92 golden rules of success hiroshi mikitani

Discussion Board

Many people in the world believe that to belong to the global community in general and to the world business community one must have a command of English, the language with the biggest influence on other countries and systems of education. Where do you stand on this issue?

Make sure you draw on this week's readings and your personal experiences learning or using English in a professional context to comment on this question.

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On Managing Across Cultures

If you read nothing else on managing across cultures, read these 10 articles. We’ve combed through hundreds of Harvard Business Review articles and selected the most important ones to help you manage culturally diverse employees, whether they’re dispersed around the world or you’re working with a multicultural team in a single location.

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HBR’S10 MUST READS

On Managing Across Cultures

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Cultural Intelligence 1 by P. Christopher Earley and Elaine Mosakowski

Managing Multicultural Teams 17 by Jeanne Brett, Kristin Behfar, and Mary C. Kern

L’Oréal Masters Multiculturalism 35 by Hae-Jung Hong and Yves L. Doz

Making Diff erences Matter: A New Paradigm for Managing Diversity 47

by David A. Thomas and Robin J. Ely

Navigating the Cultural Minefi eld 75 by Erin Meyer

Values in Tension: Ethics Away from Home 85 by Thomas Donaldson

Global Business Speaks English 103 by Tsedal Neeley

10 Rules for Managing Global Innovation 117 by Keeley Wilson and Yves L. Doz

Lost in Translation 129 by Fons Trompenaars and Peter Woolliams

The Right Way to Manage Expats 139 by J. Stewart Black and Hal B. Gregersen

About the Contributors 155 Index 157

Contents

v

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HBR’S10 MUST READS

On Managing Across Cultures

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1

Y Cultural Intelligence by P. Christopher Earley and Elaine Mosakowski

YOU SEE THEM AT INTERNATIONAL airports like Heathrow: posters advertising the global bank HSBC that show a grasshopper and the message “USA—Pest. China—Pet. Northern Thailand—Appetizer.”

Taxonomists pinned down the scientifi c defi nition of the family Acrididae more than two centuries ago. But culture is so powerful it can aff ect how even a lowly insect is perceived. So it should come as no surprise that the human actions, gestures, and speech pat- terns a person encounters in a foreign business setting are subject to an even wider range of interpretations, including ones that can make misunderstandings likely and cooperation impossible. But occasionally an outsider has a seemingly natural ability to interpret someone’s unfamiliar and ambiguous gestures in just the way that person’s compatriots and colleagues would, even to mirror them. We call that cultural intelligence or CQ . In a world where crossing boundaries is routine, CQ becomes a vitally important aptitude and skill, and not just for international bankers and borrowers.

Companies, too, have cultures, often very distinctive; anyone who joins a new company spends the fi rst few weeks deciphering its cultural code. Within any large company there are sparring subcul- tures as well: The sales force can’t talk to the engineers, and the PR people lose patience with the lawyers. Departments, divisions, pro- fessions, geographical regions—each has a constellation of manners, meanings, histories, and values that will confuse the interloper and cause him or her to stumble. Unless, that is, he or she has a high CQ.

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EARLEY AND MOSAKOWSKI

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Cultural intelligence is related to emotional intelligence, but it picks up where emotional intelligence leaves off . A person with high emotional intelligence grasps what makes us human and at the same time what makes each of us diff erent from one another. A person with high cultural intelligence can somehow tease out of a person’s or group’s behavior those features that would be true of all people and all groups, those peculiar to this person or this group, and those that are neither universal nor idiosyncratic. The vast realm that lies between those two poles is culture.

An American expatriate manager we know had his cultural intel- ligence tested while serving on a design team that included two German engineers. As other team members fl oated their ideas, the engineers condemned them repeatedly as stunted or immature or worse. The manager concluded that Germans in general are rude and aggressive.

A modicum of cultural intelligence would have helped the American realize he was mistakenly equating the merit of an idea with the merit of the person presenting it and that the Germans were able to make a sharp distinction between the two. A manager with even subtler powers of discernment might have tried to determine how much of the two Germans’ behavior was arguably German and how much was explained by the fact that they were engineers.

An expatriate manager who was merely emotionally intelligent would probably have empathized with the team members whose ideas were being criticized, modulated his or her spontaneous reac- tion to the engineers’ conduct, and proposed a new style of discus- sion that preserved candor but spared feelings, if indeed anyone’s feelings had been hurt. But without being able to tell how much of the engineers’ behavior was idiosyncratic and how much was cul- turally determined, he or she would not have known how to infl u- ence their actions or how easy it would be to do that.

One critical element that cultural intelligence and emotional intelligence do share is, in psychologist Daniel Goleman’s words, “a propensity to suspend judgment—to think before acting.” For someone richly endowed with CQ, the suspension might take hours or days, while someone with low CQ might have to take weeks or months. In either case, it involves using your senses to register all

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3

CULTURAL INTELLIGENCE

the ways that the personalities interacting in front of you are diff er- ent from those in your home culture yet similar to one another. Only when conduct you have actually observed begins to settle into pat- terns can you safely begin to anticipate how these people will react in the next situation. The inferences you draw in this manner will be free of the hazards of stereotyping.

The people who are socially the most successful among their peers often have the greatest diffi culty making sense of, and then being accepted by, cultural strangers. Those who fully embody the habits and norms of their native culture may be the most alien when they enter a culture not their own. Sometimes, people who are somewhat detached from their own culture can more easily adopt the mores and even the body language of an unfamiliar host. They’re used to being observers and making a conscious eff ort to fi t in.

Although some aspects of cultural intelligence are innate, anyone reasonably alert, motivated, and poised can attain an acceptable level

In an increasingly diverse business environment, managers must be able to navigate through the thicket of habits, gestures, and assumptions that define their coworkers’ diff erences. Foreign cultures are everywhere—in other countries, certainly, but also in corporations, vocations, and regions. Interacting with individuals within them demands perceptiveness and adaptability. And the people who have those traits in abundance aren’t necessarily the ones who enjoy the greatest social success in familiar settings. Cultural intelligence, or CQ, is the ability to make sense of unfamiliar contexts and then blend in. It has three components—the cognitive, the physical, and the emotional/

Idea in Brief motivational. While it shares many of the properties of emotional intelligence, CQ goes one step further by equipping a person to distinguish behaviors produced by the culture in question from behaviors that are peculiar to particular individuals and those found in all human beings. In their surveys of 2,000 managers in 60 countries, the authors found that most managers are not equally strong in all three of these areas of cultural intelligence. The authors have devised tools that show how to identify one’s strengths, and they have developed training techniques to help people overcome weaknesses. They conclude that anyone reasonably alert, motivated, and poised can attain an acceptable CQ.

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EARLEY AND MOSAKOWSKI

4

of cultural intelligence, as we have learned from surveying 2,000 man- agers in 60 countries and training many others. Given the number of cross-functional assignments, job transfers, new employers, and dis- tant postings most corporate managers are likely to experience in the course of a career, low CQ can turn out to be an inherent disadvantage.

The Three Sources of Cultural Intelligence

Can it really be that some managers are socially intelligent in their own settings but ineff ective in culturally novel ones? The experi- ence of Peter, a sales manager at a California medical devices group acquired by Eli Lilly Pharmaceuticals, is not unusual. At the devices company, the atmosphere had been mercenary and competitive; the best-performing employees could make as much in performance bonuses as in salary. Senior managers hounded unproductive sales- people to perform better.

At Lilly’s Indianapolis headquarters, to which Peter was trans- ferred, the sales staff received bonuses that accounted for only a small percentage of total compensation. Furthermore, criticism was restrained and confrontation kept to a minimum. To motivate people, Lilly management encouraged them. Peter commented, “Back in L.A., I knew how to handle myself and how to manage my sales team. I’d push them and confront them if they weren’t performing, and they’d respond. If you look at my evaluations, you’ll see that I was very suc- cessful and people respected me. Here in Indianapolis, they don’t like my style, and they seem to avoid the challenges that I put to them. I just can’t seem to get things done as well here as I did in California.”

Peter’s problem was threefold. First, he didn’t comprehend how much the landscape had changed. Second, he was unable to make his behavior consistent with that of everyone around him. And third, when he recognized that the arrangement wasn’t working, he became disheartened.

Peter’s three diffi culties correspond to the three components of cultural intelligence: the cognitive; the physical; and the emotional/ motivational. Cultural intelligence resides in the body and the heart, as well as the head. Although most managers are not equally strong in all three areas, each faculty is seriously hampered without the other two.

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CULTURAL INTELLIGENCE

5

Head Rote learning about the beliefs, customs, and taboos of foreign cul- tures, the approach corporate training programs tend to favor, will never prepare a person for every situation that arises, nor will it pre- vent terrible gaff es. However, inquiring about the meaning of some custom will often prove unavailing because natives may be reticent about explaining themselves to strangers, or they may have little practice looking at their own culture analytically.

Instead, a newcomer needs to devise what we call learning strat- egies. Although most people fi nd it diffi cult to discover a point of entry into alien cultures, whose very coherence can make them seem like separate, parallel worlds, an individual with high cogni- tive CQ notices clues to a culture’s shared understandings. These can appear in any form and any context but somehow indicate a line of interpretation worth pursuing.

An Irish manager at an international advertising fi rm was working with a new client, a German construction and engineering company. Devin’s experience with executives in the German retail clothing industry was that they were reasonably fl exible about deadlines and receptive to highly imaginative proposals for an advertising cam- paign. He had also worked with executives of a British construction and engineering company, whom he found to be strict about dead- lines and intent on a media campaign that stressed the fi rm’s techni- cal expertise and the cost savings it off ered.

Devin was unsure how to proceed. Should he assume that the German construction company would take after the German clothing retailer or, instead, the British construction company? He resolved to observe the new client’s representative closely and draw general con- clusions about the fi rm and its culture from his behavior, just as he had done in the other two cases. Unfortunately, the client sent a new representative to every meeting. Many came from diff erent business units and had grown up in diff erent countries. Instead of equating the fi rst representative’s behavior with the client’s corporate cul- ture, Devin looked for consistencies in the various individuals’ traits. Eventually he determined that they were all punctual, deadline- oriented, and tolerant of unconventional advertising messages. From that, he was able to infer much about the character of their employer.

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EARLEY AND MOSAKOWSKI

6

Body You will not disarm your foreign hosts, guests, or colleagues sim- ply by showing you understand their culture; your actions and de- meanor must prove that you have already to some extent entered their world. Whether it’s the way you shake hands or order a coff ee, evidence of an ability to mirror the customs and gestures of the peo- ple around you will prove that you esteem them well enough to want to be like them. By adopting people’s habits and mannerisms, you eventually come to understand in the most elemental way what it is like to be them. They, in turn, become more trusting and open. Uni- versity of Michigan professor Jeff rey Sanchez-Burks’s research on cultural barriers in business found that job candidates who adopted some of the mannerisms of recruiters with cultural backgrounds dif- ferent from their own were more likely to be made an off er.

This won’t happen if a person suff ers from a deep-seated reser- vation about the called-for behavior or lacks the physical poise to pull it off . Henri, a French manager at Aegis, a media corporation, followed the national custom of greeting his female clients with a hug and a kiss on both cheeks. Although Melanie, a British aerospace manager, understood that in France such familiarity was de rigueur in a professional setting, she couldn’t suppress her discomfort when it happened to her, and she recoiled. Inability to receive and recipro- cate gestures that are culturally characteristic refl ects a low level of cultural intelligence’s physical component.

In another instance, a Hispanic community leader in Los Angeles and an Anglo-American businessman fell into conversation at a charity event. As the former moved closer, the latter backed away. It took nearly 30 minutes of waltzing around the room for the commu- nity leader to realize that “Anglos” were not comfortable standing in such close physical proximity.

Heart Adapting to a new culture involves overcoming obstacles and set- backs. People can do that only if they believe in their own effi cacy. If they persevered in the face of challenging situations in the past, their confi dence grew. Confi dence is always rooted in mastery of a particular task or set of circumstances.

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CULTURAL INTELLIGENCE

7

A person who doesn’t believe herself capable of understanding people from unfamiliar cultures will often give up after her eff orts meet with hostility or incomprehension. By contrast, a person with high motivation will, upon confronting obstacles, setbacks, or even failure, reengage with greater vigor. To stay motivated, highly effi - cacious people do not depend on obtaining rewards, which may be unconventional or long delayed.

Hyong Moon had experience leading racially mixed teams of designers at GM, but when he headed up a product design and devel- opment team that included representatives from the sales, produc- tion, marketing, R&D, engineering, and fi nance departments, things did not go smoothly. The sales manager, for example, objected to the safety engineer’s attempt to add features such as side-impact air bags because they would boost the car’s price excessively. The confl ict became so intense and so public that a senior manager had to intervene. Although many managers would have felt chastened after that, Moon struggled even harder to gain control, which he eventually did by convincing the sales manager that the air bags could make the car more marketable. Although he had no experi- ence with cross-functional teams, his successes with single-function teams had given him the confi dence to persevere. He commented, “I’d seen these types of disagreements in other teams, and I’d been able to help team members overcome their diff erences, so I knew I could do it again.”

How Head, Body, and Heart Work Together

At the end of 1997, U.S.-based Merrill Lynch acquired UK-based Mer- cury Asset Management. At the time of the merger, Mercury was a decorous, understated, hierarchical company known for doing business in the manner of an earlier generation. Merrill, by con- trast, was informal, fast-paced, aggressive, and entrepreneurial. Both companies had employees of many nationalities. Visiting Mer- cury about six months after the merger announcement, we were greeted by Chris, a Mercury personnel manager dressed in khakis and a knit shirt. Surprised by the deviation from his usual uniform of gray or navy pinstripes, we asked him what had happened. He told

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us that Merrill had instituted casual Fridays in its own offi ces and then extended the policy on a volunteer basis to its UK sites.

Chris understood the policy as Merrill’s attempt to reduce hier- archical distinctions both within and between the companies. The intention, he thought, was to draw the two enterprises closer together. Chris also identifi ed a liking for casual dress as probably an American cultural trait.

Not all Mercury managers were receptive to the change, however. Some went along with casual Fridays for a few weeks, then gave up. Others never doff ed their more formal attire, viewing the new policy as a victory of carelessness over prudence and an attempt by Merrill to impose its identity on Mercury, whose professional

Diagnosing Your Cultural Intelligence

THESE STATEMENTS REFLECT DIFFERENT facets of cultural intelligence. For each set, add up your scores and divide by four to produce an average. Our work with large groups of managers shows that for purposes of your own development, it is most useful to think about your three scores in comparison to one another. Generally, an average of less than 3 would indicate an area calling for improvement, while an average of greater than 4.5 refl ects a true CQ strength.

Rate the extent to which you agree with each statement, using the scale:

1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree.

Before I interact with people from a new culture, I ask myself what I hope to achieve.

If I encounter something unexpected while working in a new culture, I use this experience to fi gure out new ways to approach other cultures in the future.

I plan how I’m going to relate to people from a diff erent culture before I meet them.

1

When I come into a new cultural situation, I can immediately sense whether something is going well or something is wrong.

Total 4 4 5 Cognitive CQ

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CULTURAL INTELLIGENCE

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dignity would suffer as a result. In short, the Mercury resisters did not understand the impulse behind the change (head); they could not bring themselves to alter their appearance (body); and they had been in the Mercury environment for so long that they lacked the motivation (heart) to see the experiment through. To put it even more simply, they dreaded being mistaken for Merrill executives.

How would you behave in a similar situation? The sidebar “Diagnosing Your Cultural Intelligence” allows you to assess the three facets of your own cultural intelligence and learn where your relative strengths and weaknesses lie. Attaining a high absolute score is not the objective.

It’s easy for me to change my body language (for example, eye contact or posture) to suit people from a diff erent culture.

I can alter my expression when a cultural encounter requires it.

I modify my speech style (for example, accent or tone) to suit people from a diff erent culture.

1 I easily change the way I act when a cross-cultural encounter seems to require it.

Total 4 4 5 Physical CQ

I have confi dence that I can deal well with people from a diff erent culture.

I am certain that I can befriend people whose cultural backgrounds are diff erent from mine.

I can adapt to the lifestyle of a diff erent culture with relative ease.

1 I am confi dent that I can deal with a cultural situation that’s unfamiliar.

Total 4 4 5 Emotional/motivational CQ

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Cultural Intelligence Profi les

Most managers fi t at least one of the following six profi les. By an- swering the questions in the exhibit, you can decide which one de- scribes you best.

The provincial can be quite eff ective when working with people of similar background but runs into trouble when venturing farther afi eld. A young engineer at Chevrolet’s truck division received posi- tive evaluations of his technical abilities as well as his interpersonal skills. Soon he was asked to lead a team at Saturn, an autonomous division of GM. He was not able to adjust to Saturn’s highly partici- pative approach to teamwork—he mistakenly assumed it would be as orderly and deferential as Chevy’s. Eventually, he was sent back to Chevy’s truck division.

The analyst methodically deciphers a foreign culture’s rules and expectations by resorting to a variety of elaborate learning strate- gies. The most common form of analyst realizes pretty quickly he is in alien territory but then ascertains, usually in stages, the nature of the patterns at work and how he should interact with them. Deirdre, for example, works as a broadcast director for a London-based company. Her principal responsibility is negotiating contracts with broadcast media owners. In June 2002, her company decided that all units should adopt a single negotiating strategy, and it was Deirdre’s job to make sure this happened. Instead of forcing a showdown with the managers who resisted, she held one-on-one meetings in which she probed their reasons for resisting, got them together to share ideas, and revised the negotiating strategy to incorporate approaches they had found successful. The revised strategy was more culturally fl exible than the original proposal—and the manag- ers chose to cooperate.

The natural relies entirely on his intuition rather than on a sys- tematic learning style. He is rarely steered wrong by fi rst impres- sions. Donald, a brand manager for Unilever, commented, “As part of my job, I need to judge people from a wide variety of cultural backgrounds and understand their needs quickly. When I come into a new situation, I watch everyone for a few minutes and then I get

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CULTURAL INTELLIGENCE

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a general sense of what is going on and how I need to act. I’m not really sure how I do it, but it seems to work.” When facing ambigu- ous multicultural situations that he must take control of, the natural may falter because he has never had to improvise learning strategies or cope with feelings of disorientation.

The ambassador , like many political appointees, may not know much about the culture he has just entered, but he convincingly com- municates his certainty that he belongs there. Among the managers of multinational companies we have studied, the ambassador is the most common type. His confi dence is a very powerful component of his cultural intelligence. Some of it may be derived from watch- ing how other managers have succeeded in comparable situations. The ambassador must have the humility to know what he doesn’t know—that is, to know how to avoid underestimating cultural dif- ferences, even though doing so will infl ict a degree of discomfort.

The mimic has a high degree of control over his actions and behavior, if not a great deal of insight into the signifi cance of the cultural cues he picks up. Mimicry defi nitely puts hosts and guests at ease, facilitates communication, and builds trust. Mimicry is not, however, the same as pure imitation, which can be interpreted as mocking. Ming, a manager at the Shanghai regional power author- ity, relates, “When I deal with foreigners, I try to adopt their style of speaking and interacting. I fi nd that simple things like keeping the right distance from the other person or making eye contact or speaking English at a speed that matches the other person’s puts them at ease and makes it easier to make a connection. This really makes a diff erence to newcomers to China because they often are a bit threatened by the place.”

The chameleon possesses high levels of all three CQ components and is a very uncommon managerial type. He or she even may be mistaken for a native of the country. More important, chameleons don’t generate any of the ripples that unassimilated foreigners inevi- tably do. Some are able to achieve results that natives cannot, due to their insider’s skills and outsider’s perspective. We found that only about 5% of the managers we surveyed belonged in this remarkable category.

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One of them is Nigel, a British entrepreneur who has started busi- nesses in Australia, France, and Germany. The son of diplomats, Nigel grew up all over the world. Most of his childhood, however, was spent in Saudi Arabia. After several successes of his own, some venture capitalists asked him to represent them in dealings with the founder of a money-losing Pakistani start-up.

To the founder, his company existed chiefl y to employ members of his extended family and, secondarily, the citizens of Lahore. The VCs, naturally, had a diff erent idea. They were tired of losses and wanted Nigel to persuade the founder to close down the business.

Upon relocating to Lahore, Nigel realized that the interests of fam- ily and community were not aligned. So he called in several commu- nity leaders, who agreed to meet with managers and try to convince them that the larger community of Lahore would be hurt if poten- tial investors came to view it as full of businesspeople unconcerned with a company’s solvency. Nigel’s Saudi upbringing had made him aware of Islamic principles of personal responsibility to the wider community, while his British origins tempered what in another per- son’s hands might have been the mechanical application of those tenets. Throughout the negotiations, he displayed an authoritative style appropriate to the Pakistani setting. In relatively short order, the managers and the family agreed to terminate operations.