The Intersection of Government Affairs and Corporate Innovation

February 6, 2025

Speech by Ussal Sahbaz, delivered at the 4+1 ClimAccelerator B2B and Investor Day in Baku (hosted by the Azerbaijan Innovation and Digital Development Agency (IDDA), the European Innovation Council, and Viveka)

Good afternoon, everyone. Today, I would like to discuss how government and public affairs intersect with corporate innovation development practices, and why this overlap is particularly significant for Azerbaijan.

Background and Inspiration

Before starting my government affairs consultancy — which now serves both large technology companies and scale-ups in Turkey and Azerbaijan — I led the Istanbul Innovation Center for General Electric (GE). At that time, GE had seven such centers worldwide, each dedicated to fostering innovation.

It was during my tenure at the Istanbul Innovation Center that a collaborative project first inspired me to launch a government affairs consultancy focused on innovative companies. Together with a major Turkish firm, we co-developed a sensor to monitor the gas level in LPG cylinders used for cooking. The use case was twofold:

1. Ensuring users do not run out of gas at inconvenient times (for example, cooking for guests on a Sunday afternoon), and
2. Helping the company comply with government regulations regarding the mandatory tracking of LPG cylinders.

Midway through the project, my counterpart — the innovation director at the partner company — contacted me in distress. She explained that a new regulation had been introduced requiring cylinders to be tracked with a barcode of specific dimensions. This rendered our sensor solution unworkable. When I asked why they did not lobby for a more innovative approach, she revealed that the barcode idea had actually come from their own legal department, which had minimal communication with the innovation team. As a result, our project fell into limbo.

This experience highlighted a common pain point for innovators: they may excel at developing new technologies or processes, but they often struggle to build or influence the wider stakeholder ecosystem — including government agencies — that surrounds their innovation.

From Large Corporations to Scale-Ups

I soon realized that starting a government affairs consultancy targeting large corporations could be challenging. My first client was Iyzico, a Turkish fintech firm (now part of Naspers), which remains a client to this day. Over the years, I have also had the privilege of adding several of the world’s most valuable global companies to my roster.

When I initially accepted the role of Innovation Leader at GE, I expressed concern to my then-boss, Canan Ozsoy — CEO and Chairman of GE Turkey at the time — that my background was in government and non-profits, rather than in corporate environments. She reassured me by noting:

“You will discover that these large corporations are not much different from governments.”

In many ways, she was correct. Large organizations tend to mirror each other in their bureaucracy and siloed structures. Short-term targets often overshadow long-term visions, particularly in the realm of innovation.

Why Government Affairs and Corporate Innovation Are Similar

Corporate innovation leadership and government affairs share a common thread: both require persuading stakeholders that a proposed innovation serves the broader interests of the company, the country, and society at large. In both domains, the key is to craft a compelling story around the innovation and then adapt it, through dialogue, to align with the priorities of various stakeholders. Empathy and trust are central to this process.

Relevance for Azerbaijan

In Azerbaijan, government affairs and innovation leadership are even more intertwined, due primarily to the dominance of state-owned enterprises (SOEs) in the national economy. According to the World Bank, Azerbaijan ranks just behind China in terms of SOE presence.

This is not necessarily a negative condition. As action-oriented professionals, we should take existing institutional structures as a given and build strategies that work within these frameworks. While some consulting firms may recommend corporate governance best practices or partial privatization, neither may be politically viable in certain contexts. Instead, why not focus on introducing more innovation into these enterprises?

Reforming SOEs Means Reforming the Economy
In an economy dominated by SOEs, transforming these companies inevitably transforms the broader economic landscape. Furthermore, Azerbaijan’s reliance on fossil fuels underscores the need for innovative practices. In the climate technology space, competition often arises between established players (who are typically protected by regulations) and disruptive climate tech start-ups. A collaborative approach — one that encourages incumbent SOEs to partner with new climate tech innovators — could be particularly advantageous here.

Azerbaijan’s Key Advantages

I believe Azerbaijan has three critical advantages that support this approach:

1. Educated Leadership
   Many senior positions in government departments and SOEs are held by relatively young, globally-minded professionals, many of whom have studied at institutions like Harvard and Oxford. This level of expertise and international perspective is difficult to find, even in some European countries.
2. Global Entrepreneurial Hub
   Azerbaijan maintains peaceful relations with several of the world’s most innovative or up-and-coming nations. At the InMerge Baku event in November 2024, it was remarkable to see English-, Hebrew-, Russian-, and Turkish-speaking entrepreneurs converging in one place. Such cultural and linguistic diversity fuels creativity and collaboration.
3. Agility of a Mid-Sized Population
   Azerbaijan’s population of roughly 10 million offers a degree of agility that larger nations often lack. As technology evolves faster than institutional structures can keep up, smaller countries might find it easier to adapt, whereas larger countries may become mired in internal complexities. Azerbaijan can leverage its size to pivot and innovate more swiftly.

Concluding remarks

For Azerbaijan, the synergy between government/public affairs and corporate innovation is both crucial and attainable. By fostering collaboration among SOEs, private enterprises, and government agencies, and by capitalizing on the nation’s unique advantages, Azerbaijan can advance its innovation ecosystem significantly. In doing so, it can serve as a model for other countries seeking to modernize their economies in ways that balance near-term needs with long-term technological progress.

Thank you for your time and attention. I look forward to exploring how we can continue to foster innovation and drive meaningful reforms here in Azerbaijan