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.
The Board So what does this look like? 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?
The Leadership 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. Where I’ve seen this play out quite a bit in the last ten years is through poor outcomes for Australian businesses seeking to expand into Asia without fully understanding the cultural norms of doing business with, through and in Asia. For example walking away from a negotiation with a Chinese counterpart believing that the deal has been completed in principle; not realizing that right up until there are signatures on the agreement that it is an accepted Chinese business practice to keep the door open on the negotiation and always looking to squeeze more out of the deal...or find a completely different avenue to achieve their goal.
Thus 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 such an 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 6 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!”
Organisational Practice 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 knowhow to do it! Just as we highlighted that the role of the board in a global context brings value in mentoring the organisational leadership on 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.
The Last Word 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.
First published on LinkedIn on the 14th June 2016
David Morley was interviewed by InsideHR to get his thoughts on what it takes to get cross-cultural M&A's right...you can read the interview here: