The return on investment for cultural agility and cultural profit is both short-term and long-term. So, the way to look at it is there are four stages of cultural profit. These are aware, attuned, adapting, and agile. And if you are thinking that they sound like they parallel the skills of cultural agility they sure do. Let me give you some examples of each stage.
When a company is aware they are active in other countries very often they just transplant their home strategy. They take the strategy that they use in their home country and they just kind of plunk it in into the next country. Best Buy did this in China in 2011 to disastrous results. China requires its own strategy. They often also will have the same website, the same corporate website that they have everywhere but they will think that they are being agile by translating it. What they are is they are aware that there are changes, the translation is sort of a nod at the different market. Different markets need different content.
And then finally in aware there is a reliance on brand identity. Mattel did this with Barbie also in China also in 2011. They created a superstore that didn’t make any sense for the Chinese market and they thought that they were going to be a huge success and they were actually a very expensive failure.
So also some examples of attuned. When they are attuned the marketing is localized. There is a local marketing strategy. They speak to customers in the ways that they are used to being worked with. I talked with that about Costco. The way that the stores are set up would be natural for the market that they are in whether that is the big box in the United States or a very dense vertical store in areas like Japan or Taiwan. What they also have are localized products and services and what you have very importantly is a localized management team. That means that the people who are managing are native to the country that the company is working in. So for example you have Citi Bank or Deutsch Bank or in a lot of these financial firms you can really see that they are very well developed and that their team who is managing at the local level represent the country, they are from the country that they working in. The benefits to that are enormous because then you have somebody who understands how to motivate a local team, how to manage for success with the local team, and can act in some ways as a cultural buffer between the dictates from corporate who may not really understand if an organization is not culturally agile throughout then these local managers will really act as a cultural buffer and play an enormously important role.
The next step is adapting. We talked before where you start to see some very short-term benefits, you can do some sales and stuff, but on the other hand you can also have enormous short-term risks that you are unaware of. You can lose a lot of money as well. When you are attuned these are a little bit longer-term benefits in that it takes a bit of a while to set up a localized management team, you know, the localized products and services, and it doesn’t take a huge amount of time and you will start to see the sales coming through right away. You start to see a high functioning team working together in a relatively decent period of time. The longer-term results is in the stage of adapting because when you are adapting you are really making an investment in developing local people. You are investing in their development, you are investing in improving their management skills, you are taking them a long way which makes actually foreign employers very attractive in emerging markets because everyone knows that is where you go to learn really good management skills and so this investment in developing local people also allows for long-term that these people can benefit the company and really grow very successfully and for tremendous rewards for the company. IBM is a perfect example of that. Also when a company is adapting they have a localized business model and they have localized operations across their value chain. That means that they have localized operations in logistics, in manufacturing, in all these areas that leverage the capabilities that are unique to each country that they are operating in. Of course, they are also bringing best practices that they have in the organization. So when a company moves then to being agile, truly agile, this transfer of best practices isn’t just top down. It isn’t necessarily from home market into foreign markets. What you have is transfer of relevant best practices from and to every market throughout the organization and when you think about when you have the entire globe creating your best practices the long-term return on that is enormous. So the other things too is when you have development a truly agile organization has zero cultural ceiling for senior executives. That would mean that the C-suite would be made up of people from all of these countries. The benefits of that also is you have invested in this development, you have hired the local management in the attuned stage, developed them as they are adapting. You are talking now about people who have decades of working with this company and so if you have zero cultural ceiling for senior executives then they can go all the way up into the organization. You now have the best talent pool in the world, in the globe, that you can pull from when you are looking at your succession planning. I would love to show you an example of that company but agility is still remaining a bit elusive.
When you look at it the short-term and the long-term, short-term it depends on the investment that people are making. Are they just going to be aware? Are they going to move into being attuned? And also so that definition of short-term. Again, if you just translate your website, you are in the awareness stage. You are not going to get a huge amount of ROI. If you are in attuned stage effectively localizing marketing or your supply chain you can expect increased sales and also some reduced costs. In the long-term when you are agile you have that transfer of relevant best practices from and to each country around the world and then you also have the best talent pool that you developed over decades that you can pull from in your succession planning. And that ROI, that long-term ROI is far-reaching and nearly immeasurable.