On Management: The respectful mind

Globalisation is not necessarily a process of convergence - the West has much to learn from other cultures.

by Simon Caulkin, World Business
Last Updated: 23 Jul 2013

An assumption about globalisation is that it is a process of convergence on norms that are under the control of the giant companies of the West. Whether in Bangalore, Bamako or Beijing, everyone will speak something resembling English and everyone will practise a version of business based on the Anglo-Saxon model. Although they fight about everything else, cultural convergence is one idea that both supporters and anti-globalisation protesters agree on.

Well, both groups may need to think again. In 2003, Goldman Sachs caused a stir by predicting that within 40 years the Bric economies - Brazil, Russia, India and China - would be bigger in dollar terms than the G6. Of the current G6, only the US and Japan might figure among the world's top six economies by 2050, the investment bank said. Going a stage further, Antoine van Agtmael, the pioneer investor who coined the term 'emerging markets', has identified 25 world-class companies in emerging markets that he believes "will change the face of globalisation". Alongside well-known firms such as Samsung and Infosys, his list includes Embraer (Brazil, jets); Haier (China, household goods); Hon Hai (Taiwan, consumer electronics); and Concho y Toro (Chile, wines).

These ideas blow comfortable assumptions about cultural homogenisation out of the water. English may well stay the international business language of choice, although that is not certain. But even if it remains dominant, under the surface globalisation seems more likely to challenge cultural hegemony than reinforce it. On the way, it will pose problems for companies in the developed West, precisely because they are unused to their norms being challenged: until recently, cultural adaptation was for others.

Now, however, that ability may be in the process of emerging as a source of competitive advantage. McKinsey recently speculated that regionally important firms in, for instance, Latin America were counter-intuitively better equipped to emerge as world players than many suspected: if they can successfully adapt to the bruising rough and tumble of emerging economies, the argument runs, how much easier will they find it to cope with the more structured, less volatile markets of the West? From being a matter of politeness or political correctness then, developing CQ, a cultural quotient, may in the future be as important for global business success as IQ and EQ (emotional quotient) - with the learning travelling in some unfamiliar directions.

The rise of the Indian IT industry has made Silicon Valley uncomfortably aware that Indian professionals are not just cheaper but very often better at the job than their US counterparts. With ambitious Indians increasingly choosing to stay at home rather than emigrate, US firms have two urgent reasons to study what makes them tick: the first is that understanding the cultural particularities may give them a better handle on growing their own great software developers; the second, to enable them to improve their recruiting success. Or consider Russia, where UK and US oil companies, whose expertise and resources have hitherto given them the right to operate pretty much on their own terms, are now having to adapt to radically different Russian assumptions about doing business.

CQ, or cultural intelligence, is not a soft option. First identified by Christopher Earley and Elaine Mosakowski in a Harvard Business Review article in 2004, it says that understanding what makes groups tick is as important as understanding individuals; distinguishing behaviour that's driven by culture from that specific to an individual makes it possible to interpret unfamiliar gestures, and, importantly, prevents misinterpretations that can lead to business-destroying gaffes.

This is easier said than done - ironically, often especially for those who are most successful in their own cultural context. The more effortlessly a person reflects one culture's norms and preferences, the more difficulty they may have making sense of, and adapting to, those of another. Yet with time and care, CQ can be learned. It's easy to grasp the potential benefits at every level - the ability to do better business within and between companies, certainly, but also in the long term in increasing understanding among competing nations and ideologies too. It is an essential component of what psychologist Howard Gardner, inventor of the theory of multiple intelligences, calls "the respectful mind".

But perhaps the greatest benefit of reflecting on and analysing the cultures of others is the one of self-knowledge and the ability to see one's own culture through fresh eyes. The end of such exploring, as TS Eliot put it in the oft-quoted lines from his poem Little Gidding, "will be to arrive where we started/And know the place for the first time".

- Simon Caulkin is a freelance business journalist.

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