Sunday, October 27, 2013

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

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