Cultural Intelligence I: An Introduction to Culture

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 per Wikipedia, culture is a term that has various meanings. For example, Alfred Kroeber and Clyde Kluckhohn compiled a list of 164 definitions of “culture” in “Culture: A Critical Review of Concepts and Definitions” on Questia.com.

For our purposes, we’ll define culture as the set of shared attitudes, values, goals, practices, qualities, and beliefs regarding daily interaction, manners, arts, and worthwhile pursuits for a characterizeable group of people.

Culture is important because, as noted by social scientist Geert Hofstede, it conditions individuals’ responses to their environment. Deeply embedded inside each of us, culture affects our mannerisms, our manner of speaking, our dress, and just about every other aspect of our personality. Since it deeply affects who we are, it affects the way we do business, and an understanding of different cultures is thus deeply important when conducting international trade.

Therefore, this series will continue what Dick and I started last year in Overcoming Cultural Distances in International Trade by not only defining what Cultural Intelligence is, but discussing some of the basics of cultural intelligence with respect to each of the seven countries we covered last year: China, Germany, India, Japan, (South) Korea, Mexico, and Thailand.

But first, we’ll discuss some characteristics of culture, as put forward by David C. Thomas and Kerr Inkson in their book Cultural Intelligence, People Skills for Global Business. Culture is:

  • Sharedand people within a group have it in common, so even if each individual in the group has a distinct personality, each member of the group shares a common understanding
  • Learned and Enduringas it is absorbed over long periods of time and deeply ingrained
  • A Powerful Influence on Behavioras we have a natural tendency to revert to our cultural roots and it will unconsciously influence our decisions
  • Systematic and Organizedand every value is contextually related to every other
  • Largely Invisibleas the values and beliefs that define the culture are much deeper than the expressions of those values and beliefs.

Furthermore, its effects and behavior and decisions are many and varied. For example, it:

  • Influences our Perceptionas it determines what we focus on in any given situation, and what we don’t; for example, some people will hang on your every word and ignore everything else about you while others won’t listen to a word you say while instead focussing on all of your non-verbal behaviors
  • Defines our Categorizationand helps us place people into groups such as race, culture, country, ethnic background, and social status
  • Creates our Stereotypesthat tell us what we should expect, right or wrong, from a person of a certain cultural background
  • Specifies our Attributionsand determines our rationale for why people do what we do.

That last point is key, for if we assume that a response means yes when it actually means no, or vice versa, in our international pursuits, we’re just setting ourselves up for failure.

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Want To Improve Your Performance? Increase Your CQ!

A recent article over on the HBR blogs on “how your brain connects the future to the past” discussed some “recent studies” that suggest that the areas of memory that remember the past and the areas of creativity that imagine the future in your brain are almost one in the same. More specifically, the brain’s memory circuits are not merely for reflecting on the past but are also vital mechanisms for imagining, anticipating, and preparing for the future, a skill that each of use needs daily in this fast-paced knowledge-driven economy.

In the business world, it’s a distinct advantage to have a brain that anticipates future demands and negotiates them well because accurate predictions typically translate to success. A proactive brain that flexibly recombines details from past experiences that, by analogy with your current surroundings, help you make sense of where you are, anticipate what will come next, and successfully navigate the transition increases your performance. But how do you get a proactive brain?

The article provided some tips, which included:

  • thinking about your (organization’s) goals for the future,
  • giving your brain a rich bank of experiences, and
  • interacting with others.

In short, increasing your CQ will increase your performance. So what’s CQ? That’s the subject of a new 10-part series, edited by Dick Locke — SI’s resident expert on international trade, that starts tomorrow!

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Clean Data Is Good …

… but the ability to clean it on the fly is better!

Chain Link Research, which has been publishing some of the best thought leadership on Supply Chain Management in recent months, recently ran a piece on “contract and supplier management lessons” that summarized eight key lessons from their recent research. Seven of these are dead on and emphasize lessons I’ve been trying to impart for years (including a couple that still haven’t been learned by most of the space).

The eighth lesson, which states that data cleanliness cannot be overemphasized is correct, but overlooks the fundamental problem associated with data — it will never be 100% clean. Even if you have one hundred bodies manually reviewing and cleansing the data (which is exactly what you get if you buy a certain vendor’s solution, since that’s their unwritten strategy for dealing with all the transactions that their automated mapping algorithm is unable to classify), you’re not going to get it all right. First of all, data is always being added to the system — you’ll never be 100% up to date. Secondly, classifications need to change over time. And, most importantly, humans make mistakes and while they’ll fix some errors correctly, they’ll screw up other errors (which they may miss entirely).

The real to success is having a data analysis tool that allows you to fix an error in real time as soon as its spotted — not a traditional data warehouse where you have to wait weeks (or months) for the refresh. Then you can get away with 80% to 90% accuracy* (which is all you need to figure out where the problems really lie) because, if a supplier or customer spots an error in the data, you can say “sorry, let me fix that”, click on the transaction, click on the link that shows the rule that ultimately produced the mapping, and either (a) change the rule if it is wrong or (b) create a new exception (overlay) mapping rule if the mapping rule is normally right, but this is a special case. The report is updated, very little changes in the big picture, and you move on. That’s the way you do it.

* You can achieve this level of mapping accuracy in a matter of days, creating rules by hand, no matter how much data you have. All you have to do is apply the secret sauce of:

  1. Map the GL codes
  2. Map the top Vendors
  3. Map the Vendor + GL codes (for top Vendors who sell more than one Commodity)
  4. Map the Exceptions (for example, GL codes that always map to a particular Commodity)
  5. Map the Exceptions to the Exceptions**

** If your data is really bad or you have a really sophisticated categorization scheme.

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Are You Ready for the Asian Juggernaut?

Forget the European Union. That’s old news. According to the World Bank, their combined GDP didn’t exceed the US GDP in 2009. Once China, which now has the 2nd largest GDP of any country in the world, combines with India, which might only have the 10th largest GDP now but which is expected to be the 3rd largest GDP within 30 to 40 years, Asia Major will be the dominant market force on the planet.

And if you’re thinking that they’re oil and water, and can’t mix, it would appear that recent headlines are indicating otherwise. China is moving into India, with a recent example being SANY Group that opened a new plant in Pune, India earlier this year, and India is moving into China, and Tata Communications just opened a new data center in Singapore to meet the growing IT needs of the region, and China in particular.

A new world will soon be upon us, and it will be ruled by the Asian Juggernaut. (Whedon’s vision of the future where we speak a mix of Chinese and English isn’t far off!)

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Why You Should Fear the Indian Juggernaut

When you think big consulting firm, it’s likely that you still think Accenture, A.T. Kearney or McKinsey, but I’m betting it won’t be long before you think Infosys, TCS, or Wipro. The Indian firms are on the rise, and it’s not just because of the cost. They are hard-working, driven, and, most importantly, the new generation of India companies is focussed on the right skills and attitude.

If you’re a North American company, the statistics in a recent article in the Harvard Business Review on “leadership lessons from India” should scare you. The skills that Indian leaders value most are the ultimate keys to success:

  • strategic thinking, the creativity to envision and articulate a path, and the ability to guide the organization there (61%)
  • inspirational, accountable, and entrepreneurial (57%)
  • careful talent selection, grooming, and the establishment of advanced business goals (52%)

In contrast, few supported the following the skills:

  • optimizing organizational structure and articulating core values
  • understanding competitors and markets and managing outside relations

Which is what I see too much of these days. If you don’t have a functioning team, reorganizing the organizational chart for the third time in a row isn’t going to magically create cohesion and bring prosperity. Leaders don’t articulate values in meaningless mission statements, they instill them in everything they do. And while competitive intelligence is important, it’s more important to understand your customer’s problems and the type of solutions they really require. It doesn’t do any good to build a better mousetrap if the house is infested with termites. And you can’t take on the world if your own house isn’t in order.

Furthermore, while they’ve been carefully selecting, training, and elevating talent through successively challenging real world projects, you’ve been cutting your top performers left and right simply because they fall to the right of the bell curve as you’ve yet to figure out that, in today’s information economy, you need more than a warm body in a seat. While it might not make sense to pay a janitor, security guard, or even a middle manager (who does nothing but convey messages up and down the ladder) more than the median, the same does not hold true when it comes to technology. The reality is that your top talent is worth their weight in gold while your underachievers would be worth more if you instead invested their salaries in coal. (Assuming your top earners are earning their wages on merit,) This is a case where you generally have to cut those who fall to the left of the bell curve. (The ability to cut & paste HTML and CSS does not a web developer make!) One of the big reasons you’re suffering so severely is because you’re asking under-performers to do more with less, when, chances are, they couldn’t even manage before the cuts.

They’re focussed on building companies, while you’re focussed on how to maintain your seven figure salary just for showing up to work. This is one place where Europe generally gets it more than you do. While compensation structures based on performance should be unlimited, salaries should not. Executives don’t deserve ten times the salary of their reports just for showing up to work. Salary-wise, a CEO should make the same as a lowly VP, who shouldn’t make much more than his top performer. The rest of her compensation should be based on corporate performance. If she grows the company valuation by fifty million, then she gets her million dollar bonus. If the company tanks, she gets nothing but her salary. It’s ridiculous that, in this climate, executives are still getting seven and eight figures for leading their company into bankruptcy, and then multiples of that when they are shown the door. If the only way they got the new Lamborghini was to work for it, maybe we’d see some progress.

And finally, they’re focussed on long term strategy while you can’t see beyond the next quarter. That’s why even the average multinational has a life expectancy of less than 50 years and why 85% of market leaders get displaced in a recession. If we don’t return to long term thinking, then the rising multinationals in India who are looking 30 to 50 years down the road, when they surpass us in GDP, will win. And since they have almost four times as many people, it’s very likely that they’ll stay at the top when they get there.

So unless you’re going to take a page from India’s playbook, you better start fearing the Indian juggernaut. Because the way things are going, I don’t see how it can be stopped.

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