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Your Brain on Culture

Organizations can create competitive advantage by developing a global mindset, enhancing leadership development and building global teams.

February 13, 2012
Related Topics: Corporate Culture, Management
KEYWORDS culture
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“Barbie Fails to Charm China Fans.” “Wal-Mart Leaves Korea.” “Lockheed Martin Loses Out on Contract in India.” These headlines chronicling international business missteps in 2011 illustrate why organizations must understand the buying habits, cultural customs and negotiation styles necessary for success in the global marketplace. Without cultural intelligence such headlines will continue. The chief learning officer can play a strategic role in helping an organization better understand why global business failures occur and develop learning interventions to help avoid them.

To understand the important role culture plays in global business, consider how old we are as a species. This is relevant to leaders building successful learning organizations in a global economy. Homo sapiens are approximately 200,000 years old. During those 8,000 generations, we have managed to spread all over the globe. And everywhere we settle, we create different cultures. These cultures are essentially learned survival methods in a given environment.

Since culture provides us with the guide to survival, we naturally feel protected by our own and threatened by other cultures. Aspects of our own culture may include languages, belief systems, values, what we think and hundreds of thousands of other factors we take for granted as “the right way to do things.”

Avoiding the Culture Clash

When people of different cultures come together, it creates culture clashes — a “them vs. us” attitude. These clashes used to be limited by travel, how far one could walk, ride a horse or putter in a motorized vehicle before encountering another culture. Now, due to air travel and the Internet, culture clashes are practically constant.

The proliferation of global communication and virtual relationships requires increased cultural intelligence and skills. Even the availability of state-of-the-art video conferencing hides underlying cultural differences and can cause strain because differences are often harder to detect in a virtual environment.

Further, there are practical aspects of culture that should be part of every business person’s consciousness. For instance, all global business people should immediately know what time it is in Paris, Mumbai, New York and Tokyo or when Ramadan, Diwali or Christmas will be next year. However, the less-conscious aspects of culture are most often responsible for critical cross-cultural misunderstandings in organizations and business. These focus not on the dos and don’ts, but on the how and why.

The hidden, less-conscious aspects of culture include how we make decisions, how managers and subordinates should interact at work and after work, how to establish trust, how to give a performance review, how to sell, market and protect the brand, when and how to speak up at a meeting and many other things we do because we have learned these to be the correct way to do business.

Learning leaders must ensure their global workforce is cognizant of the cultural dynamics underpinning business customs and practices in each marketplace. Without this knowledge, leaders will not know how to lead appropriately, marketing campaigns will fail, supply chains will be delayed and change management initiatives will be undermined. For example, sports lifestyle company PUMA’s attempt to market shoes bearing the color of the flag of the United Arab Emirates to consumers in the UAE failed. This misstep could have been avoided had the company understood Middle Easterners’ negative associations with feet.

Research during the past 50 years from Geert Hofstede, Fons Trompenaars, The Globe Study and others has demonstrated several distinct cultural differences that occur in business that can significantly impact success or failure. Cross-cultural training and consulting company Global Dynamics Inc. identified 14 major cultural differences or tendencies that must be addressed for anyone working in a global, culturally diverse workplace and marketplace.

One of those cultural tendencies is the degree to which a culture tends to be hierarchical or egalitarian. Learning leaders must teach employees about the various ways cultures value hierarchical vs. egalitarian approaches (Figure 1) because a misunderstanding in this arena is almost certain to lead to conflict within multicultural teams. Further, learning leaders must understand employees’ views on hierarchy, as this impacts the design and delivery of all workforce development programs.

In hierarchical cultures, decisions are made by leaders, and subordinates carry out the leaders’ orders without question. In egalitarian cultures, leaders and subordinates work collaboratively to make decisions and execute them. Employees who acquire cultural intelligence understand how to bridge these differences. The best way for employees to acquire cultural intelligence is through an intensive, interactive cross-cultural workshop made up of representatives from various cultures, and timing is a factor. Newly formed global teams should develop their cultural intelligence as a team early in the formation of the group to build trust and reduce or prevent misunderstandings.

How to Build Cultural Savvy

Developing cultural intelligence ensures leaders and direct reports understand how to leverage the diverse rules of the game of life and business found around the world for competitive advantage. Learning organizations that build cultural intelligence produce employees who are more innovative and responsive to global and local needs, and better able to build customer loyalty and promote brand recognition.

For example, in July 2001, the Wall Street Journal reported that Hilton created a new program for Chinese guests at more than 60 properties called “Hilton Huanying” — from the Chinese word for “welcome.” Where the program is available, Chinese guests receive a greeting by Mandarin-speaking staff members and are offered amenities such as a Chinese television station in the room and a Chinese breakfast.

Organizations such as global paints and coatings company AkzoNobel and Dolby Laboratories, an American company specializing in audio noise reduction and audio encoding/compression, are investing in cultural intelligence development for their people, but many still lag in this area. Harvard Business Review said in 2004 that cultural intelligence is a best practice for global success, yet the number of companies that have taken measures to build their organizations’ cultural intelligence remains relatively small due to a misconception that processes and procedures that work domestically can be easily replicated globally. May research from Roy Chua of Harvard and conclusions reached by Jeff Dyer, Hal Gregersen and Clayton Christensen in the book The Innovator’s DNA demonstrate that organizations and leaders that have more contact with different cultures come up with significantly more creative and innovative ideas.

There are many ways to build cultural intelligence in the workforce, but the following strategies can be especially effective ways to spread this type of learning throughout an organization.

Offer a core course on cultural intelligence, working globally or developing a global mindset. Since cultural intelligence impacts every aspect of business, consider offering a core cultural intelligence course to all employees across all functions and levels. The best of these programs include attendees with diverse backgrounds and levels of international experience. Global medical technology company BD, for example, includes a panel of leaders with extensive international experience who share their war stories and best practices. These programs have been so successful the company now has a waiting list to attend.

Enhance leadership development. A leader in today’s business world who does not have a global mindset will be at a competitive disadvantage. Thus, most organizations now have a process in place to develop global leaders. This can range from specific courses on global leadership to a 10-week intensive immersion in a foreign culture with leaders from multiple countries, like PricewaterhouseCoopers’ Genesis Park Program.

Each year, 150 high-potential managers are selected to enter the program. In cohorts of 50, they are assigned to one of three global locations. In 2011 managers went to Warsaw, Singapore and Boston, where they worked on global project teams with other participants from multiple countries — the Boston group had 30 countries represented. As part of the program there is an in-depth course on cultural intelligence which participants apply as part of their teamwork. The expected benefits are improved productivity and profitability because participants share cases where opportunities are lost as well as best practices.

Build global teams. Productivity of any global team, whether bicultural or multicultural, is enhanced by adding a cultural intelligence discovery session at the formative stage of team development. For example, a joint venture of multiple companies representing various nationalities would need to rapidly get senior managers from each company to work effectively together. Each company comes to the partnership with its own processes, procedures and incentive practices. While it may take years to harmonize all of the various policies, they need to quickly overcome these differences by building trust within teams that now have to work together in spite of these hurdles.

In the ideal scenario, the joint venture would proactively deliver programs that help team members better appreciate the cultural nuances of each company and national culture, as reflected in their management, decision-making and communications styles. Learning might manifest as an intensive two-day program bringing representatives from each of the companies together in each country. In the workshops the participants would learn about each other’s corporate and national culture and be taught specific techniques to bridge the differences through simulations and scenarios. Though this type of program would represent a significant investment in time and resources for all participants and organizations, the ROI likely would far outweigh the costs.

Facilitate knowledge management. Learning organizations must find a way to capture, retain and disseminate the cultural competence that already resides within their companies. Sharing information is critical for long-term global success. This is particularly true when it comes to sharing information that promotes cultural intelligence. One development solution would be an interactive online database that houses country-specific information on all the countries in which a global company operates. This information should be accessible to all employees to review before taking a business trip or welcoming customers from other cultures. Ideally, the employees would be able to not only query a multitude of cultures and topics, they would build the database by contributing case studies, lessons learned and best practices. Everyone from senior leaders to administrative personnel would have instant access to the organization’s storehouse of cultural intelligence.

Leveraging Cultural Intelligence

The aforementioned four areas are just a small sample of how progressive organizations are taking the lead to promote cultural intelligence. Other areas CLOs can leverage to develop cultural intelligence include international assignments, executive coaching, sales and marketing insight, mentoring and diversity and inclusion training.

Cultures have come up with unique solutions to the challenges they face in their environments based on their experiences. A successful global organization will learn these unique solutions and leverage them to build an organization that can be true to its core mission and values, and respectful and responsive to the cultural variation that is an essential part of the human experience.

Those who master cultural intelligence not only will be better leaders, they will be more innovative and open minded, with the capacity to simultaneously view the same situation from multiple perspectives. A heightened awareness of cultural differences will allow employees to build bridges of understanding that promote trust, efficiency and effectiveness and increase an organization’s competitive advantage in the global arena.

Neal Goodman is president of Global Dynamics, a cross-cultural training, expatriate services and global leadership coaching company. He can be reached at editor@CLOmedia.com.

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