International Business: Thinking Globally

On Capitol Hill, "French Fries" became known as "Freedom Fries." In Paris, they treated Serena Williams shabbily. When emotions run high, there is no telling where the fallout will occur. In a global marketplace where cross-cultural encounters are increasingly common, how do you work with those who don't exactly see the world as you do?

I'm not just talking about the ability to disagree politely. That's important, but in business the challenges are greater than that. Buying, selling, competing, cooperating and managing require close interaction. Relationships have to be built. Trust must be developed. It can be difficult, and the more deeply you are involved (like when establishing an operation overseas), the more difficult it gets.

Establishing a Global Mindset

In business situations, differences in cultural perspective are often marked by a phrase I have heard many times over the years: You can't do that here. You want to establish a particular kind of contract or service agreement and you are told, "You can't do that here." Or you want to use a particular organizational structure and you are told, "You can't do that here." This can be frustrating, particularly when the things you want to do are necessary for your success.

To operate in this kind of environment, a certain perspective is required - what might be called a "global mindset." To have a global mindset is to have the perspective, imagination and empathy to understand the other guy's point of view, the conviction to stand by your point of view when you must, and the flexibility and creativity to find new approaches and common ground when necessary and possible.

For me, it always helps to remember that business - like capitalism itself - is built on certain fundamental values, including accountability, fairness, trust, honesty, initiative, creativity, innovation, quality, excellence, meritocracy, freedom and opportunity. As long as I am not violating these values in a significant way, or am at least moving closer toward them, then I can be flexible. Otherwise, I'm more inclined to diplomatically stick to my guns.

Dealing with Corruption and Bureaucracy

A few examples might help. Let's start with corruption, a fairly common problem in developing countries like China, India, Russia, etc. First, you must recognize that these are societies where the rule of law has not been widely established. These are traditionally hierarchical societies, which means that it is position - not law - that confers power. People in these societies traditionally take advantage of their position to the fullest extent possible, or until they are restrained by someone in a higher position (who is probably exploiting that position for their own gains).

This is not to excuse bad behavior, but simply to help understand why corruption is so prevalent in certain cultures. (It is important to understand that, given the right conditions, such behavior can change over time.) That said, honesty is too important, both morally and in terms of the long-term impact on a business, to compromise. The best approach is always to be crystal clear up front that you expect straight dealing. Sometimes this means adjusting sales projections downward. Sometimes this means tightening up internal control procedures. Whatever it takes, honesty and trust go hand in hand. Since business is largely built on trust, this is an area where you cannot compromise.

Bureaucracy, on the other hand, is an area where you must learn to be flexible. Some countries have much greater government involvement in their economies. Their management and business practices are also still built on the slow, uncompetitive habits that are standard in non-market economies. It is easy to become frustrated in these situations and either walk away or push too hard. Both options can lead to missed opportunities or failure. A better approach is to push, but not too hard. Try to work through or around the situation to make it better, to cut through the red tape and trim the fat - all the while realizing that change takes time and you won't get all you want right away. In other words, push, but push patiently.

So when someone says, "You can't do that here," don't just take their word for it. Ask a lot of questions, get all the information you can and try to find a way around the problem. In most situations, particularly in cross-cultural ones, the key to driving change is knowing what needs to change and what doesn't, knowing how fast change can occur, and figuring out how to drive the change. There is no golden rule for answering these questions. But progress starts with a global mindset - perspective, imagination, empathy, conviction, flexibility and creativity.

Dan Joseph is a managing director at ESS China, a firm that specializes in helping American companies adjust to the challenges and seize the opportunities of globalization with a particular emphasis on China. ESS's activities include sourcing (helping U.S. companies stay competitive by keeping costs down), manufacturing and operations capability services (helping U.S. companies establish a presence in China), and investing in business opportunities in China (e.g., contract manufacturing, partnering with U.S. firms getting involved in China, acquiring companies that are dealing with global challenges, etc.). Joseph is also the author ofWen and the Art of Doing Business in China, a humorous and instructive book about his experience managing businesses in China. He can be reached at djoseph@esschina.com.