How Culturally Aware Are You?

It may be some time ago now but some may remember how in the 90’s Walmart decided to enter the German market. At this time Walmart was the biggest retailer in the world with more than 3,800 stores in the US alone and large amounts of cash in the bank. At the same time the German retail sector was in a dreadful state, so Walmart bought two German chains – Wertkauf (with 21 stores) and Interspar (with 74 stores) and in their wisdom immediately began Americanising them – which included actual greeters at the door entrances to wish shoppers a ‘good day’ and strict instructions to smile at customers :-)

 

As Kai Hammerich and Richard Lewis highlight in their book ‘Fish Can’t See Water’ the result was a disaster. The have-a nice-day stuff went down like a lead Zeppelin with employees and shoppers alike; and Walmart compounded their mistake by putting an American expat in charge who insisted everyone spoke English – this remember was in Germany.

 

The company lost $150 million a year and soon decided to sell out to a German rival, Metro.

 

What’s interesting in this case is it appears that the leadership in Arkansas never realised that it was their own leadership style in Germany that was causing the problems and never even got a chance to try and transform the organisation by changing the leadership and turning it back into a German company, where at least they spoke German.

 

It’s basic mistakes that can make the difference between multi-million dollar loses and multi-million dollar profits; and sometimes, especially when entering new markets you have to ask the right questions and most of all listen to the ‘heart beat’ of the culture, before attempting any radical changes – regardless of how un-radical they may appear to you at the time.

 

As Hammerich and Lewis mention “coping with cultural differences is becoming a valued skill. The advance of globalisation, particularly the rise of powerful emerging countries such as Brazil and China, means that companies have to deal with business and consumers from a wider range of backgrounds. And the shift from manufacturing to a service-based economy means that companies have to manage complicated ideas rather than relatively simple production processes. Western Managers must understand consumers in Sao Paulo and Beijing. They also need to know how to tap into knowledge centres halfway across the world.”

 

Understanding culture means understanding traditions; social and business norms; the language and the nuances that go with it. Something I learnt the hard way in South Africa when ordering room service and after waiting 30 minutes phoning room service to find out where my order was and being told that it would be with me ‘just now.’ In English, ‘just now’ means in a few minutes – but not in SA – 'just now' can mean anytime in the next few hours – the term ‘now now’ means in the next few minutes.

 

Hammerich and Lewis mention what many of you may already know that “many companies are bad at understanding culture. No serious business would dream of spending hundreds of millions buying a subsidiary without doing a thorough audit of the books. But Walmart advanced into the German market without bothering to make even the most rudimentary inquiries about German culture; and where even today the biggest obstacle to successful globalisation is the inability of most companies to understand the world view and aspirations of partners and competitors.”

 

An important argument that Hammerich and Lewis make is how they believe that the world civilisation can be divided into three global archetypes: linear-active; multi-active; and reactive, where;

 

1) Linear-active culture stresses timekeeping and getting-to-the-point and dominates North America and Northern Europe.

 

2) Multi-active stresses emotion and sociability and dominates in Southern Europe and Latin America, and I would suggest in Sub-Saharan Africa too.

 

3) Reactive stresses ‘face’ and harmony and dominates in Asia.

 

 

Although Hammerich and Lewis point out that it isn’t quite as simple as boxing countries and cultures as some countries stand in different positions on these various continuums; where, for example, India is halfway between reactive and multi-active and Canada halfway between linear-active and reactive.

 

Whether their model is fool proof isn’t the issue – the important point is not to ‘project’ the culture that you might be used to when you’re on another countries soil. If you want to optimise both the organisations future as well as your own, you must spend the time to really understand the culture and begin ‘to live it’ – only then will you really be able to make a difference. 

 

References:

 

Hammerich, K. and Lewis, R. (2013). Fish Can’t See Water: How National Cultures Can Make or Break Your Corporate Strategy. Wiley.  

 

Managing Change: Does Urgency Create Resistance?

Guiding change may be the ultimate test of a leader, since no business survives over the long term if it can’t reinvent itself. But, human nature being what it is, fundamental change is often resisted mightily by the people it most affects: those in the trenches of the business. Thus, leading change is both absolutely essential and incredibly difficult.

 

But one has to look at why change is resisted – and one of the key reasons is that the organisation hasn’t embraced a culture of continuous improvement, which should be a prerequisite of business thinking in today’s constantly changing business environment. 

 

It’s an outdated assumption that everyone in the trenches resist change – but what they do resist is change for change sake; change where they don’t understand the reason for change; and change when it is forced on them rather than an inclusive process that asks them for input and feedback to the ‘things’ that need changing.

 

John Kotter, wrote in a 2007 Harvard Business Review article about change management that, “the most general lesson to be learned from the more successful cases is that the change process goes through a series of phases that, in total, usually require a considerable length of time. Skipping steps creates only the illusion of speed and never produces a satisfying result. A second very general lesson is that critical mistakes in any of the phases can have a devastating impact, slowing momentum and negating hard-won gains. Perhaps because we have relatively little experience in renewing organizations, even very capable people often make at least one big error.”

 

And he went on to highlight eight steps to transforming an organization;

 

1 Establishing a sense of urgency;

2 Forming a powerful guiding coalition;

3 Creating a vision;

4 Communicating a vision;

5 Empowering others to act on the vision;

6 Planning for and creating short-term wins;

7 Consolidating improvements and producing still more change;

8 Institutionalising new approaches.

 

Maybe because Kotter is a former Professor from Harvard the business establishment fear to question the logic of the steps – but is change management really about ‘urgency’ in the 21st Century or is change management a natural extension of a continuous improvement culture. In fact the very word ‘urgency’ can create the perception of a need to ‘rush’, where the ramifications behind a word like urgent starts to enter the domain of reactive thinking – i.e. panic.

 

After the global crisis has seen organisations close or downsize; and seen employee salaries frozen while prices increase across the whole spectrum of industries regardless of size – savvy employees aren’t fearful of change, in fact they’re now more concerned if they don’t see change taking place – as most understand that there is a solid business case for constant improvement to ensure future stability in ever changing global markets.

 

Change is never isolated within an organisation, since functions are interdependent on one another and hence a change in one section of a business will always impact others, where the catalyst for the change can be an internal or external force – i.e. a change in strategy or a development in R&D; or the emergence of a new product or competitor.

 

An organisation needs those in the ‘trenches’ to be constantly feeding intel on their business environment through to the decision makers, including changes in the market and/or customer expectations and perceptions, along with any other business intel that might turn out to be an opportunity or a threat to the organisations future.

 

Already, by encouraging this positive business thinking and culture, organisations are not only ready and ‘geared’ for change but are actually expecting it – and hence there’s never a sense of urgency just a sense of acceptance and reality that change is a healthy sign of business development.

 

Creating a sense of urgency is not a prerequisite for successful change management – in fact the very process of creating that ‘sense of urgency’ can be the one factor that creates a resistance to change in the first place.

 

What organisations should strive for is a culture that expects and demands change and continuous improvement that aligns with a corporate vision to be ‘successful in something’ – whether it’s being the leader in the market or a strategically focused follower.  

 

Just How Confusing Can We Make Leadership?

Daniel Goleman asked the question that many people have; "what do effective leaders do?" and you'll hear a host of answers. Leaders set strategy; they motivate; they create a mission; they build a culture. Then ask "What should leaders do?" If the group is seasoned, you'll likely hear one response: the leader's singular job is to get results.

 

In recent years, that mystery has spawned an entire cottage industry: literally thousands of "leadership experts" have made careers of testing and coaching executives, all in pursuit of creating businesspeople who can turn bold objectives, be these strategic, financial, organizational, or all three, into reality.

 

Still, effective leadership eludes many people and organizations. Leadership experts offer advice based on inference, experience, and instinct. Sometimes that advice is right on target; sometimes it's not.

 

Goleman highlights how research by the consulting firm Hay/McBer, which draws on a random sample of 3,871 executives selected from a database of more than 20,000 executives worldwide, takes much of the mystery out of effective leadership. The research found six distinct leadership styles, each springing from different components of emotional intelligence.

 

The styles, taken individually, appear to have a direct and unique impact on the working atmosphere of a company, division, or team, and in turn, on its financial performance. And perhaps most important, the research indicates that leaders with the best results do not rely on only one leadership style; they use most of them in a given week – seamlessly and in different measure - depending on the business situation (p.78-79).

 

The six leadership styles identified from the research are;

 

1) Coercive leaders; who demand immediate compliance;

2) Authoritative leaders; who mobilize people toward a vision;

3) Affiliative leaders; who create emotional bonds and harmony;

4) Democratic leaders; who build consensus through participation;

5) Pacesetting leaders; who expect excellence and self-direction; and

6) Coaching leaders; who develop people for the future.

 

 

But what was fascinating with the research is that they found that authoritative leaders were the most successful in getting results and creating a positive climate; and though identified as a style, coercive and pace-setting leaders were seen as negative leadership styles and responsible for creating negative organisational climates.

 

One of the biggest problems with discussing leadership is that we don’t often check that we are discussing the same key issue and are even coming from the same basic foundation about definitions of leadership.

 

For example, if you asked business leaders to define authoritative leaders, it’s possible that traits like power and direction would be included in the list. Yet in the definition used in the Hay/McBer research an authoritative leader was defined as a style that embraced; mobilised people towards a vision, a ‘come with me’ approach; self confidence; empathy; change catalyst and is used when changes require a new vision, or when a clear direction is needed.

 

But traits and terms like ‘mobilising people’; empathy; self-confidence; and a catalyst of change; are behaviours that have been attributed to other leadership styles, specifically transformational leaders compared to the traditional ‘power’ based approach of ‘authoritative’ leadership.

 

So are we losing sight of what leadership is all about when we start confusing different leadership styles and successful leadership traits? The biggest danger in leadership development is that those aspiring to be a successful future leaders lose confidence in those who are supposed to be developing them – and the quickest way you’ll do that is by confusing basic traits and styles of a great leader; something that is often done with little regard for leadership development and is all to do with personal commercial gain.

 

Organisations, academic institutions and consultancies should focus on developing common themes and common traits for great leaders. They should be speaking as one and agreeing on the real behaviours that support the development of a great leader at different stages of the organisations life-cycle.

 

The more we confuse the subject – the less we’ll develop truly great leaders for the future.

 

References:

 

Goleman, D. (2000). Leadership that gets Results. Harvard Business Review. Vol. 78 Issue 2, p.78-90.

 

How Adaptable is Your Business?

In a 2011 article in the Harvard Business Review, Martin Reeves and Mike Deimler highlight how “we live in an era of risk and instability. Globalization, new technologies, and greater transparency have combined to upend the business environment and give many CEOs a deep sense of unease. Just look at the numbers. Since 1980 the volatility of business operating margins, largely static since the 1950s, has more than doubled, as has the size of the gap between winners (companies with high operating margins) and losers (those with low ones).

 

Market leadership is even more precarious. The percentage of companies falling out of the top three rankings in their industry increased from 2% in 1960 to 14% in 2008. What’s more, market leadership is proving to be an increasingly dubious prize: The once strong correlation between profitability and industry share is now almost nonexistent in some sectors. According to our calculation, the probability that the market share leader is also the profitability leader declined from 34% in 1950 to just 7% in 2007. And it has become virtually impossible for some executives even to clearly identify in what industry and with which companies they’re competing.”

 

Organisations have to be constantly alert, these days, to changes in their business environment – at least they do if you want to stay competitive in their market place. The problem for some leadership teams is that there can simply be too much information and too much uncertainty to make strategic decisions, with confidence, about the future of their company.

 

It’s in these situations that there seems to be two distinctive types of leaders and/or executive teams – the first type aren’t scared of uncertainty and are prepared to make strategic decisions based on the knowledge that they don’t have all the answers and actually don’t expect all the answers – they make short-term strategic decisions based on ‘most likely’ future scenarios, but also have a very dynamic and adaptive approach to their business environment. They expect a changing environment, and are organised to embrace and adapt to a changing environment.

 

The other type of leader and/or executive team gets frustrated with the uncertainty in their business environment. Rather than seeing this uncertainty as opportunities, they see this uncertainty as a threat, as they feel that constant ‘internal’ change gives an impression that they aren’t in control of their business. These teams and organisations often have a culture, based around their people, that seeks clear direction and consistency - and where they perceive that constant change is translated into meaning ‘that they and their management don’t know what they are doing’ by their staff.

 

This probably appears obvious to the reader – but currently out there on the ground, in the business environment, these two types of leadership teams really do exist.

 

As Reeves and Deimler mention “the goal of most strategies is to build an enduring (and implicitly static) competitive advantage by establishing clever market positioning (dominant scale or an attractive niche) or assembling the right capabilities and competencies for making or delivering an offering (doing what the company does well). Companies undertake periodic strategy reviews and set direction and organizational structure on the basis of an analysis of their industry and some forecast of how it will evolve.

 

But given the new level of uncertainty, many companies are starting to ask:

 

• How can we apply frameworks that are based on scale or position when we can go from market leader one year to follower the next?

 

• When it’s unclear where one industry ends and another begins, how do we even measure position?”

 

Organisations need to embrace the fact that their environments are changing like never before and that this constant change is here to stay. Looking for strategic certainty is going to become a major weakness within any organisations strategic framework.

 

What organisations need are organizational structures that are made up of employees, at all levels, that embrace change as a natural part of their business environment and stakeholders need leaders that create strategic processes that allow them to adapt quickly and smartly to their changing environment.

 

Hence adaptability is potentially the new competitive advantage for the 21 century on its own……

 

References:

 

Reeves, M. and Deimler, M. (2011). Adaptability: The New Competitive Advantage. Harvard Business Review. [On-line: http://hbr.org/2011/07/adaptability-the-new-competitive-advantage/ar/1]