Four Steps to Avoiding a Custody Battle on International Collaborations
Imagine you’re visiting proud parents of a new baby—say a dentist and an accountant—and one of them says, “We’re arguing over whether the baby will grow up to be a dentist or an accountant.” You’d probably think these options were a bit limiting. There are plenty of other professions, and new possibilities will open up during the baby’s lifetime.
As unlikely as this scenario might seem, it’s precisely what happens on international collaborations. Each partner expects the joint venture, subsidiary, or merged company to replicate a parental corporate culture. As with the baby example, this expectation imposes unnecessary tensions and limitations on the collaboration. For parents and corporate partners alike, “Who’s your daddy?” is the wrong question.
Your Corporate Culture Exists for a Reason. So Does Theirs.
The unique environment surrounding your company has shaped its corporate culture. This special environment offers a specific set of resources (such as component suppliers or a skilled workforce) that support the company’s growth and profitability. It also imposes specific constraints (such as a small local customer base or high energy costs) that inhibit the company’s success. These resources and constraints led your management to define success in a particular way and shaped the strategy it developed.
Your international partner’s corporate culture developed in a different environment offering different resources and constraints that led to a different definition of success and a different corporate strategy. So the more dissimilar your environment is from theirs, the more different your two corporate cultures will be.
So… given two partners with two different cultures, whose should dominate?
The Customer Is Not Always Right
Acquiring companies usually impose their own corporate cultures on their international acquisitions, one reason for the over-70% failure rate of international mergers and acquisitions. Outsourcing customers use home-country strategies to manage offshore suppliers, leading to confusion and low productivity. Companies expect their overseas subsidiaries to replicate home-country business models, resulting in weak international market penetration. Being the larger or more successful company does not mean you can successfully impose your corporate culture in your partner’s environment.
When your company teams up with an international partner, the new entity, like a new baby, will develop in a new and unique environment different from the ones that shaped its parents. The idea that a U.S. business model should—or even could—be replicated by its Indian supplier is flawed. The supplier must interface with Indian partners, manage Indian workers, and navigate Indian government processes.
Who’s Your Daddy?
Rather than argue over which parent’s approach to use, partners should collaborate to design a culture around the collaboration’s unique environment and goals. Here’s how to create a goal-based culture that promotes clarity, minimizes conflict, and maximizes employee buy-in:
1. Identify each partner’s goals. Keep in mind that while the same business concepts are used everywhere in the world, the way companies understand and practice these concepts is shaped by local resources and constraints. When your partner talks about “success,” they may mean increased market share. Or maybe success means workforce growth to them. Or quick profitability. You need to understand how they define success and how this definition is shaping their strategies. And they need to understand these things about you. Take time up front to understand your partner’s goals and explain your own.
2. Align your goals. Identify common ground and determine where each partner can adjust to accommodate the other’s needs. It’s best to drop goals your partner doesn’t value. Goals that are unique to one partner will not be served by the partnership.
3. Develop goal-based policies and systems. People on both sides are likely to resist when presented with new rules and processes. Relating these to mutually-defined goals establishes a rational basis everyone can understand, and it’s easier to enforce policies and implement systems that relate to established objectives both sides have agreed on. When disputes arise, choose the approach that best serves the partnership’s goals, without referring to “our way” or “your way.”
4. Reward appropriately. Design a reward system that aligns performance criteria with your goals. Base assessments on whether employee performance incorporates the partnership’s policies and advances its goals. Align reward policies with your stated culture to enhance clarity, compliance, and productivity.
Fortunately, collaborations don’t have to develop all new policies, systems, or processes. One partner will have something close to what you need to meet most of your objectives. Choosing wisely whose approach to use is easy if you base your decision on the nature of the goal. The fact that one company is bigger, wealthier, or more technologically sophisticated does not guarantee that its corporate culture will be relevant to all—or even most—aspects of the partnership. Instead, choose each policy, process, and system for its alignment with a goal.
An example of this procedure might be a jointly-owned collaboration of German and Brazilian electronics producers located in Brazil. German Process-oriented quality controls may be the basis of a high-performance manufacturing system. But the Brazilian partner’s Network–oriented approach to management may result in lower turnover among Brazilian employees. When selling to European customers, the German partner’s Achievement-based focus on the bottom line will deliver the results they desire, but if the collaboration also serves the Brazilian market, the Brazilian partner’s Endowment-based understanding of corporate hierarchies will be critical to satisfying those customers. A mix of policies and processes from each partner will meet the collaboration’s diverse goals most effectively.
If you’re playing cultural tug-of-war with your international partner, think back to how the collaboration’s culture was developed. Did each partner understand the other’s definition of success? Are goals for the partnership the same for both sides? Did you adopt or create policies and systems that aligned with your shared goals? Did each partner accept elements from its partner’s culture that addressed those goals?
If not, it’s no surprise that you’re in a battle for control of your collaboration. Identifying the goals you and your partner share and aligning policies and processes with those goals will help you end the conflict and partner for success.