Peter Drucker’s famous quote, “Culture eats strategy for breakfast,” is not limited to strategy but includes technology, physical facilities, distribution channels, motivations, values, and all behaviors in that culture.
Navigating cultural differences is a crucial aspect of global business development. As companies expand their reach into new markets, they encounter diverse cultural norms, values, and communication styles that can impact their operations and interactions with customers, partners, and employees. Understanding and adapting to these cultural nuances is essential for achieving success in the global arena.
Cultural differences can manifest in various aspects of business, including:
• Communication
Communication styles can be crucial in business development, mainly when dealing with people from diverse cultures. The way people communicate varies significantly from one culture to another. For example, indirect communication is preferred in certain cultures because it is polite and avoids confrontation. This means essential information is often hidden in contextual code, making it hard to understand the intended message and respond positively. In contrast, in countries such as the US, Israel, Holland, and Germany, people value directness and assertiveness, meaning they tend to convey all the necessary information directly through words.
• Business etiquette and protocol
Each culture has its own set of etiquette and protocols, such as greetings, gestures, gift-giving, and business attire. A lack of awareness or disregard for these practices can create misunderstandings and hinder relationships. Businesses should thoroughly research local business customs before engaging with partners or customers in a foreign market.
• Time perceptions
It is essential to understand that different cultures have contrasting perceptions of time management and efficiency. While some cultures prioritize punctuality and following schedules, others prefer a more relaxed time-keeping approach. Therefore, your planning, prioritizing, scheduling, and implementation strategies must be adjusted based on cultural norms and attitudes toward time to avoid delay or frustration.
• Decision-making
The decision-making processes can vary among different cultures. For instance, some cultures prioritize group decision-making and consensus, while others prioritize individual authority and decisiveness. Decisions can also be influenced by whether rules are meant to be obeyed or broken and under what circumstances. This aspect affects the level of commitment you can expect from people to follow through on what was agreed upon and whether they will adhere to universal rules, processes, and systems or make decisions based on the immediate situation.
• Negotiations
Negotiation techniques can differ significantly among various cultures. In business, negotiations play a crucial role in every deal. However, certain cultures see negotiations as a win-lose or zero-sum game, while others view them as an opportunity to create a win-win situation that expands the pie for both parties. Additionally, cultures that favor indirect approaches place a greater emphasis on building relationships. To reach mutually beneficial agreements, businesses must adapt their negotiation strategies to align with local norms.
• Customer relations
Cultural differences can also affect how businesses interact with customers. For example, in some cultures, building relationships with customers before making a sale is essential, while in others, a more transactional approach is preferred. Businesses need to understand the cultural preferences of their customers to develop effective marketing and sales strategies.
• Building relationships
The importance of relationships is universally recognized across all cultures. However, some cultures prioritize building trusting relationships before initiating any work, while others prioritize the task and value the relationship only if it leads to success. Building a long-term business relationship requires sharing personal information, as it is the foundation of trust. However, if your goal is short-term, your relationship will likely be transactional. It is crucial to understand these differences when developing a business strategy with potential clients and colleagues. This difference affects the approach one takes when starting a project and where to invest one’s efforts – whether they focus on building trust or closing the deal.
• Understanding the hierarchy – discovering the basis of authority
The criteria for inviting someone to a meeting or discussion vary in various cultures. In some cultures, expertise is the main factor, while in others, age, gender, ethnicity, tribe, or relationship determine authority. The importance of rank and the way it is demonstrated have a direct impact on whether you have access to critical decision-makers or if you have to go through gatekeepers and how you and others are expected to behave with authority, whether it’s a colleague, boss, subordinate, or friend.
THERE IS no definitive statistic on the success of companies in the global market due to cultural training. However, several studies suggest that cultural training can positively impact a company’s bottom line.
For instance, the Society for Human Resource Management study found that companies that provide cultural training to their employees are more likely to succeed in the global market. The study reported that such companies have increased sales, improved customer satisfaction, and reduced employee turnover.
An Association for Talent Development study revealed that companies that invest in cultural training are more likely to be financially successful. It was noted that these companies have a higher return on investment (ROI) than those not investing in cultural training.
Moreover, there are several case studies of companies that experienced success in the global market due to cultural training. For example, IBM has a longstanding history of providing cultural training to its employees. IBM’s cultural training program has helped the company expand into new markets and build strong relationships with customers and partners worldwide.
Similarly, Google provides cultural training to all its employees, regardless of location. Google’s cultural training program has helped the company create a more inclusive and welcoming work environment for employees worldwide.
To sum it up, the key to success lies in blending business development skills with cultural competency, which can significantly improve an organization’s performance in new markets. Furthermore, by acknowledging and respecting cultural differences with sensitivity and adaptability, organizations can overcome cultural barriers, build stronger relationships, and achieve sustainable growth in the global marketplace.
The writer is a corporate cross-cultural business consultant with over 25 years of extensive experience in American, Israeli, and global business cultures. She is the founder of TrainingCQ.