How executive leaders can cope with globalization and the challenge of cultural diversities.
About twenty years ago, I attended a company development seminar for global leaders in Ireland. One of the guest speakers was Fons Trompenaars (born Alfonsus Trompenaars), author of a best seller on national culture and its impact in business.
It was for me the beginning of a precious journey to better understand foreign countries.
Today, the paradox between the increasing globalization and the call for the strengthening of local national cultures seems more present than ever. It is imperative to see and understand the behavior of executives of other nationalities through their own eyes, instead of watching it through the glasses of our own cultures and values.
Beyond spoken words
To understand a culture, it is necessary to go much deeper than merely speaking their language, although many times this is possible, even without speaking the foreign tongue.
Endless factors form the behavior of the business counterpart in a negotiation or in an inter-company relationship. We can list history, traditions, religion, values, weather, thinking, and decision-making processes, ways of doing business, personal background, ancestors and many more.
This article describes examples of direct impacts on business, depending on the leader’s ability to perceive cultural differences. This perception can lead to a complete disaster or total success, depending on how it is used.
I was hired to be the CEO of a Brazilian subsidiary of an American company which needed a complete change in culture. The challenge was to go from a centralized leadership to a matrix-driven organization connected with many business units in the international headquarters.
One year later the transition was complete, and a different organizational structure was in place, generating satisfactory results.
It took me a couple of years to understand what had really happened. This company had been acquired from a large family-owned Brazilian conglomerate. As in many Latin American, Arab, Iberian or Far Eastern countries, the patriarchal figure was strong, embedded in the culture, and company structures were very hierarchical.
To work now within a matrix organization was like having “two fathers”. The company was having good results but was still operating within a different culture.
It reminded me of when GE Healthcare bought a large French company of radiological equipment that had a sizable customer base in Latin America. I started taking intensive private French classes to improve my communications with this new inter-company supplier.
Six months after the acquisition, the French headquarters was full of American expatriates and the French way of doing business was gone.
Which culture was better?
Both, depending on who owned the company. Both visions produced good results.
I remember the occasion when I was part of a team of five Latin American executives traveling to Tokyo to negotiate with a large financial Japanese institution. On our side, we had the decision makers to close the deal on the spot. On the Japanese side, they had six negotiators.
At the end of two days of discussions, we had a final dinner and traveled back home leaving the situation in a deadlock. Two months later we were invited for a new meeting. This time we had longer breaks for socialization and common lunches and dinners.
The negotiations went well, and I learned two important lessons (among others): the first was that the final decision maker in Japanese companies usually does not take part in the negotiation rounds. Important decisions are often made after the meeting.
Second, the development of confidence and trust comes first, and the contract is a consequence. Our goal was the opposite: go to the meeting with very good terms, get the contract, and the rest would come later. The consequence was the mentioned deadlock.
Another episode with a peculiar outcome was a business lunch between me, the country manager, and my American boss with the country manager of an important French company and his boss, who came from France for conversations about a possible partnership.
The relationship between the two of us, locally, was very good, and this was the first meeting between our two global executives.
After the long session just over appetizers and a friendly interaction with the French visitor that was enjoying a good wine and talking about our families, my boss was already impatient.
Looking constantly at his watch he asked me several times when we would get into a business conversation.
By the time dessert was served, the mood was so negative between the two of them that no progress was achieved towards the partnership then.
In the following weeks, my Brazilian counterpart and I had to put in a lot of effort to rebuild the relationship between the two companies and, months later, the partnership was accomplished.
Again, the clash between the “business first” and “building trust first” cultures. Of course, not all executives from a given country act alike, but this was an example of when cultural sensibilities are ignored.
East meets West
In another trip with a negotiation party of eight people, this time to China, aiming to acquire heavy equipment from the Chinese, the meeting took place in the city of Hangzhou, located about a two-hour drive south from Shanghai.
The factory tours and visits to other facilities were always noticeably short, but extensive time was spent by our hosts on city tours, long lunches, and dinners, in excellent restaurants over very exquisite food. By coincidence, five years prior to this trip I had read a book about the history of China in the 19th century.
The parents of this generation of Chinese executives (usually very young, fifteen years ago), lived through Mao’s Cultural Revolution. During the long meals, most of my conversation was about the struggles of their parents and the huge transformation in China under Deng Xiaoping, from the 80´s up to the present days.
To make a long story short, I was highly surprised by the excellent rapport that was possible to build with the Chinese executives, which paved the path of the negotiations, with very open dialogs and favorable results.
This experience reminded me of the words of a professor from my MBA course, which at the time, I didn’t pay proper attention to:
“If you deal with the Spanish, read Don Quixote, if you have business with the British, make sure you know Shakespeare, if you negotiate with Italians, read Dante’s Inferno.”
As a final note, after I was hired by the company to lead the cultural change, I ran a test about my business cultural profile, anxiously expecting the result to be a pure Brazilian one.
Melting pot of knowledge
To my astonishment, the result showed a total Anglo-Saxon business culture. No wonder: born in Brazil but raised in a Lithuanian family, educated in the USA, and working my whole career in American multinationals, that was how I used to see the way of doing business.
A foreigner, in my own country.
New cultures and behaviors are not easy to understand and learn. On the other hand, many learning avenues will be available, if there’s a genuine and sincere desire to follow this path and develop empathy.
When this is successfully done, the results in business reach a new dimension.