I just did a previous string of videos explaining why global companies make the mistake of not addressing culture. There are people within global companies who sense the differences between cultures, differences in how they think and how they work.
These people know that there is enormous influence of culture, and they want to address them. In fact, they know that they have to address culture, but they cannot find support, real support. Why? Well, let’s look at the players and let’s look at the options.
What about strategy consultants? We know the names of the major players. McKinsey, Boston Consulting, Bain, Roland Berger and many others, including very fine boutique firms.
What do they do? They come into the companies, analyze the situation and recommend to the client the direction of company, the structure of the organization, products, services, business models, and internal processes.
What about the accounting firms, the so-called Big Four, EY, PwC, KPMG, Deloitte? They have been breaking into the strategy field over the last years. And there are many other accounting firms, also boutiques.
Then there are the M&A advisors, financial institutions, the M&A attorneys, the entire M&A ecosystem. These folks typically serve small- to mid-sized companies.
Do any of these groups help clients to address culture?
M&A advisors do not, but might soon, because their clients are beginning to request it. The strategy and accounting firms do offer assistance with post-merger integration, but they do not address culture, at least not yet.
Folks, actually all could, perhaps should, be helping with culture. But they are not. Why not?
Strategy consultants provide advice about M&A. They guide their client through the process. At he end of the M&A process strategy consultants are very familiar with the companies, both the acquiring and the acquired companies. Because they did the analysis. The should know where integration must succeed.
Why do strategy consultant not help with culture? I think there are several reasons.
The first is that addressing culture is not in their dna. Soft factors are not in their dna. These people are numbers-oriented. Their thinking is if you can’t quantify something, then it is not relevant. They come from the disciplines of finance, accounting, the natural sciences, and business.
Their mindset cannot explain how Americans and Germans, for example, lead and want to be led. The cannot define what an effective process looks like in Germany or in the United States.
The second reason is scalability. Their business model resists addressing national culture. If they did take culture into account their methods and techniques would have to be modified, customized. That would make their business model not universal, no longer scalable.
They would have to customize for each country. What they offer in U.S. they would not be able to offer in Germany, and vice versa, and this would be the case regarding all other countries.
The third reason is implementation. If strategy consultants were to offer assistance with post-merger integration, and thereby address influence of cultural differences on cross-border collaboration, they would have to transition from interacting with executive management down to interacting with employees on the working levels, where collaboration actually takes place, where collaboration succeeds or fails.
And that means hands-on support. It means sharing responsibility for implementation of their own recommendations. Involvement in implementation means getting their hands dirty. It means they can’t run away from what they sold to the client.
I could be wrong, perhaps these firms do help their global clients with culture. Either way there is a simple way to verify this. And not by reading what they claim on their websites. Instead, simply ask them.
If their response is yes, then ask them a few simplye questions: Which countries do you address? Can you show us some of your content about their business cultures?
Please explain you research methodology which led to that content. Can you provide examples of key differences between, for example, the United States and Germany?
How exactly do you deliver your expertise? Can you send us bios of the people who will be doing the delivery? Would you, please, supply us with references in the US-Germany space? And finally, what would a program looks like?
We all know the big-name strategy firms. And we all know the big-name business schools: Harvard, Stanford, UPenn Wharton, and many other top-tier schools. And in Europe there are the elite universities: HEC Paris, London Business School, St. Gallen, Insead, IESE.
Do any of them address the influence of culture on cross-border organisations?
They do not. Neither in their executive education programs, nor in their consulting services. And seldom do the MBA programs touch the subject of culture. Why? Like the strategy consultants there are reasons:
The first is lack of expertise. Professors lack country expertise. Let’s think about it, how does one develop that expertise? With the help of theory? No, there is only one way.
You have to have lived in the culture about which you claim to have expertise. You have to have experienced differences in many situations, and over a longer period of time. You then need to step back and analyze those experiences. Finally, the expert has to put those results to work in the real world.
This is a very long and arduous path. There are no shortcuts. You have to go deep and broad. And over a long period of time.
The second reason is their business model. If global companies have difficulties addressing national culture, how much more will the business schools struggle with it? How can business school professors address cultures if global companies do not address culture? And then there is the very practical question about what cultures to build expertise? Which countries should be chosen? Now, what is true for professors is also true for executive education programs.
The third reason is it would raise rather uncomfortable questions. Addressing cultural differences would have serious consequences for business school curriculums. If the academic world were to address culture it would mean major changes to their business model. Their course content would no longer be universal. What is true for the U.S. would not necessarily be true for Germany and vice versa.
What about change management experts? These are excellent people. Most have studied business or psychology or the humanities. Many have lived and worked abroad. They have experienced cultural differences.
Their skill set is valuable. They grasp quickly the change needed within the companies of their clients. They are familiar with how companies operate. They are good at structuring the conversation.
However, they have weakness. They lack country-culture expertise. This is not a criticism. It is a simple fact that they do not focus on culture. Instead their focus is on the change process.
If they were to address culture, they would do it via change methods. They would get colleagues on the client side to talk about cultural differences, with the hope that these same colleagues during, for example the post-merger integration process, would come up with their own intercultural insights.
In other words, change management people are at their core discussion moderators. Now that is very helpful. And it is better than not addressing cultural differences at all. But frankly, you as the client, you and your colleagues, can run discussions yourself. There is no need for consultants. Save yourself the time and money. There is no reason to engage them.
Can organizational development people help? Organizational development is a generic term which includes change management. Like their colleagues in change, the OD approach depends on concepts and methods. And it is also their hope that people will talk about culture in order to understand each other.
Unfortunately, like their colleagues in change, OD-experts simply do not have any cultural expertise. Neither in the differences between countries nor in understanding the influence of those differences on cross-border collaboration.
What about intercultural trainers? They are typically trained as psychologists, anthropologists or sociologists. They have lived and worked abroad, experienced cultural differences, and know how to run workshops. That’s all fine.
They, however, have a significant deficit. It is their content. Typically it is rather shallow. Often their content is flat out wrong. In some cases it is both, shallow and wrong.
Intercultural trainers remain on the theoretical level. Frankly, it is not enough to describe Germany as a so-called low-context communication culture and the U.S. as a high-context communication culture.
Intercultural trainers can, under certain circumstances, be helpful as an introduction, but they are no help with specific problems. I become very nervous when they begin talking about cultural dimensions such as power distance, individualism vs. collectivism, masculinity vs. feminity.
If cultures were so simple that it was enough to describe a few dimensions then there would most likely be an app on every smartphone which magically allows Germans and Americans to understand each other and to collaborate. The app does not exists.
What about language instructors? It is interesting that of all of the groups thusfar mentioned only the language instructors can be of assistance. Because they build the bridge via words. It is words, and the thought behind them, which can begin to enable insight.
Think of the German word Qualität, and the American word quality. When Germans and Americans collaborate they do so in the English language. Both use the word quality. But do they have same understanding? American quality and German Qualität?
But language instructors also have a deficit. They can’t go beyond words. Word history is a great tool of analysis. It can give valuable insight. And it is fascinating.
But explain to Americans the German understanding of Qualität. You can go far back into its history, but does that address the challenges which American and German engineers face when collaborating, when designing a gas turbine or a braking system or a complex medical instrument.
Language does not explain what a German mechanical engineer means when he says the quality of the technical solutionis not good enough. Nor does it explain what an American marketing expert means when she says that the U.S. customers want value more than engineering.
These are rather obvious reasons why language instructors cannot help global companies to address the influence of cultural differences on cross-border collaboration. They are educators and not businesspeople. They seldom understand companies. And seldom do they understand the international environment in which the companies are operating.
The big question, the overarching question, is who can help global companies to understand and manage the influence of culture on collaboration? Stated differently, how is expertise in this are defined?
I believe that expertise is experience understood and explained. Experience in and across cultures is not enough. Expertise is more than a long list of interesting anecdotes based on having lived and worked in the US-Germany space.
Nor is theoretical knowledge enough. Theory must be based on experience. Without experience theory is empty words. Instead, authentic expertise has three components:
First, extensive experience means having lived and worked in the culture not one year, not five years, but at least ten years. Second, the person has to step back in order to analyze those experiences. What are the differences? What is their impact on collaboration? How do we get the differences to work for not against collaboration?
Third, the expert has to be able to explain all of this effectively. Their delivery must be pragmatic, practical, and effective. If we apply this definition to groups discussed thusfar, frankly, none of them meet the criteria.