The Value of Cross-Cultural Competence for your next Export Market
The Value of Cross-Cultural Competence for your next Export Market
Culture has increasingly become the buzzword in this era of Globalization: we talk about “cultural sensitivity”, “cultural integration”, “cultural awareness” and so forth. We also talk about the importance of “corporate culture” and communicating and harnessing this culture to attract and retain employees that are the best fit within our organizations.
But what is culture really? And why is it so important for companies engaged international exports of goods and services?
Culture is a shared system of meanings and patterns of behavior. It is expressed in the solutions that people have chosen when solving dilemmas in the areas of human relationships, time management and dealing with our external environment. Cultural diversity expresses itself in viewpoints and values, in operational priorities and in ways of working and can have a significant impact on your business. Let’s take for example, the meaning of a contract. In some parts of the world signing a contract is a door opener that serves as a start to further negotiations on how business will be done. In contrast, most North American companies would understand a signed contract to mean the deal has been sealed and the relationship going forward to be dictated by the parameters agreed to in the contract. Understanding how to navigate these viewpoints and values can mean a lot to the bottom line and determine how you maximize on export opportunities.
When business and culture clash – culture always wins!
Whether within our organizations or with clients, at some level or another we all interact in multicultural environments that need to be managed – even at a subconscious level. Two of the world’s top experts on Cross-Cultural studies, Fons Trompenaars and Charles Hampden-Turner, have spent over 25 years researching, analyzing and working on culture and its implication on business. They have developed an in-depth methodology of reconciling cultural differences with business solutions in mind. Their work has shown that in order to successfully collaborate in a multi-cultural environment, individuals first need to be aware of their own personal cultural preferences, are able to respect the cultural perspectives of others, and are capable of reconciling the cultural value differences they encounter and finally realize the envisioned, integrated solutions. Essentially, seek first to understand, then to be understood.
Today, the reasons why companies expand into global markets are changing. While it used to be that companies looked to cheaper markets abroad for lower production cost, today the main driver is access to larger markets and driving innovation in the local market.
When companies decide to expand into new markets, they can raise the capital, put teams in place and build the infrastructure in less than a year, or mere months. Many companies scope out opportunities in foreign markets by sending key executives to gather information, test the waters, find partners and identify joint ventures or targets for a merger or acquisition. Others don’t even bother with elaborate strategy and use online channels to sell directly to end users in one or more markets.
But just because a company has built up global operations, it does not automatically follow that it has a global outlook. Mindsets don’t change that quickly and building a multinational organization to manage export footprint can be more challenging than it appears. In reality, “multinational” really means “multidimensional.” With this comes the need of having to focus simultaneously on far-ranging markets and customers, a diverse workforce, efficient and adaptable supply chains, competitors and relationships with governments and communities at all levels. It also means having to remain flexible in times of adversity and change.
To succeed in this complex environment, companies must look for new perspectives to stimulate innovative thinking. To be successful internationally, they must learn how to operate across different business and economic environments and understand how to balance autonomy with control. And they must do all this swiftly and decisively.
Cultural issues have a lasting effect and can assume huge significance in any cross-national business endeavor, yet they are all too frequently not taken into consideration next to legal, financial and operational obstacles when closing a deal. For instance, up to 70% of mergers and acquisitions fail to meet the objectives or expected benefits, because there wasn’t adequate attention placed on the cultural aspects of the integration after the deal is closed.
It is possible to secure significant business benefits during an integration by embracing culture at an early stage and by actively creating a new high performing culture focused on shared values and reconciled differences. Culture defines the context in which people leverage their energies in order for the organization to deliver optimum results. This human element often explains what distinguishes the highest performing companies from those that lag behind. High performing companies are those that ensure that business operations, management, strategy, culture and people are fully aligned. Engaging the human factor in an integration program will lead to accelerated growth on a personal and team level resulting in raised and sustained performance in the new organization. Whether dealing with corporate or national culture, all businesses have to navigate the complexities arising from the diversity inherent in our global markets.
So what are, then, the implications for business that justify an investment in cross-cultural training?
Preparing your people before entry into new markets reduces risk and increases success rates of forming lasting joint ventures, partnerships and the integration after a merger or acquisition. By understanding who we are and how we see the world, and at the same time respecting and reconciling the cultural value differences we encounter, we can grow beyond compromise to enable and nurture true innovation in our export markets. This approach goes way beyond the old adage of “When in Rome, do as the Romans”. By avoiding mere compromise and embracing “and/and” or, ideally, “through/through”, companies are able to realize tangible benefits for their businesses:
- Teams learn to appreciate and reconcile cultural differences, and know when to tolerate contradictions and when to reject them.
- Executives can consult more effectively with diverse management teams to understand the implications of headquarters-based decisions on other markets.
- Cross-cultural competence ties together corporate and national culture and helps strengthen the link between company values and employee behavior.
- A global mindset on the executive level allows for an increase in the diversity of management teams so that they better reflect the breadth of the company’s geographical footprint.
- It allows executives to express their diversity rather than conform to a homogenous corporate culture.
Risk and expenditure are reduced significantly in export projects where there is effective development of intercultural competence in the leadership and operational teams on the ground where necessary. Overall, companies who have successfully built and harnessed cultural competence for the markets they do business in enjoy increased employee satisfaction, reduced turnover and increased organizational effectiveness. In addition, companies can expect substantial and sustainable returns to come from personal and professional growth of its workforce as a result of the productive cross-cultural relationships formed.
Achieving cross-cultural competence is about you and your organization. It is about your leadership, management and your people, individually and in groups.
Michele Hecken & Usukuma Ekuere, Founding Partners of Alpha Global Experts Inc.