At the end of the semester, as students were sharing with each other what they had learned from my course in cross-cultural management, one of my students, Tom, an American in his mid-40s who was going back to school for an MBA after having worked in the corporate world, made a telling comment. He said: âBefore this course, I never thought of the U.S. as having a culture. I thought what we did here was what everybody else in the world did, at least in terms of business practices. Now I realize that I am to some extent a product of my culture.â Tom has never traveled abroad, and so he has never had to face the day-to-day realities of managing others from different cultures.
Charles Munger, Warren Buffettâs friend and close business associate at Berkshire Hathaway, was quoted in a Wall Street Journal interview1 as saying:
People chronically misappraise the limits of their own knowledge; thatâs one of the most basic parts of human nature. Knowing the edge of your circle of competence is one of the most difficult things for a human being to do. Knowing what you donât know is much more useful in life and business than being brilliant.
For those managers like Tom, who may never have spent any time outside their own country, taking Mr. Mungerâs advice to know what you donât know may be difficult. It certainly was for me, as I was born and raised in the Philippines, and other than a trip to Hong Kong as a teenager, had never left my home country.
After I graduated from college, I went to work for the Philippine Refining Company, a subsidiary of Unilever. One of my best friends accepted an offer from Procter & Gamble (P&G) Philippines. These two companies were fierce competitors in the Philippines, and we would often compare notes on what it was like working for our respective companies. The Philippine Refining Company shared some of the Dutch cultural characteristics; managers took a long time making decisions because they valued consensus. And the directness of some of the Dutch expatriates working there seemed jarring to the Filipinos. P&G Philippines had a very different culture; decisions were made quickly, risk-taking was encouraged, and there was a more informal working relationship between managers and employees. At the time, I did not realize the extent to which the cultures of these companies reflected the cultures of the countries in which they were based.
Many years later, after having moved to the USA, obtaining my Ph.D., and then working for several Fortune 500 companies where I had international assignments in over 15 different countries (including a three-year stint in Japan), I have a little more perspective on the subject of global leadership and managing across cultures. I have met, worked with, and interviewed several hundred individuals from many different nationalities who have had various leadership roles in their global organizations: as traditional expatriates (going from home country to host country), reverse expatriates (going from host country to home country), third-country expatriates (going from one subsidiary to another), managers with either short-term or rotational assignment roles, as well as leaders of global virtual teams. I have also had various global leadership roles, as well as having led global face-to-face and virtual teams, in different corporations.
In the early part of my career, it seemed like the traditional expatriate model was the prevailing one for global organizations that were expanding. In the Philippines, there were American, Dutch, British, German, and Mexican expatriates sent by their global companies to oversee the local subsidiaries and to educate them on the policies and procedures of the parent company. At about that same time, Japanese car executives were also sending their expatriates to the USA to open sales offices (Cusumano 1988). Today, this is only one of several models for expatriate assignments. In this traditional model, the typical expatriate was one who came from the home country of the multinational, and who was sent overseas, many times for a two- to three-year stint. Depending on the business goals of the company, the expatriate could be expected to accomplish one of several objectives, for example: find a local agent to sell the companyâs products, meet with local distributors, select local franchisees, negotiate with a joint venture partner, hire a local manager to run an overseas office, or lay the groundwork for setting up a production plant.
In almost all cases, the expatriates would âexportâ their knowledge and the companyâs competencies, especially if their firm was setting up an overseas subsidiary and hiring local employees. There was an unwritten assumption that the locals had to be molded and educated on the companyâs products, policies, and practices. After a period of time, the expatriate would leave, with another one taking his or her place. Eventually, there might be someone in the local office who would be given greater responsibility but invariably, the country manager would be an expatriate (Inkson et al. 1998; Peterson et al. 2000).
At times, the selection of the expatriate to send abroad seemed unusual. For example, in one company, a Latin American executive was selected to head the companyâs German subsidiary. On the surface, this appeared to be a poor fit, since the two countries are culturally very dissimilar. In this particular case, however, the selection was quite astute. The German subsidiary had lacked a passionate leader who could inject some energy into the business, and he provided that. He was just what the German employees needed; he energized the organization, and excited the employees in that subsidiary. After two years, he had improved the subsidiaryâs performance and profitability.
At another company, a female from New Zealand working in Australia was selected to lead the marketing organization of a subsidiary of a US company in Japan. Despite the paucity of female executives in Japan, and the concerns some senior managers had about how older Japanese executives would react to interacting with a gaijin female executive, she did quite well in Japan.
Peter Drucker (1973) wrote that a manager has five critical responsibilities: set objectives, organize (e.g., analyze activities, structure, and select people for jobs), motivate and communicate, measure, and develop people. It is challenging enough to do these without adding the complexity of managing in a complex, global environment. Yet this is what more and more companies are demanding of their leaders today. In the many interviews my students and I have conducted with executives, the ability to lead globally is increasingly one of the most important requirements for those interested in senior management positions. In a speech many years ago, Jack Welch said (Black and Gregersen 1999):
The Jack Welch of the future cannot be like me. Iâve spent my entire career in the United States. The next head of GE will be somebody who has spent time in Bombay, in Hong Kong, in Buenos Aires. (p. 56)
And General Petraeus (2006), in an entirely different context, said:
Working in another culture is enormously difficult if one doesnât understand the ethnic groups, tribes, religious elements, political parties and other social groupingsâand their respective viewpoints; the relationships among the various groups; governmental structures and processes; local and regional history; and, of course, local and national leaders. (p. 8)
In one of his observations about soldiering in Iraq, Petraeus noted that cultural awareness is a force multiplier, and that knowledge of the cultural terrain is sometimes even more important than knowledge of the geographic terrain.
Goldman Sachs, which has a large office in Tokyo, started a program several years ago to help its Japanese staff interact more effectively with colleagues around the world. Itâs referred to as a âculture dojo.â2 The program provides a forum for people to get together to share their experiences of working for a global business and to learn from each other. There are similar efforts by companies like Accenture and General Electric to help Japanese executives overcome cultural barriers. Mr. Takashi Yoshimura, managing director of Goldmanâs compliance division in Tokyo, observes that there is a language and a cultural challenge for many Japanese. In my own experience working in Japan, both are present. Many Japanese were not comfortable speaking in English, and I often had a translator in many of the meetings I led in Tokyo. In fact, senior management in one company had set a policy that to be promoted to a kacho level (similar to a manager level in other countries), the candidate also needed to score at least 900 in a standardized English Proficiency test.
The cultural issue is around the discomfort many Japanese have about âthinking out loud,â âjumping to discussions,â and hesitating to say something unless it is important. According to Mr. Yoshimura, âIn my college (in Japan), people didnât say anything that might make them look foolish, but at Harvard Law School people said whatever they wanted to say.â
A commonly accepted definition of leadership, paraphrasing Yukl (2009), is that it involves a process of influence over others to guide, structure, and facilitate activities and relationships in the pursuit of certain outcomes. How does global leadership differ from leadership in general? Some managers we interviewed claim that leadership is leadership everywhere, and that the major difference is the greater diversity of situations, including cultural issues. However, there are several reasons why global leadership is more than just a difference in degree from leadership in general.
First, the context that global leaders face is very different and more complex than that faced by domestic leaders (Canals 2014; Steers et al. 2012). The cultural, economic, environmental, political, and religious differences are generally greater than those faced by leaders managing within their own country. Youssef and Luthans (2012) have pointed out that global leaders experience three types of distance: physical distance (due to geographical dispersion), structural distance (due to organization...