The sudden arrest of Carlos Ghosn, the celebrated turnaround auto industry veteran under Japanese law has reiterated the fact that many of our top business leaders lack geo-cultural understanding. And as corporations become more local to gain global dominance, knowledge of every country, its citizens, their culture and the communities that they live in is becoming essential. The judgment is still not out but what seems to be at the center of this controversy is Ghosn inability to carry together his leadership team from Japan, or Nissan. A French Lebanese citizen who is Brazilian by birth failed to understand the cultural nuances of Asia, especially, Japan, a country steeped in a conservative and low decibel culture.
Today the top leadership teams across businesses need to have a multi-country and multi-cultural approach to building an organization. Every corporation now has a global presence across the country’s with vastly different religion and business culture, hence, acting locally while thinking globally is becoming critical for success.
Dr. Paul Aitken, UK based professor and Leadership consultant who has developed 12 practices of leadership agility ( Agilityship –as coined by Dr Paul), prescribes ‘cultural competence’ as one of the most important practice for a leader to understand and implement in real life experiences.
I would mention four critical areas of experience for global leaders who want to become successful in a new country market. It comes from my personal experience of having worked in multi-cultural country environments. Having started my career in India – one of the world’s most challenging yet promising emerging markets and then getting posted across from South Africa to Jordan and now leading a business group in Singapore.
I term it as the 4 C’s to win a country market with ease and conviction
Build a Culture of trust: One of the essential aspects that a new leader needs to take care on arrival in a new country is to understand its culture and people. What worked in the headquarter may not be relevant at the country level. Management practices that are common in western societies may be totally out of place in Asia. And by understanding the local culture, a leader builds trust with the team on the ground. It is from experience that I say that accepting the local culture is the best way to build trust with the team, its consumers and the citizens in general. Trying to impose extreme views or acting roughshod will not only misalign you from the unit but culturally distance you from the actual happenings on the ground. The controversy that I mentioned at the start of my article seems to be due to this creation of a cultural distance.
Have Long-term Commitment: Today, a corporation’s commitment to stay put in a country or geography is also being continuously questioned. With pressure on performance, many MNC headquarters often make the mistake of entering and exiting markets in a hurry. An MNC or a new brand needs years of patience and commitment to stay and grow its market. Consumer loyalty, trust, and affinity will come only when they feel a sense of long term commitment. Initially for any new company, things may go wrong, be slow or even be loss-making; however, the ability to play the game for the long term is critical to success. Some of the most successful brands in India today are from South Korea (Hyundai) and Japan (Maruti/ Suzuki). However, this journey has been one of patience, customer orientation, and localization.
Show Strength of Character: Integrity and governance are the pillars on which global organizations are built. Hence, the power of character is vital when you enter a new market. No local office can justify illegal means like graft, speed money or any policy deviation in the name of culture. When at the start a company establishes a strong character of not doing anything wrong whatever be the circumstances, local weaknesses or unjust demands if any also disappear. The top leader should showcase impeccable conduct and integrity to ensure that the local team, suppliers or any other person get a clear message that nothing will be done outside the rule-book or something that hurts or compromises the reputation of the corporation. In the long term, such an approach builds respect for the brand.
An ecosystem of Co-existence: A key to success in new markets or country markets is to look for a local partner who understands ground level realities better. A joint venture or partnership approach helps in global companies to set up shop in a shorter time, bring in R&D and product best practices while the local partner handles on ground logistics. This approach needs a sense of trust between both parties and ideally, should have a time frame. Once the global player is comfortable, the local player may sell the stake to let the MNC brand chart out their path. Today, Apple’s partnership with Foxconn is a beautiful example where R&D and product innovation of a US brand married to manufacturing efficiency and prowess of an Asian company has created a “win-win” eco-system.
While multi-cultural talent is a reality, global leadership bench with geo-cultural talent is still in demand. It will drive an organization’s success or otherwise in key consumption markets. With America and Europe slowing down Asia is becoming the consumption hub, many South East Asian countries even though geographically small have great market potential. A leader’s ability to create a unique local mindset will help build a good local team and set up a valuable business that adds value to the local economy and contributes to the stakeholder value creation to the global corporation.
