Bilateral Trade and Globalisation

Globalisation – an opportunity for success or failure?

Globalisation – an opportunity for success or failure?

The significance of Asia and other emerging markets as forces within the global economy have never been so real. During the last decade, India’s sustained growth rate of 10 percent per annum astonished the world which had been focussed on China which was growing a percentage point or two higher. However, I have other reasons other than the growing economic importance of emerging countries for focussing on culture in this article.

Globalisation – an opportunity for success or failure?

Issues covered:

The significance of Asia and other emerging markets as forces within the global economy have never been so real. During the last decade, India’s sustained growth rate of 10 percent per annum astonished the world which had been focussed on China which was growing a percentage point or two higher. However, I have other reasons other than the growing economic importance of emerging countries for focussing on culture in this article. KFVC has been working with Clients across international borders for 20 years. We have seen unimaginable change in the region since then and we have also seen the “good, bad and ugly” when it comes to how businesses try to expand and grow in new territories.

International teams can work more creatively and successfully than homogeneous teams – or this can all simply end in frustration. Global alliances can turn a company into a world market leader – or bring about a difficult learning process.

So, what makes the difference between success and failure? Studies show that the most crucial success factor is the people. Globally successful businesses will be the ones that invest time and effort into understanding the difference between business cultures as well as understanding and motivating employees. International cooperation and innovation will not happen in isolation. It needs to be carefully built and requires constant attention.

Over time KFVC has gained many insights into collaborations across borders from a range of perspectives. When it comes to listing factors of paramount importance, common words of wisdom emerge:

  • Stakeholder engagement – especially a relationship of trust and respect
  • Investment in human resource (the people) from the outset
  • Attention to detail – there are no short cuts in quality and safety standards
  • Sharing expertise – two sharing of expertise for genuine collaboration

Walking around a Conference in Delhi last January, I became acutely aware that while companies aspire to be global players, the outlook and aspirations of the people they have representing them can be quite insular and local in flavour. I met people representing companies who were completely unaware of the world outside their headquarter location. When I discussed this issue with some of the executives I met, the responses were equally dismissive. I received replies like “cultural mismatch is irrelevant in a business context”; “people get along somehow” or “we muddle through”.

I will be clear on my views at this stage. I have known that in a business context, understanding both the organisational culture of the companies as well as the national cultures of the individuals within that company or that company’s intended location can be a deal breaker! At the very least, this lack of understanding can become a minor irritant, at its worst may lead to major conflict. My team and I have had so many experiences of being invited into companies to carry out interventions as these seemingly small differences had become blown out of all proportion and seriously affected business performance.

I am constantly surprised how even the largest or most established of legal firms overlook so many obvious things in their selection of global joint venture partners. Such oversights can be a recipe for disaster. Add to this a lack of cross cultural understanding and your organisation may have inadvertently created a minefield!

Companies with strong global cultures and multi-cultural understanding perform better than companies without global cultures. They are more aware of cultural norms, bring the best teams together, sustain high morale and keep employees as well as each other focussed on the company’s purpose and mission. Their workforces also feel more empowered to come up with innovatory and the best solutions for the business locally and globally. These firms seem to understand local business rituals together with their own strengths and weaknesses. They fare better than companies that are more introspective.

Building a strong global culture is not easy. It does not happen by accident. The Board of Directors will refer to globalisation as business policy. How often do they take proactive action to create a global culture from the inside out? Instead, spurred on by the drive for production figures and shareholder demand, Board attention becomes focussed externally, outside the company. So, they avoid the more difficult, more plodding, gradual and difficult work of building internal culture whilst at the same time incorporating inter-cultural awareness into the mix. Inevitably, a gap starts to develop between the headquarters and its international locations.

You really must work on expanding the corporate mind-set. “Corporate HQ knows best” is a huge stumbling block in developing a high performing global organisation. Often Headquarters’ Managers tend to corporate arrogance where they are completely unaware of the impact of their words. Leaders need to understand how to avoid the HQ mentality. Listening and being able to understand local nuances will make a huge difference. It is essential for a potential global leader to understand how to think and adapt globally. Gaining insights into cross-cultural beliefs and behaviours will broaden leadership thinking.

In KFVC programmes, we always ensure that we take business problems and then play them back to their originators from different cultural perspectives- we have had some stimulating workshops! Corporate decision makers need to understand one size does not fit all. By growing competent local managers, companies will be able to mix up their talent pool even more effectively.

Do take a look at some of these suggestions to break free of headquarters or country- centric organisational culture? You will be able to develop advantage through a strong, inclusive and collaborative global culture. New markets will be better addressed and business performance will be enhanced. Times are moving on, when I discussed this issue with a senior executive today he responded “ we did make some business errors based on our lack of cultural awareness – next time we will make sure our teams are better prepared in future” . Music to my ears……………..

The table below holds some practical suggestions:

  Seven keys to building a high performing international business
Understand where you are and set ground rulesCarry out a baseline survey. (BCS). Identify business needs and processes that are applicable globally. Be clear what locations you want to enter and the key cultural requirements for effective entry. Prepare a set of competencies that reflect those requirements and incorporate them into your recruitment and individual development plans.
Define vision and supporting brandAllow the corporate vision to travel globally. Create a brand that supports it. Remember not all brand values will meet international acclaim some may even cause derision. Make your vision a vehicle to convey common ideas and beliefs that will unify – then diverse employees can identify and engage with them.
Ask, listen , observe, show respectThese are difficult skills for many senior executives to master. They must be practised daily and established as part of the organisational culture. Never ignore the basics of global cultural sensitivity. Train leaders to really observe as well as to ask, listen and seek to understand how to respect cultural norms and expectations.
Create and collaborate-develop a working environment to encourage innovationInnovation is key – cross-cultural environments that encourage creativity and the free flow of ideas will bring out the best of all worlds. Build crosscultural teams that communicate and create effectively.
Be clear about competenciesHaving a global mind-set should be a key requirement for any leadership position – from supervisors to Board members.
Create strong cross-cultural teamsMake time for face to face meetings, hire senior people with aspirations for multinational experience and introduce them to some serious businessfocussed cross cultural training. Shift people between locations.
Hire competent local workforceEngage with enthusiastic local managers and grow their multinational focus

This article is correct at August 2020

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