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The significance of culture on global business
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IF one day you’re asked to manage a supply chain in Malaysia, the next day you’re managing your virtual team in China, and the next you’re optimizing your company’s call center in India. You know that it’s just not possible to be an expert in every culture or geography in which you do business. What is possible is developing the mindset of a globalist — or, in other words, mastering cross-cultural core competency.
Why is cross-cultural competence critical to your professional future? It’s omnipresent in every business interaction and strategic decision. According to a Accenture study, optimizing this process through training can increase productivity by 30 percent.
It is not feasible to be an expert on all the world’s cultures. It is possible, however, to incorporate a cross-cultural framework that improves cross-cultural understanding and interactions. One such framework, the Business Model of Intercultural Analysis, uses the following six “comprehension lenses” to examine enterprise-wide cross-cultural challenges.
Cultural themes
Every society has its own “cultural themes,” which have a substantial impact on how that culture does business. Chinese cultural themes are rooted in folk belief and Confucian values, including filial piety, thrift, endurance and trustworthiness. These values are deeply engrained in the Chinese culture.
The Confucian value of endurance has a profound impact on the business process. The members of a Chinese negotiations team will seek protracted negotiations to test their counterpart’s endurance. They will typically initiate with an offer that is low to enable extensive haggling, so as to evaluate an adversary’s endurance.
The unwitting Westerner may misinterpret this as unreasonable and storm out of the meeting. The total disconnect causes a loss of business opportunity, or alternatively, leaves dollars on the table as the exhausted Westerner makes price concessions early.
Communication
An understanding of the subtle challenges in the use of English with non-native speakers, as well as the nuances of non-verbal communication, is critical to achieving business objectives when operating across cultures.
The term “no,” for example, is rarely used in deference to more indirect methods of communicating and an American may hear the Chinese cue for the word “no” — including the phrases “maybe,” “we shall see” and “we shall study it,” without ever realizing that these phrases are the Chinese equivalent of “no.”
Failure to understand these cues wastes time and money, and is the basis of communication failure that can jeopardize the business objective.
Group dynamics
This comprehension lens involves the understanding of how individuals from certain cultures interact in groups. An understanding of group dynamics in the target culture significantly impacts the sales process. In individualistic cultures, such as the United States, customers make most of their buying decisions individually, whereas in collectivistic cultures, decisions are significantly influenced by the group (family, extended family, network of friends and colleagues, and the community at large).
Glocalization
Global branding, messaging, corporate values and marketing all have to be localized — thus the term “glocalization.” If a company’s headquarters is in Asia, with satellite offices in Europe and North America, the global brand, messaging and indeed every type of communication, whether internal or external, needs to be translated in a way that is culturally fluent.
The value proposition of any communication may be entirely valid, but if it is presented in a way that cannot be “heard,” or that violates cultural norms, then the messaging will fall on deaf ears.
Process engineering
Even given the incredible advances in modern-day technology, global companies still suffer from program and platform inconsistencies. Where technological practicality or the realities of budget do not permit complete integration, that disconnect must be evaluated and corrected.
At a minimum, all offices in the operation must “know what they don’t know” regarding the business processes, IT systems and the roll-out of global policy and procedure to assure maximum efficiency, risk reduction and cost optimization. Typical examples include requests from finance in HQ in the United States requesting financial reports from satellite offices around the world.
Time orientation
The most striking difference between China and Western cultures in this regard is the long-term orientation of the Chinese culture which has survived for thousands of years. The longevity of the culture combined with Confucian philosophy yields a long-term orientation that materializes in the business world in several ways.
Short-term wastefulness in a supply chain, for example, is despised because thrift is a significant virtue, but professional development training that will lead to long-term corporate growth may see lavish expenditures. Business planning is not quarterly or annual, but often is anticipated for the next decade, or even decades.
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