I get asked what a culturally agile organization is and so I am going to start with a couple of examples of what it is not then I will give you examples of what it is.
So what it is not, I am going to take the example of Best Buy inChinaor inEurope. What they are doing is that they are taking their strategy, which has worked very well in theUnited States, and simply imposing that strategy on the rest of the world. They are experiencing some pretty phenomenal failures with that because the rest of the world needs localization of strategy for one thing. Secondly is Groupon. Their strategy is not so hot either but where they really blew it in one manner was in their marketing. They ran a Super Bowl ad in theUnited Statesthat was very insensitive to Chinese consumers. The result of that was that obviously they didn’t think that they would have to consider that they crossed boundaries but they were trying to make a market entry at the same time into China and so they were spending millions of dollars at the same time that they are insulting their future customers and it took about a minute to light up the Chinese microblog. You have to have a coherent organization that is speaking to each other all the time about where it is everywhere in the world and the people working there have to have enough cultural agility in themselves to be able to call it. You can’t have some sort of watchdog.
So here are examples of companies who are really culturally agile and doing very well. One is the bank HSBC. For example, when they go into a country first of all they get as much local staff as possible, as much local talent. They develop it very well. But when they send their managers there their managers stay for decades. Most other companies have a two to three year rotational cycle. For example, German companies. They move into a new country, they are trained by the local staff in local culture and how to do things, and then about two to three years into it right when they are really understanding it they get sent back and so all of that investment into them understanding it is then taken out and the local staff just gets drained and demotivated by having to do it all over again. Another example of a company who is very culturally agile in doing things very well is IBM. When IBM for example enteredChinathey went over with Singaporeans and American-born Chinese as much as possible. Then they invested very heavily in developing their local talent and they have quite a string of mainline Chinese who are in charge of things. It is actually fairly rare to see someone who is not Chinese in IBM. The other thing where they have gone further beyond their leadership in management is they are localizing their value chains. They are localizing all of their operations to be relevant to the country that they are in. Everyone in the organization has a high level of individual cultural agility. The organization as a whole communicates and so one thing doesn’t happen in one country that other people don’t understand, that they don’t know about. Then finally they localize. IBM is localizing their value chain meaning that they have specialized logistics, procurement, manufacturing, sales, distribution, service, and support are all relevant to the country that they are active in. They are not just taking one global system and imposing it everywhere because quite honestly that is not effective.
In summary, here are the three things that culturally agile organizations do best. First of all, as individuals and as a whole they have grown their knowledge and ability in cultural agility skills. Secondly, they seamlessly communicate in order to weigh interrelationships and make sure that everyone is aware of what is going on all over the planet. Third, they make sure that their organization looks like their market both in their local staff and also in their operations.
One way that every organization can still improve is to have the composition of their senior staff reflect their global organization sales. The question for you is where are you on that scale and where is your organization because if you’re not at the high end of these skills in these operations you are leaving money on the table. That is what I call cultural profit.