Monthly Archives: October 2010

Cultural Intelligence V: Germany

This series is edited by Dick Locke, SI’s resident expert on International Trade, author of Global Supply Management — A Guide to International Procurement (which was the definitive guide for almost a decade), and President of the Global Procurement Group and Global Supply Training which regularly gives seminars on International Trade and working with International Cultures.

As highlighted in last year’s post on Overcoming Cultural Differences in International Trade with Germany, Germany, which is one of the most influential nations in the EU, has a very distinct culture that is simultaneously easy and hard to sum up. About the only way to do it is to quote one of their favorite sayings — Alles lief wie am Schnürchen. (Everything went like clockwork.)

With respect to Locke’s seven key cultural differences (first outlined as six in his classic text on Global Supply Management), while the power distance is very low in German society due to the strong push for social equality, hierarchy is mandatory in a German company and this often results in exaggerated deference to one’s superior or CEO. Time is monochronic as German’s believe in punctuality to a tee, buyers and sellers are of more-or-less equal rank (though the buyer will be treated with great respect if the rules of German business are followed), and uncertainty is loathed. While harmony is a must with respect to business decisions, as a consensus must first be reached, they will likely be the most frank, direct, and blunt people you encounter in your international dealings. Face is important within their culture (so while they will openly disagree with you, they will only air their internal disagreements in private meetings), which is highly individualistic and private.

Verbal communication in Germany is extremely direct. The tone of the conversation will be reserved in a business setting, though they may be loud and boisterous in public. The volume will be low to moderate, so you should avoid raising your voice — it’s about the facts, not the emotions.

Non-verbal communication is relatively low compared to some of the other cultures we’ll cover, but body position is very important. It’s rude to have your hands in your pockets while talking or to shake with one hand in your pocket. Also, keep your gestures to a minimum, don’t use the OK sign, and don’t point to your head. Be reserved in your facial expressions, as the Germans are suspicious of emotions, but do maintain eye contact when speaking or being introduced (and use a firm handshake). Finally, keep roughly the same distance as you would with your North American counterparts. Depending on where you are from in North America, you’ll find that the German’s are either a little closer or a little further, but there will not be much of a difference either way (except in a supermarket or bakery, where they might literally be breathing down your neck). With respect to touching, European greetings are reserved for friends.

As per our last post, to them, business is serious. It’s not a joke, and jokes in a business setting will not go over well. Meetings are to start on time, follow the agenda, and finish on time between buyers and sellers with representation of equal rank. (Pay attention to titles. They are very important.) Negotiations, which are to be honest and straight-forward, are hard and concessions should be expected on either side. Meals are common, but they are not the affairs you’ll find in Asia. Germans want to get home to their families, so don’t plan on sticking around too long after dinner. Also, be sure that you don’t drink before the host.

Finally, the Germans believe in giving a detailed factual rendition of their own capabilities. Don’t mistake this for arrogance.

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The Missing Key to Supplier Performance in most SRM Initiatives

Trust.

That’s right, trust. Specifically, trust in the supplier. Now it’s not always possible, but if the supplier is providing a strategic product or service, shouldn’t you be able to trust the supplier? If you have to monitor each and everything the supplier does, is that really a desirable situation?

And if you have a supplier that is trustworthy, you might find that less monitoring improves results, as the supplier wants to demonstrate that your faith in them is well deserved. (Furthermore, the supplier will have more time to focus on their work if you aren’t nagging them for an update every five minutes). As proof, consider this recent tidbit buried about 2/3rds of the way into this recent article in the CPO Agenda on “When do we get to SRM?”

“One contract, for example, was managed by more than one full-time officer but this was adding no value. We decided it wasn’t a strategic supplier and the contract would have performed automatically anyway. So we took away the dedicated officer with no detriment to the service. In fact, it resulted in the supplier feeling more trusted.”

Now I’m not saying you shouldn’t monitor contracts and results, but that it should be done in moderation and that the best scenario is one where monitoring is automated and you only need to get involved when early warning indicators indicate that there may be a problem. You want to be spending your time building a better product or service for the end customer, not wasting it double checking every little thing your supplier does … because, in that case, you might as well be doing the work yourself!

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Have You Been Aribaed: The Harbinger of Getting Paid

Today’s guest post is from Richard Adin, founder of Freelance Editorial Services and blogmaster of An American Editor. It originally appeared on An American Editor on September 23, 2010 and is reprinted with kind permission.

Have you been aribaed (that’s ariba + ed to somewhat simulate the verbing of a company name)? I have and I must admit, I don’t like it.

It’s the modern megacorporation’s way of further shafting (squeezing mercilessly) the little person who really can’t fight back. It isn’t the battle between near-equals or almost-near-equals or even fantasy-almost-near-equals, but the battle of multiple giants against an ant.

Okay, I hear you asking, “so what’s the problem?” The problem is this: freelance editors are generally 1-person small businesses. They do not make million-dollar grosses, do not file SEC reports quarterly, and do not worry about being delisted on the stock exchanges. Instead, they worry about keeping expenses down, getting enough business to earn a living that is at least equivalent to what they could earn working at the local convenience store, and getting those who hire them to pay them the agreed-to amount on time. In other words, we are part of that cadre that both Republicans and Democrats seemingly want to protect when they speak of small business but consistently fail to protect because we don’t fork over enough cash to them.

What is Ariba? Ariba is a megacorporation1 that serves as an intermediary between suppliers and clients for invoicing and payment. I assume that the reason for a company to sign on with Ariba is so that it can eventually eliminate its own accounts payable department, saving the costs of writing checks, verifying invoices, and, of course, all the costs associated with having human beings working in these departments; I don’t know this for certain.

So far, so good — right? Well, setting aside the idea that if American companies continue to forcibly retire low-level workers so they can increase the perks to very-high-level executives there soon will be only a handful of people able to afford to buy the company’s products because the vast majority of people will have no disposable income (and let’s face it, if you manufacture a book, how many copies of a title is the company CEO likely to buy), there is nothing particularly wrong with delegating to a third party bill paying.

Except when you — the supplier of labor or goods — are aribaed, because when you are aribaed, you have to pay Ariba a percentage of your invoice in order to get paid. Imagine this. MegaMonolith Corporation (MM) hires you to edit a book and because of competition and outsourcing to packagers, in order to compete you have had to set your price at the same level as it was in 1995.

So you do the job with great skill and care, working long days and weekends to get the job done in time to meet MM’s compressed schedule — and getting no additional monies for working more than 8 hours in a day or on weekends — and submit your invoice for payment. Previously, your invoice went directly to MM, the client.

But out of the blue MM gets the bright idea to use Ariba. Now you get your chance to be aribaed. In order to edit books for MM, you have to get a purchase order (just like before, so no big deal) but now you have to submit your invoice through Ariba, who won’t process your invoice unless there is a matching purchase order. On the surface it looks great until you get your check and discover that you’ve aribaed — Ariba charges you a percentage of your invoice for sending you the money you are owed. And, if you don’t join Ariba, process your invoices through Ariba, and pay Ariba’s fee, you can no longer sell your services to MM. Welcome to the group of people who have been aribaed!

On wonders if MM needs to replace a thousand computers is it likely that Dell or IBM will voluntarily pay this fee? My guess is not, but they have the power that us freelancers don’t and offer goods that are relatively unique, which we don’t. In the end, it is the small fry like us who will pay MM’s operational costs or be barred from doing business with MM.

Ariba’s pitch is that it is a place of networking. Other potential customers will find you in its database and send you business. And my great-great-great-great-grandmother will be elected president of the United States right after her resurrection. Do they really think we are so naive as to believe that the people who make the decision to hire a freelance editor are searching Ariba’s database?

Unfortunately, just as many publishers have forsaken quality for quarterly returns, so they will squeeze the little person because they can’t squeeze the IBMs and Microsofts of the world. They will squeeze where they can, which means the workers in the trenches. And aribaing freelancers is just one more way to do so. It is a natural next step to the outsourcing of editorial services to packagers that began in earnest in the late 1990s as a way to squeeze editorial pricing.

Are you ready to be aribaed? If not, get prepared, because it is coming.

Thanks, Richard!

1 As per a recent post by Debbie Wilson on the Gartner blogs, it is a megacorporation with a market cap of 1.73 Billion.

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Outsourcing? Two Years to Turnaround!

While short and sweet and filled with a number of (now) obvious pieces of advice, a recent article over on CIO Insight on “Nine Things No One Ever Told You” [about offshoring] made two great points that many articles miss:

  1. Process Matters and
  2. It Takes Time to Get a Stable, Productive Processoften 18 to 24 months if you and your partner are new to outsourcing!

In other words, if this is your first time, expect that it will take two years to get the full extent of the payback which might not be as much as you expect after infrastructure investments, change management costs, travel, and rework are factored in (which will often be [much] more than you expect).

And process matters. Without sound processes and standards in place to keep the business running smoothly, it is more work to manage multiple relationships, each of which will function poorly without a strong foundation. So, if you still haven’t realized that the outsourcing craze has finally stopped and decide you want to chase after the runaway train long after it has left the station, remember this: Two years to turnaround. Ouch!

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Cultural Intelligence IV: China

This series is edited by Dick Locke, SI’s resident expert on International Trade, author of “Global Supply Management — A Guide to International Procurement” (which was the definitive guide for almost a decade), and President of the Global Procurement Group and Global Supply Training which regularly gives seminars on International Trade and working with International Cultures.

As highlighted in last year’s post on Overcoming Cultural Differences in International Trade with China, China is one of the most developed cultures in the world, with a long history behind their well establish social order, which requires an inequality between any two people to maintain stability. (That’s part of the reason that the Chinese generally believe that all foreigners — who are traditionally inferior, corrupt, decadent, disloyal, volatile, barbaric, and devils-in-disguise — are inexperienced in matters of business even if they are technically competent.) As a result, dealing with the Chinese can be very difficult for an outsider, and a North American in particular.

With respect to Locke’s seven key cultural differences (first outlined as six in his classic text on Global Supply Management), China has an implicit power distance between any two individuals (which is higher in the North than in the South), a monochronic approach to time in business, and a strong distaste for uncertainty. Maintaining harmony and face is of utmost importance, individuality is not, but privacy is deeply respected. They may ask blunt questions about your personal situation and beliefs, but that is only to understand what may offend you (so they can avoid doing it). After all, they praise virtue to the point that two mutually exclusive answers can both be true if both are virtuous.

Verbal communication in China is very indirect where business is concerned. Since harmony and face must be maintained no matter what, all answers are soft, there are no admissions of a failure to understand, and direct “no”s are effectively taboo. That’s why you can’t ask them a yes/no question. If you want to know if they understand a request, you have to ask them what they are going to do. Thus, you should be calm and polite in negotiations and avoid getting loud. However, the opposite holds true in social encounters. Socially, it’s okay to be boisterous, and it is expected at meals (at the appropriate time). And you can be quite loud, especially if laughing at yourself.

Non-verbal communication is effusive in their society, hard for an outsider to read, and even harder to master. As a result, you should avoid large gestures, as many are taboo (including the pointing of the index finger, finger snapping, and whistling), and maintain an impassive facial expression during business (as frowning is a sign of disagreement and smiling can be simply a polite way to mask uncertainty or uneasiness). Eye contact should be avoided in greetings as almost everyone is unequal and respect must be maintained, emotions should be reserved until you know the right times to display them, and you should allow them to dictate the distance between you, which is usually at most 3 feet (and just enough to respect your privacy in accordance with their cultural norms) as they will often speak quietly to avoid disturbing others who may be nearby. Finally, you must avoid personal contact (unless they touch you, at which point you may reciprocate in kind) as the Chinese generally don’t like to be touched. As with many Asian cultures, touching is reserved for (close) friends and peers.

As per our last post, meetings primarily exist to gather information (and decisions will be made back at the office). Once they get to know you, negotiations will get progressively detailed to the point where the questions are so precise that it will be almost impossible to answer them without disclosing your IP. This is common practice to make sure you are truly interested in a mutually beneficial long-term business relationship and not just looking to exploit cheap labor. It has nothing to do with your IP (although IP theft is a serious problem in China and you have to invest equal effort to insure that they are also interested in a long term business relationship). And meals, while they may last hours and get loud and boisterous later on, are formal. You must not discuss business until the host brings it up. A few other pointers is that he who extends the invitation always pays (but you can pretend to fight over the bill to gain points), you must eat hearty to please the host, but you must leave some food on your plate when you are full.

Finally, one other point that you should remember is that the Chinese will often disparage their own accomplishments and there is a social protocol to this. Specifically, you are expected to respond with a complement. For example, if a Chinese person says that he may not have chosen the best restaurant for you, do not say something along the lines of “we’ll manage“. Instead say that you’re sure the restaurant choice is impeccable and/or that he outdid himself in its selection.

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