When is a global organisation really global? Is it when there is a good representation of offices around the world? Or when a good financial year is the result of some good joint efforts between countries and regions? Perhaps when we have a healthy expat program, and lots of global project teams? Or is it when we have consistent training programs being delivered in all regions of the business? The answer lies partly in the above; but is that enough? I think the examples listed above are all components and even outputs of a healthy global organisation; but a truly global organisation, I believe, is one that clearly understands and articulates from the board down, that they are a global organisation.
Let’s start with the board. Board Diversity has been a topic for years, both in terms of gender and race; however it makes perfect sense that as an organisation grows and enters into global markets that the role and expectations of the board become a little broader. Perhaps not with respect to the role of the board, but more with how the board can continue to engage, partner and challenge the executive in a global context rather than the boundaries of the local market. One of the benefits, and expectations, of the board is to bring a depth of experience that bolsters the effectiveness of the CEO, their team and of course their strategy. So how can a global strategy be endorsed by a board that doesn’t reflect a depth of experience in doing business beyond borders or with the depth of complexity in which the company plays?
And then there is the CEO and their leadership team. The impact of a misalignment between the board and the executive in a cultural context isn’t always obvious, especially in the heady days of breaking out and tackling new markets. It’s easy in those early days of a start up to write off failures in this context as inexperience and testing the market. But that’s a poor excuse either with or without a board experienced in conducting cross-cultural business. The leadership team, irrespective of whether it's for a start-up or a more established global organisation, has a responsibility to guide the ship through the waters of international business with a measure of experience and consistency. When this is isn’t present, it can start to be seen in poor M&A decisions or by not seeing the cultural risks when moving into new countries, even in the most basic of ways, such as; poor negotiation strategies, or upstream business development that completely misses the mark due to committing cultural faux-pas without realising it, or just playing in the wrong place at the wrong time with no experience available to tap them on the shoulder and point them in the right direction.
Do you have a shared global language?
So far we’ve focused on how the board and the executive engage with the external factors; however this focus also needs to shine inwards, and again, without a true depth of experience in what makes a global organisation tick, some big issues can arise. For example, how is the global strategic plan created and communicated? Is the assumption made that if the plan is created through an Anglo lens and pushed out in the way you’d expect in an Anglo environment, that everyone will embrace it? Anyone who has worked, or led in a multi-national has probably experienced the 'flying under the radar syndrome'; when a new plan or direction pushed out by the HQ country is not embraced or adopted in the way that they would like in the country network. One of the most common mistakes, for example, is the assumption that all Anglo countries will pull in the same direction as they are perceived to be culturally similar. There is some truth to this, but the reality is that when analysed from a national culture perspective, Anglo countries are all identical in that competition and autonomy are culturally important tendencies from the perspective of Prof Geert Hofstede’s 6 D cultural analysis and therefore fall into one of Huib Wursten’s 7 country clusters of ‘Competition’. Knowing this critical piece of information would mean that the creation and roll out of any plan would seek to engage and involve each country and be very explicit in how each country would benefit rather than being laid back and making the assumption “well, they’re like us, they’ll get it!”
Now we are starting to explore the influence of leadership on the way business gets done throughout the organisation. There are many aspects to this, but what we do know through many studies and our own experiences gained from working in global learning functions, consulting to global project teams and coaching expats around the world; there is knowing what you have to do, but being a truly global organisation means that you know how to do it! Just as we highlighted above with the how the board can bring value in mentoring the executive in how to work in a global context, this in turn filters down via the leadership to the teams and individuals charged with actually doing it on a daily basis.
This influence can be seen in how global learning practices are deployed, how expat knowledge is transferred before, throughout and after the assignment, and in how energy and information flows across borders and despite borders. The more transactional and clunky the efforts, the more likely the organisation is still learning how to make sense of being global, and it may also be a direct reflection of the relationship between the board and the leadership in this context. As it gets easier, it could be likened to moving through the stages of competence, to the point of being unconsciously competent; though I’m not sure that this stage is ever fully realised in a global organisation; but perhaps if that’s the goal, the clunkiness and transactional nature of being global can be tolerated a little more as the organisation works hard to get there.
Being a global organisation is one thing. Knowing how to be global is quite another, and I think an undervalued and often misunderstood element of being a truly global organisation.
Of course there are many more strands to this story, and it's not really 'the last word'...but if there is anything that I hope to leave you with, it’s this. Don't start the development of your global strategy at the level of HR, OD or Operations. It needs to start with the Board, the CEO and their leadership group. When it comes to global business success, the relationship between the board and the organisations leadership group can easily be considered a lynch pin relationship. The very nature of that relationship impacts the perspective of the CEO and their team, which in turn influences strategy and the organisational frame of reference with respect to what being global means to them.
Author: David Morley
This is has been updated from an original post in 2016, published on LinkedIn and at www.pontevalle.com
...the ideal of the ‘authentic’ relationship that we hear so much about in the Anglo leadership space is always relative to the willingness and ability of the people involved to be vulnerable.
Trust gained through being vulnerable is not a natural preference for those of us in the Anglo world, but it is probably the door through which we can stand to gain the most in our business and personal relationships.
Based on the national culture research of Prof Geert Hofstede, we know that close to three quarters of the world is Collectivist. In other words…it’s about ‘we’ instead of ‘me’. Group harmony is a central theme, and trust is built based on ‘who’ you are as much (if not more than) ‘what’ you do. There is a level of implicit vulnerability in this way of being as it means sharing who you are, spending time ‘being’ with others, listening, and putting your own wants, needs and desires to one side whilst you consider and value the wants, needs and desires of the group. Based on this description, you can probably guess that Asia, the Middle East and pockets of Eastern Europe and South America fall into this dimension of culture. It is also said that how you are introduced to a work group in Asia or the Middle East, is critical, because the work group is seen as an extension of the family group. You aren’t just being introduced to any other team, you are being introduced to ‘my’ team; my ‘family’.
This is not a natural way of being for Individualist cultures such as Australia, New Zealand, the US, Canada or the UK. In an Individualist culture ‘it’s about me not we’! It’s about me being acknowledged for my needs, wants and desires. Alongside this is the focus we have on the task and achieving the task, often at the expense (or in spite of) the relationship. It’s little wonder that most money made in team building is probably made in Individualist countries!
However, it’s also important to note that neither the Collectivist or Individualist way is better than the other. They are what they are and work still gets done; but when the cultures come together in a highly multi-cultural society or in global teams, understanding this concept, and knowing how to adapt your approach, can be a career-saver!
Beyond this though, in the Anglo business world we also know that vulnerability is a concept, and practice, that can help bind a team and lift performance in a mono-culture environment. How do we know this? Look at the focus on helping leaders learn how to engage with their people through development programs and executive/leadership coaching. Consider the metrics we see in engagement surveys that focus on trust and the way leaders create environments conducive to trust and engagement. Are we in effect asking our leaders to consider some Collectivist practices and create the feeling of family? A place where we may not always like each other, but we have a relationship built over time that allows us to relax our individual boundaries, share what we really think, what really motivates us or scares us?
The heart of genuine engagement is about being able to move beyond being on task with each other. It’s about being able to relax our boundaries, and to experience connection and true collaboration based on a platform of professional intimacy.
And therein lies both the dilemma and the opportunity...the ideal of the ‘authentic’ relationship that we hear so much about in the Anglo leadership space is always relative to the willingness and ability of the people involved to be vulnerable.
I recently attended a business forum held by the European Services Forum and the EU Centre for Global Affairs, to learn more about the status of trade agreements between the European Union (EU) and Australia and what the future may hold for them considering Brexit and the US election.
One of the things we know about trade agreements, and this was confirmed in the presentation, is the huge amount of time and energy spent (not to mention money) on crafting, negotiating and bringing a trade agreement to life. Then there is the time and energy required to maintain it and ensure it is communicated and leveraged (though I’m not sure this happens so well, but perhaps that’s a topic for another time!). But what we don’t know is that whilst this new relationship is being created in good faith by both parties, one half of the marriage is most likely getting itchy feet and thinking about moving on already! You know, the whole ‘it’s me, not you’ scenario? The sad thing is that neither party is aware of this process, or that it is already bubbling away below the surface before the relationship has even commenced!
Let’s look at why I think this, and why I’m not quite as optimistic as some of the speakers that morning on the future of trade agreements between the EU and anglo-sphere countries. Having worked for several years in culture and its intersection with business and politics, I can see how Prof Geert Hofstede’s two dimensions of Uncertainty Avoidance (how a society deals with or prevents uncertainty) and Long vs Short Term Orientation (how we view time, a long term open orientation or a short term normative view) can help us understand why the marriage may be on the rocks before even starting!
Let’s start with the EU. The EU is not a country, but almost all its member countries are moderate to very high in Uncertainty Avoidance. In other words, there is a preference to avoid uncertainty and ambiguity and to prevent such situations. It’s also about securing the future by removing uncertainty today and seeking to understand where uncertainty may lay along the journey. They are also mostly quite Long-Term outlook countries, preferring a future-oriented approach rather than a Short-Term normative perspective. So, despite not being a single country, the grouping of EU member countries is certainly strongly influenced by these factors.
Let’s contrast this with the UK and the US who have a cultural preference for throwing caution to the wind and being more spontaneous, or perhaps unpredictable, as they are each tending towards lower Uncertainty Avoidance. The US cultural norm is middle of the road on the Long-Term/Short-Term orientation, but certainly there is no strong preference toward a Long-Term outlook, and the UK rates as very Short-Term oriented on this cultural dimension. Considering this we can see some possible links between the Brexit decision (many observers commenting that it is a short-term/near-sighted decision) and the unpredictable decision in the US polls in what is as much about throwing caution to the wind and taking a chance on an unknown. Right now it’s quite an ambiguous and unsure time for both the UK and the US.
Now, let’s bundle Australia, New Zealand and Canada in with the US and the UK. We all share similar cultural norms; no real preference for avoiding uncertainty and all of us having a very short-term, normative orientation. With this in mind, how much faith can be placed in any trade agreements with anglo-sphere countries? Especially if there is every chance that in the future we may fall back on our natural cultural norm of being Short-Term oriented, possibly scrap or work back any global trade agreements and replace them with more protectionist driven domestic policies that echo the 'your with us or against us' nature of Short-Term orientation? And whilst this may appear to the EU as a spur of the moment decision, we will feel ok about this because of our ability to create and deal with uncertainty; it doesn’t mean we like it, but at the same time it feels ok. You only need to look at the Australian political landscape over the last nine years to understand that dynamic!
So, the big question. Will we be faithful to our EU partner over the mid to long term in our various trade agreements?
I’m not sure; but perhaps it would be wise for the EU to build in a pre-nuptial agreement. One that ensures accountability and commitment, and that requires up front marriage counselling to ensure as much transparency and understanding about ‘who’ it is that we’re jumping into a relationship with. Because at the end of the day, it’s not just about the parents, it’s also about the kids. In this case, the thousands of businesses who stand to gain or lose based on the quality and efficacy of the trade agreement. And whether it's a global focused trade agreement, or a domestic driven agenda, it doesn't matter because either way will work. Both have advantages and disadvantages. Short-term societies know how to make things work as much as long-term. It's the loss of momentum, energy and fatigue that comes with the significant change in direction (the 'separation') that slows us down more than anything else and creates an impasse as us kids try to work out who we'd rather live with!
First posted on LinkedIn, 9th December 2016.
Being able to engage, influence and lead effectively across borders was once considered one of the new frontiers of leadership as globalisation started to take effect. Now it seems there is almost an assumption that if you work in a global organisation, and are an effective leader in your home country that this will automatically translate into being an effective leader in a different country or across a region. But that’s not normally the case, as I’ve found when coaching many leaders who have found themselves in this position.
So, what are the characteristics of being an effective global leader? In my experience, there are three dimensions to consider that have underpinned the success of those leaders I’ve worked with who are achieving good results beyond borders. By contrast, I would also suggest that they are many of the missing elements for those I’ve coached who aren’t performing as well as they would like at this level. These three dimensions are:
Let’s take a brief look at what these dimensions comprise.
This is the ability and desire to:
This is the ability and desire to:
This is the ability and desire to:
These dimensions are highly interdependent, for example, you can be quite open to taking in new experiences (Perceptual Awareness) but not be so interested in engaging with your new surrounds (Relational Awareness). I see this when strong technical leaders who have spent many years working as an individual contributor, and have a preference for taking in what's going on around them, but not really wanting to engage with it, find themselves in an expat or global leadership role and suddenly having to lead or influence peers across the globe. Engaging with others in their home country probably presented enough challenges without the complexity of having to do it in a global setting!
Then there are leaders who have average to well-developed levels of Perceptual and Relational Awareness, but have lower levels of Self-Awareness, and are unable to cope effectively with the stresses that come with having to perform and lead in a foreign environment. Working in these environments can allow lower levels of self-esteem and confidence to manifest as stress and negatively impact what could potentially be a positive experience.
You’ll also notice that I’ve not referred to technical competence. It’s not that I don’t think it’s important; it’s just that rarely is it the reason that I find myself coaching global leaders. In fact, I can only think of a couple of occasions when part of the challenge for a global leader has been technical competence. That’s not to say that it doesn’t happen more frequently, however it’s the behaviours relating to the ‘global self’ that are mostly the reason for poor performance than technical competence.
The good news is that these dimensions can be measured and developed providing the global leader with a window to their ‘global self’; which is a good thing for the leader and the organisation when we consider the high turnover rates of expats either during their assignment or within eighteen months of returning. But even if the only thing you do is take the time to reflect on where you think you sit on these dimensions, you’ve already taken the first step towards developing your ‘global self’ and enhancing your effectiveness as a global leader, no matter your starting point!
What does national identity have to do with employee engagement?
Well, everything really when we consider that ‘who we are’ is central to what motivates us. Like organisational culture, we know that national culture is made of outer layers that are mostly easy to see; practices, rituals, symbols etc… But the deepest layer of culture is that of values, which exist deep within each of us, and which determines the way we perceive, and therefore, embrace the outer layers. These are values that underpin our perception of self, and of who we are, such as gender and national identity. And this is the key. By understanding the differences between national culture and organisational culture, we can strengthen the potential of engagement approaches; especially in multi-national settings, or in multi-cultural societies. By understanding the core tenets of national culture, an organisation has the ability to build in added relevance, and dare I say it, sustainability, to their engagement strategies and activities.
Let’s explore this a little more to get an idea of how easy it is to build in this extra layer of relevance and impact to an engagement strategy. Firstly, we need a common global framework and language for understanding national culture; for this I draw on the scientific foundation of Prof Geert Hofstede’s six dimensions of culture, of which I will focus on the first five:
Power Distance: The extent to which the less powerful members of institutions and organisations accept that power is distributed unequally. Higher Power Distance = hierarchy, power and distance between the top of the institution and the bottom. Lower Power Distance = flatter hierarchies (and hierarchy for convenience only) and greater accessibility to superiors.
Individual or Collective: In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies people belong to ‘in-groups’ that take care of them in exchange for loyalty.
Masculine or Feminine: Emphasis on status, achievement and success in life, versus emphasis on the quality of life and serving others.
Uncertainty Avoidance: The extent to which people feel threatened by ambiguous situations and have created beliefs and institutions that try to avoid these.
Long Term vs Short Term: The extent to which people show a future-oriented perspective rather than a normative or short-term point of view.
With the above dimensions in mind, we can already start to see that what may work in one country as far as an engagement approach is concerned may not work as well, if at all, in a different country. This is a huge consideration for multi-nationals. For those with a single country focus, our experience is showing very clearly how the effective use of these dimensions can help to optimise the way engagement occurs; both at a leadership and organisational level. Let’s look at what this means.
Culture Focused Engagement
We have taken the cultural dimensions of Hofstede, and applied them to employee engagement and found that there are a number of fairly simple combinations that can inform the approach of your engagement strategy for greater impact. We have broken them into two sets of factors, People and Organisational Factors.
These are the factors that influence the way leaders engage with their people, ranging from the relevance of reward and recognition strategies, and how leaders motivate and inspire. Below is a short overview of the impact of each People Factor Dimension.
People Factor 1: Involve Me or Tell Me
Involve Me countries are those with a lower Power Distance score, such as Australia, New Zealand, the US and the UK. As the name suggests, the involvement of employees in decision making through a more consultative style is central to how leaders can engage with their teams. In Tell Me cultures, there is higher Power Distance; with ‘power’ being the central concept. Most countries around the world outside of Germany, Anglo and Scandinavian countries are higher in Power Distance. Therefore, in these countries, the higher the score on the Power Distance scale, the less likely it is that a) the manager will want to involve their employee in a conversation to seek their opinion on a topic, as this would mean giving up the power that comes with their role, and b) the employee will not believe they have the power to engage in such a conversation in the first place and will expect to be told. Outside of day-to-day leadership styles, an easy example of how we see this play out in multi-national companies is through the application of the annual objectives setting process. Employees from Involve Me countries, (lower Power Distance origins), will appreciate this process and be mostly engaged in the negotiation of objectives. The same practice rolled out in Tell Me countries stand next to no chance of being applied successfully, if at all (with the same going for higher Power Distance employees living and working in a lower Power Distance society). The manager will see this as giving up a central tenant of their role (to have the answers and provide direction) and the employee will not believe that they have the power in the first place to have such a conversation.
People Factor 2: Recognise Me or Acknowledge Us
This factor is based on Hofstede’s second dimension of Individualism vs Collectivism, and has a strong influence on recognition, loyalty and, like the first factor, how people like to be led. Anglosphere countries, Germany, France, the Netherlands are examples of Recognise Me countries; all highly individualist societies. The Middle East, West Asia, Asia and South America are all examples of Acknowledge Us regions, and more collectivist. When coaching expat leaders moving from individualist countries to collectivist, this is one of the more subtle, but high impacting aspects of leadership that needs to be grasped. The easy example is how we recognise high performers. In a Recognise Me country, it is as the name suggests; we recognise those who perform. Whether it is in the company newsletter, as employee of the month or a special voucher for a vacation. In Recognise Me cultures, loyalty is to oneself, and their immediate circle of friends or family; and engagement is probably most likely to occur if the organisation can demonstrate an intersection between the needs of both the organisation and the employee. In an Acknowledge Us country, where belonging and loyalty to the group trumps self-actualisation, the approach to recognise great performance is structured not to place an individual above the group. In fact the belief is more likely to be that ‘we’ succeeded with little or no thought of how one individual was better than the other. Naturally you can imagine how leadership styles need to be adjusted to maximise performance. Applying a Recognise Me style of leadership in an Acknowledge Us country will only create disharmony, and create greater distance between the manager and the employee group than would normally exist.
People Factor 3: Task Trust or Relationship Trust
Trust and engagement are often considered interchangeable terms when thinking about employee engagement. But how we build trust will happen in different ways, depending on where you are from. Through a business lens, and drawing once again on the Hofstede dimension of Individualism vs Collectivism, we know that trust is built in different ways; either through the demonstration of individual competence and focusing immediately on business (Task Trust) or by sharing time in the group and letting people understand who they are really working with (Relationship Trust). From an engagement perspective we can see that this element has the potential to work against us in very subtle ways if we aren’t awake to the difference in approaches. An Asian member of a global team (Relationship Trust), who is used to slowly spending time building the business relationship, will likely find it confronting if they are sent to Task Trust country as an expat or to form part of a virtual team made up mostly of Individualist team members. Confronting in that a quick team-building session will serve as the means by which the ice is broken and the first building blocks of trust are established in an Task Trust society. It’s interesting to note that in my experience, very little energy is given to the notion of team building in Relationship Trust countries; whereas in Task Trust countries, where the focus is on what ‘I can do’ and ‘who I am’, it makes sense that team building and Tuckman’s stages of team development have a genuine role to play in building team engagement.
People Factor 4: Win the Game or Play the Game
In tougher cultures, or as Hofstede describes, Masculine cultures, the aim is to be the best, to win. Japan, China, Australia, the US and Germany are all examples of countries who fall into this category. On the other hand, more tender cultures, where the emphasis is on the quality of life, the aim is to participate, collaborate and achieve in a win-win manner. The Scandinavian region, The Netherlands, Sri Lanka and Thailand are all examples of countries that fall into this category. This factor has a strong impact on the best approaches for rewarding, and in some respects, the language and symbols used to motivate. In tougher cultures, where win/lose is preferable to win/win, the dialogue required is a more direct style that clearly points out benefits. And the role of rewards, to recognise status, are central to motivation. In more tender cultures, where the journey is as important as the outcome, then the focus is more on how to ensure ‘we’ experience the journey and the outcome. This factor plays a role in how you communicate messages to your team to motivate them; tough = sell and debate, whilst tender = support and dialogue.
Organisational Approach Factors:
The design of an engagement strategy is one thing; but knowing how to optimise its approach through the effective understanding and application of national culture factors is something else. Even a basic understanding of the national culture dimensions can assist with more targeted communication and change management techniques. The Organisational Approach Factors are underpinned by two of Prof Hofstede’s dimensions: Uncertainty Avoidance and Long or Short Term Orientation (how we perceive time).
By taking these dimensions into consideration, we are able to create a core engagement approach that will target a majority of employees; remembering that in any country there will always be cultural outliers, such as expats, immigrants, or the children of immigrant parents.
Below is a summary of the various organisational approaches to engagement based on the combinations of Uncertainty Avoidance and Long or Short-Term Outlook.
(Click on the table for a bigger version)
For many years we’ve been considering the impact of organisational culture on employee engagement and the interplay that exists between the two when creating engagement strategies. By taking one extra step, and considering one of the core values that exist in all of us, that of our national identity, it is possible engagement to take on a whole new meaning and relevance.
I was speaking with a colleague recently who is developing an organisational framework to support the transition of their business from that of domestic to regional with a longer-term eye on going truly global. They are aiming to develop the idea of a global mindset within their people and systems of work, and the framework they described was robust, catering for all the classical elements of going global. Leadership and capability development integrating with mobility policies and seeking to involve as many of their people as possible in a clearly understood and shared definition of what a global mindset means for their business.
It all sounded so positive, and yet I had this strong nagging feeling as I left the conversation that there was something missing, something important. And it hit me; it was this whole idea of ‘frame of reference’ and how to expand the perspective of their employees who may never have even travelled outside of their own state or country. This is always one of the greatest challenges when developing a global outlook for an organisation and something that needs to be conveyed in the most practical way possible. My experience over the past 15 years has been very consistent with the research that suggests that the development of our beliefs and values is mostly driven through experiences and exposure to life. Even the most experienced of expatriates can sometimes find themselves unprepared for their next assignment despite having a number of assignments under their belt, and of course there is reverse culture shock which also reminds us that no matter how well travelled we are, our return is often bumpier than the departure.
So what does this all mean? As robust a model you are aiming to create, the reality is that the way we see ourselves in the context of the world is never a complete known and an imperfect process. So a robust model is great, but try not to seek perfection. If you were to ask me, a perfect model is one that is continually evolving to suit and support the changing needs of an organisation. It may be grounded in strong theoretical frameworks and policy, but it has an interface which is practical, intuitive and responsive. Practical in a way that provides experiential learning and preparation, and that challenges underlying assumptions around culture and ways of working. Not just for the expat and their family, but for their new manager and colleagues as well. Expatriation is a multi-dimensional process, yet we so often only focus on what is immediately in front of us. Intuitive from the perspective that no matter how well prepared we think may be; we are human. Intuitive systems that provide nurture and support resilience throughout the lifecycle of the assignment are critical. Intuitive also from the perspective that the framework is designed in the knowledge that there are peaks and troughs of energy and motivation as the expatriate and their family deal with transition throughout the length of the assignment. And finally, responsive, by ensuring that a key part of the HR business partner tool kit is knowing how to anticipate the peaks and troughs and work with this for the good of the expatriate, their family and their team.
But what about those people left behind, who may not actually live and work abroad, but are expected to work with colleagues from around the world?
The same principles apply; create an experiential, intuitive and responsive process. Experiential learning that allows them to learn more about working virtually whilst they also reflect on and expand their own belief system when it comes to working with different cultures. Given they aren’t working abroad, the ability to reinforce this on a daily basis isn’t so strong and this is where the intuitive element of support needs to be stronger. Anticipate for these people, unless they have worked and lived abroad, that for them it isn’t quite real. That their colleagues are voices at the end of a phone line, keystrokes at the other end of an email or a two dimensional figure on a video conference. Create opportunities to connect frequently through technology, and to share more of who they are rather than what they do. Virtual teaming is a necessity for these people, and yet it is so often overlooked. Equip the team manager with skills to anticipate and spot when the virtual team is flagging in energy, but also give them the tools and techniques (along with their HR partners) to revive flagging energy in the remote team. This is about understanding and reducing the psychological distance despite the physical distance – and it is possible.
What it all boils down to is this.
Our frameworks need to be grounded in good research and theory; there is no doubt about this. But theory and frameworks don’t help anyone if they can’t be translated into a meaningful process of practice that actually helps someone do their job. In the world of mobility this takes on an extra layer of importance, because the way we see ourselves reflects on the way we see the world. So the ability to create experiences and practices that impact on beliefs and behaviours are critical both to virtual team collaboration and the general performance of expatriate and mobility programs.
The role that culture and strategy plays in the success or failure of M&A’s is more significant than many realise. Having experienced M&A’s first hand over the last ten years, both as an employee, and a contributing strategist/consultant to the M&A process, I suggest that the implications of not considering the cultural and organisational strategy factors as highly as the economic, financial and market factors is a big reason for the failure of M&A’s.
At best, it seems M&A’s are considered a 50-50 chance as to whether they will succeed. Sometimes they are a raging success; take Disney and Pixar for example, or Exxon and Mobil. However, despite best intentions and the robustness of the decision-making process, many of these marriages fail, sometimes within a matter of years, as in the case of Mattel and The Learning Company or Daimler Benz and Chrysler (though this dragged out for a number of years before Daimler off-loaded Chrysler); all despite the sizeable investments that go into M&A’s.
Often the decision to come together makes complete sense in terms of product and market focus; however culture and strategy are often overlooked and many times it is these factors that can bring a complex deal unstuck. Let’s come back to the Daimler Benz/Chrysler story as an example of how cultural misalignment impacts on strategy in the M&A process.
On paper the deal looked sweet; for Chrysler they would aim to extend their international reach and for both parties, significant savings could be achieved by combining research and development functions along with combining purchasing and other operations. However the cultures of the two organisations couldn’t have been more different. The ways of working, conducting business and managing employees was significantly different between the German Daimler Benz employees and the approach of the American group, Chrysler. The German half of the partnership was more hierarchical in terms of management style and favoured quality and reliability in manufacturing as the way to the hearts of their clients. On the other hand, the American management style was more egalitarian and team based, and their client orientation hinged on the look and feel of the product, including the slogans and terminology used.
Such a divergent cultural approach impacted the sales strategy of organisation. This in turn had a negative impact on the production arm the business who were receiving conflicting messages and directions. In addition, over the life of the relationship the natural style of Daimler was to impose their management style on the relationship which in turn reduced the levels of trust and engagement from the Chrysler team. These issues, along with other similar factors, underpinned the ultimate result - the share price dropping by over half in less than two years.
This is a well known case that helps to illuminate the importance of taking a little extra time to assess the cultures and business strategy of each organisation, in order to identify synergies on that level and not just product, market and revenue. The issues that faced Daimler Benz and Chrysler are not exclusive to this situation; we see them time and again.
So what are the steps that can underpin a higher likelihood of a successful M&A outcome?
Firstly; take the time to get an independent assessment of the culture of each company; not just the organisational culture (eg; innovative vs bureaucratic), but the national culture as well if it is to be a multi-national M&A. If there are significant differences, it’s not the end of the world; however the differences are known and can be worked with from the outset rather than invisibly eroding the deal until it’s too late. Implementing a simple process of high level alignmentbetween key stakeholders from each camp can help to determine a shared approach to working with, and leveraging, the different cultures for success.
Secondly, assess the strategies of the different organisations; look at the principles of manufacturing, project management, innovation and client interaction. How different or aligned are they? There may be a synergy in product strategy or a symbiotic effect in terms of market position, but if the way the product is conceived, created and brought to market is disjointed then the impact will be noticeable quickly - in terms of order intake, client satisfaction and share price. Strategy can be explored in conjunction as part of the high level alignment process mentioned above. The strategies of the two organisations can be explored to the extent that there is a new and shared strategy created that optimises the best of both worlds.
Finally, don’t be afraid to look beyond culture and strategy to the philosophy of the two organisations. Who were the founders of these organisations and how have their organisations evolved as a result of their intent? They may not be with the organisation any longer, however their philosophy on why, where and how business is conducted can still be regarded as the heart and soul of the organisation. Importantly, if they are still with the organisation, then this is an important element to be acknowledged and worked with if the M&A is to be a success.
There is no reason for your M&A to start out on rocky ground; take the time to understand the cultural, strategic and (if brave enough) philosophical factors. If there is difference, then realise that it is in the differences where success can be created; even if the success is that you choose not to move beyond the first couple of dates and commit to marriage!