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Blog Category: Cultural Issues

Cultural Issues


Lots of our clients are WEIRD

It’s probably not a great idea to start a post by appearing to insult most of our clients…

… So I’d better quickly explain what I mean by calling you WEIRD.

Joseph Henrich, Steven J Heine and Ara Norenzayan issued a research paper a few years ago showing that most behavioural science theory is built upon research that examines an intensely narrow sample of human variation – disproportionately biased towards US university undergraduates and that this has skewed the findings of a great deal of research when you try to make it fit a culturally diverse world. Their definition of the sample base was that they were quite simply WEIRD

Western
Educated
Industrialised
Rational
Democratic

I think that all of this seems very likely to be true but I think that you can take the hypothesis way beyond the fields of behavioural science into the world of politics and it also seems incredibly true in the world of commerce.

I spend my days working with (mainly) western companies who are international in nature and who struggle with the complexities of interacting across the boundaries of global culture, time zones and geography. We help them understand how significantly and deeply cultural differences can impact on the effectiveness and efficiencies of their global operations. The longer I work in this field the more I come to realise that this WEIRD issue is at the heart of a lot of the dilemmas our clients face.

I have come to realise that (either consciously or subconsciously) people who are WEIRD in North America and Europe look around the world and think that the rest of the world is also WEIRD or, if they are not, would really like to become WEIRD at some stage in their ‘evolution’. The problem is that probably 80% of the world (by population) actually are not WEIRD and have no desire to become so. In fact the 80% of the world’s population who are not WEIRD look back at North America and Europe and think ‘those guys are seriously WEIRD’.

Where are most global compliance policies driven from? Europe and North America on the whole. We are moving around the world trying to apply WEIRD policies, processes and ethics into an un-WEIRD world and people simply just ‘don’t get’ what we are talking about. Our core values and beliefs are simply an irrelevance to people in many parts of the world.

A very good, very topical example of this would be the reaction of the majority of Russians to Vladimir Putin’s close association with the recent Panama leaks which highlight tax evasion amongst the rich and powerful. A BBC reporter, when interviewing ‘the man in the street’ in Russia was greeted with this reaction. “People high up have always had accounts like these and they always will. Putin can’t keep an eye on everyone.” In other words – it doesn’t matter and I don’t care. Contrast that with the reactions to the news that the Icelandic Prime Minister, Sigurður Ingi Jóhannsson, was associated with the scandal or that David Cameron’s father had been named.

I’m not saying that I disagree with the ethical and commercial standpoints espoused by the WEIRD – I’m WEIRD myself – it’s more about getting people in the WEIRD countries to recognise that the ‘universal’ truths that they see as ‘self-evident’ are only ‘self-evident’ to a very small minority of the people on the planet. The starting point should be that ‘there may very possibly be a fundamental disagreement on this issue’ rather than am assumption that everybody, everywhere will ‘get it’.

It will be interesting to see, as China and India evolve as global super-powers, whether these WEIRD ideas will prevail globally or be eclipsed by other philosophies and approaches. Any thoughts from my WEIRD (and non-WEIRD) contacts?

For more information on how Global Business Culture can help you become more globally savvy contact me at keith@globalbusinessculture.com


You really need to build your own levels of Cultural Fluency

I really believe this statement is true if any person is to be able to work really effectively across the barriers of culture, language, geography and time. The basic problem is that people are not born with an innate understanding of how business works in areas of the globe they don’t know and maybe have never visited – this knowledge and awareness needs to be developed.

The process of changing your mindset and developing better levels of global fluency and therefore the ability to work seamlessly across cultures is a three step process:

  • Awareness building:You have to intellectually buy-in to the fact that international cultural differences can have a very significant impact on the efficiencies of any global organisation – and therefore its profitability. You also have to accept that you have a role to play in this process. Sounds like an easy step but it isn’t.  If things go wrong when you are working cross-border it’s always partly your fault.
  • Knowledge development:unfortunately it isn’t enough to be aware that cultural differences exist – you then need to acquire the specific knowledge to interface effectively in lots of different markets. Awareness will get you to accept the need to be adaptive and not make assumptions but the adaptations needed when dealing in India or Brazil will be very different. This knowledge can be acquired over long periods of time and through making countless errors or the process can be speeded up through research and good quality training interventions.

  • Embedding insight into corporate processes:Once you have awareness and knowledge, you need to embed the lessons learned into the warp and the weft of the  way in which you do things on a daily basis. If you work in a global environment, every time you make a decision the impacts of that decision land differently in different places. How can you control the potential negatives of the impact of unforeseen cultural consequences and reactions? It’s not easy but it can be done if you have a deep understanding and the requisite level of knowledge.

In my experience – and I’ve worked with business people all over the world on these issues – few people really take the time to understand the impact of cultural differences.  People only tend to think about these things when something goes wrong and that’s usually too late.

If you would like to discuss how Global Business Culture can help you develop greater levels of cultural awareness and fluency personally or within your organisation, please contact me on keith@globalbusinessculture.com


Off-shore Partners in India

Over the years I’ve been involved in a number of major projects where U.S. or European companies have looked to transition work from their home countries to outsourced facilities in India.  The drivers behind these projects have been many and varied, but I suppose that cost reduction is always a major component of any such decision.  Personally, I’ve always thought there are a number of advantages above and beyond cost arbitrage but for many clients that’s their starting point.

If your main motivation for going through the transition process is cost then it stands to reason that you have to make the transition work efficiently or any imagined cost savings can be quickly eroded through well-documented problems such as high attrition rates and client dissatisfaction.  Cultural issues play a huge role in creating disconnects between the home teams and the India-based teams – but cultural issues are not the only challenge.

Another area which is fraught with difficulty is in the partner selection process.  Lots of clients have got a year or two down the line only to question their original choice of partner but are then loath to jump ship and go through the pain of transition for a second time – better the devil you know etc.

Based on our experience at Global Business Culture here are five issues you need to consider when selecting an outsourced partner in India.  The list is not exhaustive but it’s a good starting point:

The Tender Process: A western-led tender process will only get you so far in India.  I’ve seen situations where the responses to tender have led clients to the wrong supplier, in the wrong location, staffed by the wrong people.  ‘Do you have experience of the banking/insurance/automotive/pharma sectors?’    The answer will be ‘yes’.  People move company and position all the time in India and employees pick up experience across a wide range of sectors – but that knowledge can be quite superficial.

You need to effectively pre-qualify your tender short-list and the best way to do that is on the ground.  Start with a long list and whittle this down until you have three or four bona fide contenders and then, and only then, get on a plane and spend time with each of the candidates.  It should be as much about chemistry as it is about commercials.

Management Capability: I cannot stress how it is important to assess the management capabilities of an outsource partner.  The India offshore business has grown exponentially over the past decade or so but management capability has not necessarily been able to keep pace with that growth.  It is not a question of education or technical ability; it is more an issue of commercial experience and acumen.  Many Western clients who transition work to India are looking for people who can operate with a knowledge of home country market conditions and – even more difficult – an understanding of home country cultural expectations.

This is a tall order and those two demands can be very difficult to meet.  Don’t expect too much at the outset and be prepared to invest in training people to make up the skills and knowledge gap.

Attrition rates: How does your potential partner manage its attrition rates?  Attrition rates are notoriously high in the offshore industry in India and this can cause you serious difficulties on an ongoing basis.  Attrition leads to knowledge and skills seepage and massive recruitment and re-training costs (which can eat away at any cost arbitrage you were looking to harvest.)

Try to get some accurate figures on attrition from any potential partners and don’t just look at the numbers, look at the trends over a few years.  Ask your partners how they manage this issue, what policies and processes they have in place to address the challenge. If they just brush it off as irrelevant, be very wary. When we talk to home teams, lack of continuity of contact in India is often cited as the biggest headache.

Size: Should you team up with a large, well-established player in the market who has size, scalability and well-tested procedures, or with a smaller outfit who are growing and hungry? With a larger player, you might end up being a small fish in a very large pond and feel you are of little importance whereas a smaller partner may see you as strategically vital but lack the sophistication you are looking for.

You need to balance these conflicting arguments and find a solution that you are comfortable with in the short and medium term.  Again, it has to be about chemistry as well as commercials.

Price: If you are going through the whole process as a cost-reducing exercise then this obviously becomes a key factor in the final decision-making process.

But just a few words of caution, which come from experience. If you drive too hard a bargain, people will resent it. You are shedding people back home (this is resented at home) and you are squeezing the pips of your new partner (this is equally resented in India). The whole process can become pretty sour very quickly and you end up with massively resentful workers in two locations.

In addition, your India partner often becomes critical to the well-being of your global business.  In fact, the better your partner performs, the more critical they become as you invest even more heavily in them in terms of time and emotion.  What are you going to do if they turn around and say, ‘we can’t support this level of work anymore at the price we are charging?’  You may find they have you over a barrel.

The deal must be fair from the outset – that’s what will bring the cost savings in the long run.

For more information on this, contact me at keith@globalbusinessculture.com


Is it possible to build a Global Appraisal System in a Culturally Complex Organisation?

As more and more companies organise themselves in regional or even global structures, the need for some form of global bench-marking of performance becomes ever more pressing – but is it really possible to have one system that can accurately grade performance in the USA, China and Nigeria?

The problems start to arise as soon as you try to set benchmarks for ‘good’ or ‘bad’ in any interpersonal situation. The complexities of global cultural differences mean that what is considered poor behaviour in one country is likely to be viewed positively in another:

 

  • Is direct and honest feedback to a co-worker good practice? It probably is in the Netherlands but just as probably isn’t in Japan (or even the UK).
  • Is individual initiative to be encouraged? Definitely in the USA but less so in India.

So who chooses what is deemed to be ‘good’ behaviour and what a corporation wants to encourage in its employees? In my experience it is usually the Head Office who calls the shots and who decides positive from negative, good from bad – and then fails to understand when it is accused of latter-day colonialism.

How globally savvy and well-equipped with cultural knowledge and empathy are key HR team members and how open are they to a challenge to some of their basic beliefs in this area?

These are all difficult questions but ones that need addressing. The Mercer survey of 2013, stated that only 3% of respondents from a sample of 1056 global companies said their current appraisal systems were delivering value – so something is obviously not working at the moment.

If you would like to understand how Global Business Culture can help your HR team develop the necessary levels of cultural fluency to tackle this issue effectively, please contact me at keith@globalbusinessculture.com

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Selling in China – what works and what doesn’t

Like all markets, China plays by its own rules.  Some sales approaches that work well in your own country might completely fail in a market as unique as China – on the other had some might work really well.  So, is it just a question of trying everything that works at home and analysing the results to determine what the best approach might be in China or are there any sales techniques that are generally better regarded than others?

Here’s a quick overview of what we have found succeeds in China when working with a range of major global clients across multiple sectors:

  • Exhibitions: Exhibitions and conferences seem to be held in much greater regard in China than in the West.  Attendance at key exhibitions should form an integral part of your sales and marketing plans if you want to be seen as a serious player in the Chinese market.  Attendance at exhibitions for a number of years in a row shows you are in the market for the long-haul and can be taken seriously as a potential partner.
  • A good China-friendly website: A well-structured website in Chinese which clearly outlines your products or offering is essential these days.  With over 400 million online users, China is a digital economy with a capital D.  Potential clients will visit your website before meeting you and will form an opinion based on how China-friendly your site is.  Don’t just take your existing site and translate a few pages – get some professional advice from people who really understand digital in China.
  • Local sales representatives: China is a massively relationship oriented country and key relationships need to be nurtured over a few years.  This relationship-building process is difficult to manage from a distance.  It pays to have local people on the ground who speak the language, know the culture and who can react quickly to client demands.  Should these local representatives be employed by you or should you work with a local distributor?  That is your key decision and you’ll probably need advice to help you make the right choice from a tax, compliance and growth perspective – don’t make an uniformed decision as it will cost you in the long-run.
  • Quality: You are unlikely to be able to compete against local companies on the basis of price so you will need to compete on quality.  All of your sales and marketing materials should be heavily quality-oriented.  Western companies are valued in China for the superior quality they represent and you need to display pride and confidence in your product.  If there are three things you should emphasise to potential Chinese buyers they are quality, quality, quality.
  • Telesales: Although communication via the phone is important – this is usually for making initial contact, arranging meetings, gathering background information etc.  It is unusual to try to ‘sell’ over the phone as the sales and relationship-building process are so tightly interconnected.  Phones are useful but only up to a certain point.  Regular face-to-face contact is the key to success.

What lessons can we draw from this and what advice do we give to clients? China is potentially a highly lucrative market which could redefine the future direction of you company if you get it right.  However, China needs time, patience and cashflow – the sales cycle in China can be long and you need stamina, management bandwidth, local knowledge and cash to achieve lasting success.

If you’d like to go into any of these issues in more depth please get in touch, keith@globalbusinessculture.com