Culture has become a buzzword in this era of global expansion — organizations talk about “cultural sensitivity,” “cultural integration” and “cultural awareness.”
They also talk about the importance of corporate culture and communicating this culture to attract and retain employees with the best fit.
Culture is a shared systems of meanings and patterns of behaviour. It is expressed in the solutions people have chosen in solving human problems or dilemmas in the areas of human relationships, time and external environment.
Cultural diversity expresses itself in viewpoints and values, in operational priorities and in ways of working.
When business and culture clash, culture always wins.
Two of the world’s top experts on cross-cultural studies, Fons Trompenaars and Charles Hampden-Turner, have spent more than 20 years researching and analyzing 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, to successfully collaborate in a multicultural environment, individuals need to be aware of their own personal cultural preferences, respect the cultural perspective of the other, reconcile the cultural value differences they encounter and realize the envisioned, integrated solutions. It’s about seeking first to understand, then to be understood.
When companies want to expand overseas, they can raise the capital, put teams in place and build the infrastructure in less than a year. But mindsets don’t change that quickly. Just because a company has built up global operations, it does not automatically follow that it has a global outlook.
The reasons companies expand into global markets are changing. While it was usually the bigger companies that looked to cheaper markets abroad for lower production costs, the main driver now is access to a larger market and driving innovation in the local market.
In reality, “multinational” means “multidimensional.” With this comes the need to focus simultaneously on far-ranging markets and customers, a diverse workforce, efficient and adaptable supply chains and relationships with governments and communities at all levels. It also means having to remain flexible in times of adversity and change.
This multidimensional company must operate in an entirely new and often foreign context of different government models, rules and regulations, an entirely different way of doing business and, of course, new competitors.
To succeed, it must look for new perspectives to stimulate innovative thinking. It must learn how to operate across different business and economic environments and understand how to balance autonomy with control. And all of this must be done swiftly and decisively.
Many companies scope out opportunities in foreign markets by sending key executives to gather information, test the waters and find partners, joint ventures or targets for mergers and acquisitions. Cultural issues assume huge significance in any cross-national business endeavour, yet the vital cultural issues are all too frequently not given proper weight next to legal, financial and operational obstacles.
Up to 70 per cent of mergers and acquisitions fail to meet the objectives or expected benefits because there has not been adequate attention to the cultural aspects of the integration, according to the 2010 book The Global M&A Tango by Fons Trompenaars and Maarten Nijhoff Asser.
It is possible to secure significant business benefits of an integration by embracing culture at an early stage and actively creating a new, high-performing culture focused on shared values and reconciled differences. Culture defines the context in which people leverage their energies so an organization delivers optimum results. This human element often explains what distinguishes the highest-performing companies from those that lag behind.
High-performing companies ensure 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 at the new organization.
“Values are the environment or context within which you can globalize while still giving managers the freedom to make decisions locally,” says Trompenaars.
By understanding who we are and how we see the world, and at the same time respecting and reconciling cultural value differences, we can grow beyond compromise to enable and nurture true innovation. This approach goes way beyond the old adage of “When in Rome, do as the Romans” and companies are able to realize very positive implications for business:
• Teams learn to appreciate and reconcile cultural differences, and know when to tolerate or reject contradictions.
• 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 behaviour.
• A global mindset on the executive level allows for an increase in the diversity of management teams so they better reflect the breadth of a company’s geographical footprint.
• Executives can express their diversity rather than conform to a homogenous corporate culture.
Reconciling cultural differences to your advantage by uncovering hidden opportunities in diversity leads to innovation. Preparing people to successfully navigate foreign cultures when entering new markets and successfully negotiating reduces risk and increases success rates in joint ventures and post-merger integration.
Risk and expenditure are reduced significantly by building intercultural competence in leadership and teams, and team performance is increased by connecting different viewpoints.
Companies that have successfully built cultural competence enjoy increased employee satisfaction, reduced turnover and increased organizational effectiveness.
In an international work environment, people from diverse backgrounds differ in the specific solutions they choose for universally shared business issues. Underestimating the role of culture can heavily impact the quality and results of a business.
Michele Hecken is founding partner of Alpha Global Experts in Spruce Grove, Alta. She can be reached at (780) 962-7821, email@example.com or, for more information, visit www.alphaglobalexperts.com.