younger generation who crave connectivity. 

In Khanna’s assessment, it is important that Iran adopts a new mindset and embraces open infrastructure.  "I never bought the resistance economy thesis and I saw it as a 'rhetorical cry' that hid poor decision-making. A strong state can control its connectivity. I don’t believe that economic opening comes at the price of being exploited.” Khanna points out that Iran’s energy industry is inherently dependent on its connections to global markets, yet those connections were not sacrificed in the name of the resistance economy, even when the political call for resistance was strongest. Encouragingly, the Rouhani administration and much of the business community in Iran seem to have embraced a mindset more committed to connectivity. Whether it is possible to rally all key elements of the Iranian state under a single agenda of managed globalization and infrastructure development remains to be seen.

To create a cohesive development agenda, Khanna believes that the Iranian state must project more confidence through connectivity. Iran has “an intelligent population and a clever government able to executive on a model of controlled connectivity” that does not expose the country to exploitation as has been historically feared. Khanna states that when traveling in Iran, “You truly feel you are in a very stable, civilizational state. This is a deep stability. In Western conversations you sometimes hear politicians ask ‘what can we do to destabilize Iran’ and the answer is nothing, because it is a fundamentally stable state.” 

Recognizing this inherent stability, Iranian policy makers need to avoid equivocating at a crucial time. Khanna warns that hesitating to commit to connectivity and the related infrastructure investments because of concerns over instability and exploitation is self-defeating. He contends, “If you don’t make these investments, you run the risk of falling apart catastrophically.” He points to Venezuela, which squandered years of historic oil revenues, choosing economic isolation in the name of self-reliance, only to fall into near total economic collapse in recent months. Newspapers sympathetic to the government of President Rouhani have similarly used Venezuela to show what would befall Iran if it purses the path of a resistance economy without modification. 

Most of all, Khanna believes that despite the long-term nature of infrastructure planning and development, time is of the essence. “It is never too early, but it can certainly be too late to be spending in these fundamental ways. It is a pity countries wait until it is too late and they don’t have any money to do it anyway.” 

Why must Iran's business leaders adopt a long-term mindset?

In recent weeks, there have been growing murmurs that the Iran Nuclear Deal is under threat. Iran has not seen a boost in its economic performance that many had expected immediately following the lifting of sanctions. Analysts are concerned that without tangible results in the short-term, the deal will become politically untenable for the Rouhani administration. In the face of these fears, Rouhani has prioritized economic reforms that will deliver benefits in tandem with coming election cycles. Similarly, Iranian business leaders are pitching investment opportunities aggressively, behaving as though the window of opportunity could close at any minute. 

But the success of the Iran Deal—an agreement that overturned thirty-five years of economic and political marginalization—has an inherently long-term orientation.  Transition Day, on which all provisionally-lifted sanctions will be permanently removed, is slated for October 20, 2023. It is clear that if Iran is going to maximize post-sanctions opportunities, and reach its remaining milestones, it must think beyond the next few years and conceive a long-term roadmap for success.

Oxford historian Homa Katouzian has described Iran as a “short-term society” where “history [is] a series of connected short runs.” A lack of “accumulation and preservation” has meant that successes in good times did not build towards maximal levels of development or prosperity in the long-term. Iran has been held back by “the basic norms of arbitrary state and society,” where a “lack of structure” leads to “disruption.” Though a particular feature of Iranian history, this condition can be seen beyond Iran. As the behavior of business leaders and policymakers around the world attests, in any atmosphere of uncertainty, the fear of disruption means that short-term thinking supplants the long-term mindset.

The challenge of thinking long-term is an area of focus for Thimon de Jong, a futurist who specializes in “future human behavior and how it relates to business strategy.” He is the founder of Whetston, a strategic foresight think tank based in the Netherlands. Whetston works with some of the world’s leading companies, including Microsoft, Vodafone, and Morgan Stanley. As de Jong explains,“I do two things. Commercially, I give presentations and workshops around the world in all kinds of different industries. [I also] lecture at Utrecht University, where I teach masters students. They keep me fresh and on my toes. Teaching is the best way to test a lot of ideas and theories.” 

Recently, Thimon has explored the importance of a long-term mindset in a time of global “short-term hysteria.” His research suggests that business leaders around the world have developed short-term mindsets, often concerned only with the opportunities, risks, and necessary actions of the next fiscal quarter. Focusing on the short-term means ignoring the long-term, and business leaders and policymakers are spending little to no time creating robust plans to achieve larger goals for the next, five, ten, and even fifty years. Thimon believes a correction is underway and that the most successful business leaders are now beginning to “try and seek that balance again.”

There are numerous drivers that have caused the short-term hysteria, but they boil down to a single buzzword: disruption. Disruption is typically thought of in technological terms— a new technology is developed that offers radical efficiencies, and the company that owns that technology has a meteoric rise, displacing traditional powerhouses. Ride-sharing company Uber, now valued at over $60 billion USD is a prime example. Technology is changing so rapidly that businesses rarely have time to adapt. Thimon cites Harvard historian Jill Lepore, who writes about a“disruption machine” and a belief in the primacy of technological innovation that has led business leaders to become “transfixed by change [and] blind to continuity.”

Iran must contend with both economic and political disruptions. To Thimon, political and economic shocks like Brexit or the rise of Donald Trump are prime examples of disruptive developments that feed short-term thinking. “It is the same anxiety. There is more anxiety than just the tech. We live in emotional and uncertain times.” 

Recent political and economic disruption in Iran has elicited largely positive emotions. The election of Hassan Rouhani, the successful conclusion of the JCPOA, and the implementation of sanctions relief, have all “disrupted” the previous business environment. Much like technological disruption, these developments have brought new optimism to the business community. With new conditions come new opportunities, and the energy seen in Tehran’s private sector today is as electrifying as that of Silicon Valley. In both places, a business community is confronted with the enormity of its own potential. But the challenge of rising to the occasion breeds anxiety alongside optimism. 

Every major Iranian business is racing to secure its post-sanctions position—finding viable partners, securing investment, launching new projects and products. Even while the overall pace of economic reintegration remains slow, given challenges such as the hesitation of major banks to re-engage Iran, the pace of business development activity is frenzied. There is a clear fear of “falling behind” the competition. Thimon encounters a similar anxiety in business leaders in Europe, even among companies with little competition.  “They are scared even if the numbers say they are fine, the fear of being disrupted changes their mindset.”

Importantly, short-term thinking is not limited to senior management in Iran. There are signs that professionals at all levels, unsure of how to take advantage of new opportunities brought about by sanctions relief and the related disruption, are falling into the trap of short-term thinking. Data from IranTalent.com, Iran’s leading jobs website, suggests that while unemployment in Iran is high, companies are still struggling to find and keep suitable candidates. 

Speaking at a recent conference, IranTalent CEO Aseyeh Hatami noted that the best qualified candidates in Iran today are “looking short-term” in a job market where being “poached” with better packages and better titles is common. Thimon sees this as a familiar “war on talent” where companies are exacerbating the situation. “They are encouraging this kind of job-hopping with salaries that are based on annual performance, and that is short-term [thinking]. I talk to many middle managers and they admit how they can artificially boost their annual performance, get headhunted, and then leave.” 

Once individuals reach senior positions in Iranian companies, they tend to reward themselves with higher compensation without any regard to potential damage to long-term value for the company. Says de Jong, “The brain is hardwired to have instant gratification. You need some constraints. You need some structures to protect people from how the mind works.” Without protections, business leaders disregard the creation of robust future value. This lack of foresight results in businesses invariably failing. De Jong points out that “the person that follows has to fix the mess. And that goes to one of the practical takeaways—we should reward for the long-term.” In other words, Iranian businesses must learn to compensate their employees with regard to a long-term strategy.

It is clear that both in Iran and globally, anxiety regarding “disruption", whether political, economic, or technological, is leading business leaders and professionals to fall into a short-term mindset. Thimon thinks it is time for a correction. “If you look at several indicators, we have reached a point now that we are so focused on the short-term, that we are at a tipping point where long-term thinking will come back to balance it out. We are out of sync now.” He cites a number of encouraging signs that business leaders are waking up to the dangers of short-term thinking. In February of this year, Larry Fink, the CEO of BlackRock, the world’s largest asset manager, wrote a widely circulated letter addressed to the chief executives of all S&P 500 companies, “asking that every CEO lay out for shareholders each year a strategic framework for long-term value creation.” Fink’s letter also demands that policymakers take “a longer-term perspective” to “help support the growth of companies and the entire economy.” 

For Iran, a commitment to long-term thinking is imperative. The lifting of sanctions has brought not only optimism and anxiety, but also a unique historical turning point. For the country to capitalize on sanctions relief does not mean achieving near-term profits, but rather securing long-term value for the economy and for society. Thimon believes that this effort must be led from within Iran, an important notion for a country which has always prided itself on the ability to develop its own political and economic models. “You need thought leaders, you need local gurus. You need a Unilever of Iran or an Apple of Iran, the two or three companies that everyone sees as the example of best practices and how to succeed in the next wave of business.” 

Thimon suggests that leading businesses must focus on three efforts to boost long-term thinking. Firstly, they must ensure that long-term strategizing takes place as a matter of best practice. This involves budgeting the time and resources for strategic meetings, without distractions, where the mind can engage in what Princeton psychologist Daniel Kahneman calls “slow thinking”—effortful, logical, calculating, and conscious. The output of these meetings should be the actionable “strategic framework” that Fink suggests in his letter. Shareholders can then use stated goals to keep the organization and its management accountable. Thimon’s experience advising major companies has shown him that “to actually do long-term thinking is very difficult,” but that the benefits are absolutely worth it. During the 2009 financial crisis, Unilever CEO Paul Polman made long-term thinking a key principle of the company’s strategic planning, going so far as to eliminate quarterly reporting. The strategy has proven highly effective, with share prices hovering near all-time highs.

Secondly, businesses must ensure that they reward long-term thinking through standardized incentives. Some Iranian companies have found intelligent ways to earn long-term commitment from their employees. For example, the Iranian subsidiary of British American Tobacco, BAT Pars, provides new hires a very clear career progression plan, including training opportunities and the possibility of promotions to postings abroad. Despite offering lower base pay than their competitors, the ability of employees to carve personal career paths within the company has made BAT Pars one of the most successful entities in hiring and retaining top talent in Iran. Aseyeh Hatami describes this as “giving candidates a dream”—a notion that inevitably entails long-term thinking. 

Finally, long-term thinking needs to become an integral aspect of Iranian business culture. The new wave of entrepreneurship in Iran is encouraging. Young business leaders can act as what Thimon calls “change agents,” helping to drive the new mindset towards longer-term strategies. After all, the companies that seek to be disruptive are often the ones most in need of a long-term strategy. “You might want to become the unicorn start-up, but many companies grow slowly at first. Founders and investors have to be in it for the long-term to be rewarded.” Moreover, Thimon’s research suggests that the relatively large proportion of family businesses in Iran’s private sector might help in the effort to make long-term thinking more palatable. “Imagine your son or daughter working at the company. If you know that your children are going to work in this company, would you make different decisions?”

Thimon realizes that thinking slow, thinking of a career path, thinking about the next generation “sounds a bit boring.” But he is adamant that success in today’s uncertain environment “is all about moderation.” Understandably, Iran wants to race aggressively into the future, to embrace disruption and change. “Now the sanctions are lifted and Iran wants to speed up and make up for times lost.” But the country’s political and economic leaders need to ask key questions. “What is too fast, what is too much, and where is the long-term program?” Thimon’s final observation is that Iran must learn from the past in order to create its future. “In a way it is brilliant that Iran is a little late to the party because it can see the mistakes made in other countries, in other business cases, and find the best practices, in order to ultimately avoid the mistakes the BRIC countries have made in the last twenty years.” 

As the economies of Brazil, Russia, India, and China begin to falter, struggling with structural issues that were never properly addressed, Iran should take heed. Thinking long-term now will mean achieving greater success in the long run by accumulating and preserving value.

Photo Credit: Whetston