It’s conventional wisdom that suppliers must establish value propositions based on objective criteria like quality, price, and service to win customer accounts. These factors, combined with strategic positioning and marketing, are the basis for corporate buying decisions. But companies of all sizes make culture-based decisions that have little to do with any of the above. Here are some examples:
Understanding the cultural tendencies of international customers can help market entrants predict how potential customers will view purchasing decisions and develop culture-based value propositions. My book The Culture Solution explains how to recognize cultural tendencies and offers detailed, specific strategies for selling to companies based on their profiles for eight cultural dimensions. Here are some for the examples above:
When it comes to Network-oriented customers like the Brazilian automotive company, it’s vital to take time to create a personal connection, possibly by working through mutual contacts. By developing a strong relationship over time, a new entrant can level the playing field with local competitors so that their objective value proposition will be more persuasive.
Thoroughness-oriented companies like the Italian fabric mill revere tradition and prefer incremental change over radical moves, so it’s important to promote new processes gradually and to show respect for company history and reputation. A supplier that acknowledges the importance of continuity and focuses on the long term will avoid the appearance of a hard sell and give its customers time to adjust to proposed changes.
Before approaching a Group-oriented customer like the Japanese electronics manufacturer, it’s helpful to establish credibility with other members of the system. Taking time to gather information on customer needs and meeting the requirements of the lengthy vetting process enthusiastically will help convince customers it’s worth the time and effort to confirm a new supplier.
Leveraging cultural knowledge is the quickest way for expanding companies to change their status from new kid on the block to trusted insider.
Integrating cultural tendencies to achieve synergies on international projects requires a goal-oriented focus. The practices below help shift the emphasis from partner preferences to the unique needs and goals of the international venture:
#1: Sacrifice Your Leverage
To ensure a goal-based culture, the partner with greater leverage (a customer, for example) must put aside this advantage in the name of outcomes. Forcing one partner to do most of the accommodating results in production inefficiencies and reduced employee motivation and fails to address the unique needs and conditions of the joint project.
#2: Prioritize Goals
Project goals, rather than either side’s preferences, should shape a collaboration’s policies and processes. Partners should consider the resources and constraints that shape their approach to business and how they differ from those of the collaboration. Identifying factors that are unique to the project—and different from either parent—will help collaborators draw on practices from each one that will serve it well.
#3: Respect—But Don’t Worship—Local Practices
Firms that gain overseas employees in an international expansion may inherit policies and practices that differ from, and even conflict with, headquarters’ values. At the same time, headquarters policies don’t always translate well into new cultural contexts.
To decide what to keep and what to change, firms should conduct a cultural assessment of the local environment. They should ask about local practices, pinpoint the systems and processes associated with them, and identify the values that drive them. Understanding the ecosystem of business behind local practices can help management determine which ones should be encouraged and which must be replaced.
#4 View Culture as an Asset
A company acquiring a successful firm to gain access to new markets or customers should think of the acquired firm’s corporate culture as a significant, although intangible, asset. To avoid dismantling the systems and processes that made it successful in the first place, the acquiring company should consider how the company’s values and policies have contributed to its ability to serve the market. Discussing the possible results of changed policies on the acquisition’s productivity, quality, and customer relations can help separate structures and processes that should be preserved from those that must be changed to better integrate with parent culture.
Ethics violations in Japanese companies are making the headlines lately. Toshiba’s “toxic culture” has been blamed for the company’s large-scale misrepresentation of returns on long-term projects in its accounting statements. Its rigid hierarchy has been cited by analysts as a contributing factor. They describe top managers who set impossible targets and pressured employees to produce profit statements to match. People who knew about the abuses felt unable to question them or speak out, and it took an external audit to expose the violations.
A Financial Times article describes some of the dangers of rigid hierarchy, a characteristic of Endowment tendency in my ARC System framework. The inflexibility and formality of strong Endowment orientation, while encouraging loyalty and structure, can create a divide between top management and lower level employees that encourages corruption. People at the top feel they are above the law and people at the bottom lack the power to insist on ethical practices.
There are other problems, too. Employees whose opinions aren’t valued will keep useful insights to themselves. Fear of giving managers bad news causes problems to go unreported. And power distance between customers and suppliers can spread these problems throughout a supply chain. Recent revelations of defects at Kobe Steel and other companies have been attributed to suppliers’ unwillingness to admit they couldn’t meet customers’ quality specifications, another symptom of Endowment tendencies.
Getting input from employees at every level is especially important in international contexts, where companies face new challenges and pitfalls. To counteract excessive hierarchy, managers should work to encourage a flow of information up and down the chain of command. Initiating frank discussions across levels and job functions can help disrupt siloed communication patterns and enhance exchange throughout the organization.
Encouraging open communication takes time; people won’t be quick to express opinions that were ignored or punished in the past. Rewarding those who contribute ideas, take personal initiative, and express concerns will encourage others to follow suit. Securing input from employees throughout the organization can help firms identify and solve problems before they escalate and gain maximum value from their international workforce.
Terry Kahler’s post on his three years as general manager of Dell’s Brazilian operation provides an excellent example of establishing a successful culture in an overseas operation.
To conform to Dell’s corporate policy and adhere to U.S. law, Terry needed to manage his Brazilian employees’ Situation orientation—their tendency to question authority and ignore rules. The existence of the “Jeitinho Brasileiro”, the “Brazilian way” of skirting the law to get things done, isn’t surprising, given Brazil’s history. Situation tendencies are strong in environments where legal and political systems are considered weak or unfair, particularly those with high levels of political turmoil and corruption. Rather than obey rules as a matter of course, people decide what to do based on their own needs.
Although Terry was committed to managing his Brazilian employees in a culturally sensitive way, when it came to ethical conduct, his goal of alignment with Dell’s corporate policy would require a cultural shift at the Brazilian operation.
To create a goal-based culture, it is vital to:
At Dell Brazil, Terry Kahler established clear policies for ethical conduct, offered training in appropriate practices, and followed through with clear and public action when policies were violated. Employees had a road map for success and saw the consequences of not following it. Focusing on outcomes helped Terry justify asking employees to change their behavior and helped him avoid a cultural power struggle. Terry’s use of goal-based management principles made Dell Brazil a global success story.
Things to know and practice for success in international encounters
What to Keep in Mind
1.You have a culture, too
We tend to think of our own preferences as being “normal” or “natural” and to see others as being the ones with a culture. But our own behaviors, attitudes and expectations are culturally determined and no more “normal” than any others. If we grew up where they did, we’d have those cultural tendencies, too.
2.You’re playing the wrong game
No one would use a baseball bat in a basketball game, but we unknowingly use culture-based behaviors, attitudes and expectations in new cultural environments where they aren’t helpful. Cultural awareness means recognizing that the rules of the cultural “games” others are playing are different.
3.Assumptions are like onions; they have many layers
It’s not easy to shed culture-based assumptions because they go so deep. Concepts we refer to every day—honesty, reliability, and respect, to name a few—are defined differently throughout the world. Recognizing the assumptions behind our own expectations is vital to cross-cultural competence.
4.You’re not as open-minded as you think
We’d all like to think we’re understanding when it comes to cultural difference. A good way to test for open-mindedness is to imagine talking to someone from a different socio-economic, ethnic, or political background—in our home country. How easy is it to listen, empathize, and see through their “cultural lens”?
What to Do
5.Become a cultural investigator
New contacts and environments constantly give us clues about their cultural orientation. We can look for these clues in the way people communicate, the way they set up their physical surroundings, and the systems and processes they use. Anything that’s unfamiliar points to a different way of thinking.
6.Identify cultural “sub-texts”—explain yourself and ask questions
Discovering the cultural basis for things that are unfamiliar helps us understand others’ motivations and priorities. Actively comparing viewpoints with international contacts to expose different ways of thinking makes it possible to communicate in a culturally appropriate way and develop proposals that meet common goals.
7.Don’t make it worse
Cultural conflict begins with subtle misalignments. When something seems confusing or a little “off”, it’s best to stop, explain ourselves, and ask questions to avoid compounding the problem. Understanding differences in the way two parties view an encounter is vital to getting things back on track.
8.Have the reaction, then step back
Everyone’s cultural “buttons” get pushed at times, and it’s best to be honest about frustration when it happens. Afterwards, we can step back and think more objectively about why we responded in a certain way. Check out this practice exercise.
9.Put down the bat
Even the best baseball player cannot win a basketball game using a bat. We must understand the rules of a new cultural “game” and the reasons behind them before we make a decision to embrace them or teach others the game we know best.
10.Leverage “their” strengths
Each cultural tendency comes with unique skills and knowledge, so intercultural partners bring new resources and strategies to the table. Combining the advantages of diverse approaches is the way to achieve synergistic performance on international projects and collaborations.