Creativity & Innovation in Indian Social Life

Innovation and Creativity is a prerequisite for all aspects of life - irrespective of the field. In a hyper competitive world, creativity and innovation has become a key factor for success. Even in politics - leaders like Narendra Modi or Arvind Kejeriwal are getting elected because they ran a very creative campaign.

Just focusing on operational issues: Planning, Organization and optimizing processes is just not enough to succeed.

Today in Indian Society, Innovation and Creativity has taken roots in every aspect of social life: Education (eLearning, peer-learning) Work habits (Mobile-enabled-Uber workforce, work-from-home),  Parenting (Focused parenting workshops, quality time) and even sex (alternate lifestyles, 50 shades of Grey), and virtually every field of human endeavor.

As a result, we are seeing rapid social innovations in all fields. The established norms of social life of the previous/past generations are being questioned and changed to meet newer social challenges.
Consensus decision making & emphasis on conformity is being replaced by creative & competitive decision making.

Every individual are learning to break the existing norms, break from existing institutions and create new norms, rules of their own in order to work in the ways most appropriate to their hyper-competitive,  idiosyncratic lifestyles..

In a knowledge driven economy, people are being encouraged to be creative right from childhood. Little children in schools and preschools are being encouraged to "think on their own" and do things creatively. As this generation grows up, they are innovating and challenging established norms and making the society accept new and creative lifestyles.

In the last decade alone, we have seen more changes to the social norms than in several centuries. For example, if nuclear families was the fist major change in social norms. Now gay lifestyles, single & swinging lifestyle, or childless marriages are being accepted. Legalization of Marijuana is another example of such acceptance. Society is now accepting and adapting to this rapid change.

Creative & Innovative changes to Social life is no longer treated as products of "outsiders". Creative individuals are no longer from rich backgrounds - who have access to large resources at their disposal.

Creativity and Innovation has become pervasive in all aspects of life and all social institutions are adapting to it and in the process, we are seeing a rapid increase in the rate at which progress is made. Society and social institutions are now ready to facilitate the creative process and embrace change.

Today, society at large, is ready to pursue ideas that goes against consensus opinion - regardless of the field. People are making informed decisions and taking risks. Risk of failure does not seem to hinder them. People are seeking new means to succeed and are investing in knowledge, information in form of Internet & Instant communications & Social Networks.

Stigma of failure and the risks of failure is also being minimized by the rapidly growing economy. People who failed are now getting a second chance and new opportunities to try again.

The Risk-reward system is building tolerance for disagreement and people are harnessing it into a good to action:  "So you think I'm wrong.  Well, let me show you...." , "You say, it can't be.  Prove it to me...."

Indian society today is not making arguments that are for-or-against the idea, but rather what can be done with it!

Improving Innovation with Diversity

Recently, I was giving a talk on innovation and a person in the audience asked me the question: Why diversity is important for Innovation?

Many people in the audience were initially amused by the question. It sounds so obvious that diversity helps innovation, but when I turned the question back to audience, they was whole lot of discussion on the subject. The outcome of this discussion is documented in this article.

Today, in the global world, everyone agrees that successful innovation is the key to profitability. And innovation requires smart people with better ideas. Herein lies an intuitive and the most powerful force for innovation: Workforce diversity.

Almost everyone agrees that diversity is good for innovation, but most people cannot reason out on how diversity helps innovation or explain why diversity helps innovation.

Introduction

At the first glance, innovation has nothing to do with diversity. A lone inventor working in a lab gets his "eureka" moment and he goes on to create a path breaking invention. In that environment there was no diversity & yet innovation happened. So at the first glance, diversity has little to do with innovation. This was the situation in the industrial age (1850-1920). Thomas Edison, Henry Ford, Alfred Diesel, Nikola Tesla, were all strong individuals who were the beacons on invention. The term "innovation" was not invented yet.

But then, when we look little deeper at the invention, and the process of invention - the need for diversity becomes clearer. Let take a simple example of Edison's invention of light bulb as an example. The first light bulb created by Edison was made of a carbon fiber held between to electrical points in a vacuum glass bulb. Thomas Edison did not even invent one single item that made up the light bulb, his invention was in effect a recipe of putting various things together that made the light bulb work. Edison worked on proven concepts and ideas. Humphry Davy from UK has proved that electricity can be converted into light - by passing high voltage current through a filament of platinum. Another British scientist Warren de la Rue demonstrated that vacuum environments is necessary to longevity of the filament. American inventor John W. Starr proved the use of carbon filaments in light bulbs. The glass itself was originally invented by Arabs and perfected by Venetians. Now when we look at all the people involved in creating various components that make up the light bulb, it becomes clear that a lone individual could not have invented the light bulb. The final invention was a culmination of efforts of a diverse set of individuals.

Now in 21st century, things are not too different - though the pace of innovation has increased tremendously. What used to take a decade to develop in 1900 is now developed in a year.  The technical complexity needed to solve a problem has also increased tremendously. The only way to address the need for faster pace and handling technical complexity is talent. We need more number of intelligent people to innovate. Getting the best talent means getting people from different parts of the world - in other words get a diverse set of people to work on the big problem.

For innovation to happen people have to share their knowledge and work together.

Basic definitions

To understand the benefits of diversity in Innovation, first we need to define and understand a few key terms:
1. Diversity
2. Innovation
3. Successful Innovation.

What is diversity?

Diversity is defined as a group of  people who have differences in race, gender, ethnicity, physical capabilities, and sexual orientation - social or political differences.

What is Innovation?

Innovation is defined as development of new solutions that needs the needs of customers, where new solutions offer greater value to customers. Innovations can be a mix of products, services, technologies and ideas. Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. (source: Wikipedia)

What is Successful Innovation?

Successful innovation is the innovation that gives greater value to the innovator - i.e., the innovation that gives greater profit/benefit to the innovator than the other alternatives. Often times successful innovation is most often characterized by financial success.

Why have diversity?

Diversity is a good thing, but are there reasons to have diversity? In my opinion, there are three major reasons for diversity:

   1. Speedup Innovation
   2. Tap into specialized Skills
   3. Get different perspectives.

Speedup Innovation

Innovation requires quality talent and in right quantities. As the pace of innovation increased, there is the pressure to innovate faster, this implied that more talented people are needed. Good talent is tough to find in one single location. Immigration laws have hindered people movement, companies are forced to open multiple R&D centers all over the world to attract the best talent. Companies such as Intel, Cisco, Microsoft, Google, EMC, GE, Roche, etc., have setup R&D centers all over the world. Now companies have centers in USA, UK, France, India, China, Israel, Russia, Australia, Korea, Brazil and host of other countries. These global R&D centers collaborate to speed up innovation.

Tap into specialized Skills

When we look around the world, we find that not all the skills are available in all countries in equal measures. Some countries have specialized in certain technologies or certain skills. This specialization has allowed countries to create a competitive advantage. For example, France has specialized in Aviation & Nuclear energy. Germany has specialized in Automobiles and heavy engineering. USA has specialized in Software, Biotechnology, & Semiconductors, India has specialized in software and heavy engineering. China has specialized in manufacturing.

Innovation needs multiple skill sets. So when companies look for skills, they need to set up R&D centers in countries which has those skill sets or get people to immigrate to a central R&D center. For a long time California was a hot bed of innovation - because companies could get people from all over the world to work in California, but with changing immigration rules, companies are forced to set up multiple R&D centers.

Get different perspectives

Today. Customers are global, products are global. A new product - say Samsung Galaxy phones are being used world wide over and by people of all ethnicity, cultures, genders, etc. So when the products have to be sold to a diverse set of customers, the product development team will need different perspectives - and the best way to get that is to have a diversity in the innovation teams.

People with different skill sets and with different cultural backgrounds see different problems and solutions. Getting multiple perspectives to the problem helps to create new and better solutions. To understand this, consider the example of Samsung's Galaxy cell phones. Samsung understood the need to have a global perspective for its smart phones and developed phones with different designs - There are several designs of smart phones instead of having one standard design. The phones in some markets allow dual SIM, so that people can use the same phone with multiple carriers, the user interface & screens are customized, and the phones are priced differently as well. The range and diversity of Galaxy phones led to the success of Samsung in Smart phone business.

Diversity also brings in sensitivity towards different customers & markets. This helps in avoiding cultural blunders when developing new products. If GM had Mexican engineers in its team in 1970's - it could have avoided the 'Chevy Nova' branding blunder.

How diversity helps in creating successful innovation?

We know that diversity can help innovation, but can diversity help in successful innovation?

To answer this, we need to understand the word "success".

In simple concepts of economics, success is maximizing the increase in economic output with minimal increase in inputs. Where the economic inputs are capital & labor, and output is sales revenue.  This basic principles explains why governments and companies like to increase  spending on education and R&D.

Economic success through diversity has three distinct aspects:

1. Synergy from different combination of ideas
2. Enhance Organizational Efficiency
3. Increasing corporate profits

Synergy of Ideas

Diversity brings in different perspectives and different ideas and these ideas can be combined in many ways. Diversity helps pick the right combination of ideas that can address different markets. For example, at EMC, two teams of engineers developed two products - Atmos, a cloud storage system and Smarts a network management software. Another team saw both the ideas and saw value in combining the two products that enhances the value of Atmos. The new idea did not cost much - but the value was very high.

Enhance Organizational Efficiency

Diversity also improves organization efficiency in many subtle ways.

1. Easier to attract talent.

Having a diverse workforce will help attract talent - which lowers cost of hiring & helps towards innovation. 

2. Management Processes

People from different cultures bring with them different management processes and techniques. 

3. Understand market requirements & help enter new markets

People who share the same cultural background as the customer will understand the needs and nuances of the market better.

4. Improve customer service.

Better understanding of customers leads to better quality of service

5. Improves investment climate.

Diversity in the management & leadership levels will make it easier to attract capital from different markets/investors.

Overall, diversity helps lower the cost of operations. This helps improve operational efficiency.

Increasing corporate profits

The big benefit of diversity is that when innovation projects are well managed, it helps increase market size, lowers costs of development and can increase revenue in a big way. With proper management, diversity can be used to increase corporate profits & shareholder value.

Closing Thoughts 

The globalization of business has created a hyper competitive and a complex business environment. To be successful, companies now need to create new products and services while lowering the cost of development. The best way to do that is to have a global, diverse workforce.

A diverse R&D team is a necessity for innovation and to develop global business strategies. Having multiple voices will lead to new ideas, new services, and new products, and encourage out-of-the-box thinking. Today, companies no longer view diversity and inclusion efforts as separate from their other business practices, and recognize that a diverse workforce can differentiate them from their competitors by attracting top talent and capturing new clients.

Innovation provides the seeds for economic growth, and for that innovation to happen depends as much on collective difference as on aggregate ability. If people think alike then no matter how smart they are they most likely will get stuck at the same locally optimal solutions. Finding new and better solutions, innovating, requires thinking differently. That's why diversity improves innovation.

Another Mega Merger Fails

Today’s business headlines screams: Alcatel-Lucent chairman, CEO to resign

And I say – “Another one bites the dust”

Mega mergers often fail to deliver value. Ever since I started watching the M&A activity, Almost all the mega mergers have failed to deliver value for the shareholders and the deal makers – the CEO of the acquiring firm is always forced to resign when the merger fails to improve share holder value.

To understand this better, just look at the history of recent mega mergers:

• HP – Compaq: Hewlett-Packard top executive ousted
  
• Daimler-Chrysler: Daimler and Chrysler to split up
  
• AOL-Time Warner: Case accepts blame for AOL-Time Warner debacle
  
• Merger of Deutsche Bank and Dresdner Bank fails
  
• Federated-May
  
• Wells Fargo – First Interstate
  
• AT&T – NCR

Also see:

• The Dubious Logic of Global Megamergers
• The impact of mega mergers on stock performance
• After Back-Slapping Wanes, Mega-Mergers Often Fail
  

Global Corporations & Product Positioning

Last week, there were two news articles which caught my eye.

One was in Wall Street Journal on Levi Strauss: “Levi Strauss is retooling its signature button-fly 501 jeans so that they will have the same fit in each of the 110 countries in which the company says they are sold.”

The other was on Business Week on McDonalds: "The brand position is different in different parts of the world," he says. In the U.S., customers tend to eat on the go, and around 70% U.S. sales come from drive-throughs. Europeans prefer to linger. "In Europe it's more about the experience," he says. "It's convenient and a destination place at the same time."

To make the Golden Arches a place where Europeans want to hang out necessitated a major design overhaul. Hennequin, as French country head, refurbished the chain's outlets there, and he was tapped to do the same across the 40-country-strong European operation. He created a McDonald's design studio outside Paris to come up with a range of eight design packages from which franchisees, who account for 68% of European outlets, can choose.

Both companies are global leaders in their fields; both companies cater the general public – with lifestyle products and now both companies are moving in different directions of globalization with their products. McDonalds is becoming more local in Europe – by differentiating from the US operations and localizing the offerings to meet European tastes. While Levi Strauss is moving in the opposite direction – by developing a standardized product across the globe.

Interestingly, the financial results of these two companies are also moving in opposite directions. Levi Strauss is seeing a steady decline in income – from a peak of $7.1 billion in 1997 to $4.4 billion in 2007, while McDonalds is showing a steady increase in revenue in Europe.

This article is not a debate of localization of products Vs Globalization of products. Instead, I will concentrate on the fundamental principles of product positioning in a global economy and talk about the choices product managers have when positioning products for different markets.


Product Positioning

Product Managers have several choices in positioning a product in a global market – by varying two levers: Price & product localization (or product customization), which is illustrated below.

Products can be positioned anywhere in this two by two matrix, but in each market (or geography), there can be only one price-localization point for a particular product. The same product can be positioned differently in different markets. For example, Levi Strauss can position its signature button-fly 501 jeans at different price points in different markets or it can choose to have a standard global price.

Note that Levi Strauss has the option of placing its 501 fly button jeans at different price points – and that translates to different value points in different markets. For example if the Jeans is sold at (say) $40 in the US – it is perceived as Value-for-money, while in Malaysia, the same product may be priced at $30 and be perceived as a premium product.

If one were to opt for a global product, then the product pricing & positioning in different markets will have to be carefully planned – in view of the perceived value the product offers to customers. If the value positioning is wrong in one geographic market, then it has serious implication to other markets – in terms of brand reputation. Similarly, for a global product, if the pricing difference varies greatly between two geographic markets, then customers will choose the bypass the organized supply chain & procure the product from the lowest priced geography; which disturbs channel relationships. To illustrate this, if Levis Strauss prices 501 jeans in the US at $24, and prices the same in India at $2100 ($ 50), then customers in India and/or retailers can choose to buy it from the US rather than in India.

Localization also has its pitfalls

McDonalds for a long time followed a global standardization policy: All its restaurants serve similar food – fast, clean and good food. All the restaurants have a standard ambiance and is value positioned in the value of money segment. McDonald’s also establishes its global standard for developing its supply chain – from procuring raw materials to distribution.

However, in the recent times, McDonalds is becoming more open to experimentations and is localizing its product offerings – not just the menu, but also the ambiance and supply chain.

Successful localization for a global company is often difficult as it runs against the standard established practices, also the knowledge gained in one market cannot be used in other markets, and lastly the success of the local operation becomes tightly tied to the local people who run the local operation.

Implications for Technology Products & Companies

High tech products or engineering products such as Aircrafts, Computers, software, Medical equipment, chemicals etc are often positioned as a global product. The product is sold in only one format all over the world and at a same price.

However, the differences in taxes in various markets cause a price difference – which in turn result in “Grey” markets. Intel microprocessors for example is available at a lower price in the grey market, while the same product is available at a higher price through authorized dealers.

Similarly, Dell Laptop Dell XPS M1350 is available at:

US$999 in the US
US$1234 in UK
US$1140 in India

NOTE: Pricing is for an identical configuration in each of the three countries

This price differential makes people buy the Laptop in the US – and for use in India.

The same story is true for HP laptops as well.

Another downside of having a global standard pricing is that it results in diminished demand in other markets. For example most of the enterprise software – like Oracle 11i, SAP etc are sold at a uniform price – a price based on the US costs and demands. This leads to reduced sales in Asia, where customers prefer to use a lower cost alternative such as MYSQL or RAMSOFT ERP etc. In case there are no alternatives, businesses in Asia will prefer not to use such expensive systems – and may use increased labor instead or use it more judiciously. (or may simply choose to use a pirated version)

The trend is however changing. Asian companies have learnt to bargain harder and thus procure the same product at a huge discount. (See Reliance telecom story). Software companies have started the practice of discounting on the price when selling to Asian/African markets. This results in having a global product priced differently in multiple markets. (Discounting is mainly done in-order to maximize marginal revenues)

Many companies have started (albeit slowly – and half heartedly) to localize their products. Microsoft Vista & Microsoft XP is a good example of localization. Product positioning of Microsoft Vista will approximately look like:

Similarly, product positioning for EMC2 SMARTS will be like:

Closing Thoughts

Product positioning in multiple markets is a challenging task. In the initial phase of globalization, companies typically tend to follow a “global product” strategy. In the next phase, companies try out various localizations to increase sales and market share. As the companies evolve – they develop new set of global products from local products – “Glocal products” which is a mix of localization for the global markets.

Consumer product manufacturers such as Unilever, P&G, Toyota are good examples of such companies – they have few global brand names – but all of them have a localization content.

Product managers can use the two-by-two matrix to plan their product mix and then position their products in multiple markets.

Managing Cultural Integration post M&A

Year 2007. Indian companies have gone on an acquisition spree. According to Dun & Bradstreet, 243 M&A deals were concluded in the first 5 months worth a staggering $46.8 billion!! Most of these were acquisitions overseas by Indian companies. And the rate of these M&A activities shows no sign of slowing down.

Compared to the year 2006, the total value of M&A deals was a miserly $20.6 billion.

Local economy is driven by robust growth, buoyant demand & a strong surge of confidence. This effect is seen in increasing FDI inflows, resurgent stock market and long term Indian investors. Thus the increased inflow of capital and strong growth prospects is driving Indian companies to acquire companies abroad.

Indian companies have so far been able to manage these acquisitions quite well. But this time the challenges are bigger and there is lot at stake. The biggest challenge facing Indian firms after acquiring companies in other countries is that of Integration - more specifically Cultural Integration. As Indian companies are now acquiring global companies such as Corus Steel, Novelis, Flag Telecom etc., the challenge to integrate different work cultures is a daunting task.

Just to illustrate, long time Corus employees in UK were aghast when they heard of the possibility that an "Indian" company will acquire them, and they will have an Indian boss - whose name they cannot pronounce. Similarly, Novelis employees will not be able to pronounce the name of their new Chief - Kumaramangalam Birla!

Under such circumstances, think about the challenge of cultural integration.

To make these acquisitions work and deliver results as per share holder’s expectations, acquiring companies must overcome the challenge of cultural integration.

Why is Cultural Integration such a Big Challenge?

Cultural Integration is never easy. Even global companies struggle with it even now. The reasons why cultural integration is such a huge challenge are:

1. Cultures build prejudices which is often influenced by history. Most Europeans & Americans view India as a third world country, poor country and as a backward country. This distorts the current reality and people have difficulty to come to terms with the acquisition.
   
2. Corporate culture is an amalgamation of: National culture, Religious culture, and professional culture. These cultural dimensions are often invisible - but ever present & relevant.
   
3. Need to balance the local needs and the global needs during the post-acquisition period. These needs may be the local community demands, business demands, investors demands etc.
   
4. Need to meet the high expectations of the share holders post-acquisition. Often times these acquisitions are financed through LBO or debt, and this needs a good cash flows to sustain. In addition, the management will be under pressure to show the benefits of acquisition as promised before the acquisition
   
5. Lack of Experience in dealing with a different culture. This applies equally to Indian & foreign company managers. Most managers lack the cross-cultural skills needed during the post acquisition integration.
   

Changing the HR paradigm

For a long long time in India, the concept of human resource management meant only Industrial Relationship management. Indian HR Managers became experts in dealing with unions, all IR related issues and today they have to deal with this complex challenge of cultural integration. For most organizations, cultural integration is a new challenge never before seen in India.

How to overcome this Challenge?

Cultural Integration is not an easy challenge and therefore there are no simple answers or no single correct answer. The options of all available tools and solutions is just as large as the problem itself - and that makes it even tougher to overcome the challenge.

The task of cultural integration must be headed by "two-in-a-box" leadership, where one person from each company are assigned equal responsibility and they work in a team. For example in Tata-Corus merger, there must be two persons who share the responsibility for cultural integration.

• Identify the problem
  
  Based on my experience, I would say that if the company’s HR managers were to identify the scope and dimension of the challenge, then they have 25% of the solution. I often say that correctly defining the problem itself is the biggest challenge - once the problem is correctly defined, finding the solution is mearly an exercise of logical analysis.
  Identifying the scope, the nature and the dimensions of the challenge will require in-depth survey & analysis of employee behavior, attitudes and responses. This is best done by a third party consultant(s) who is seen as a neutral entity by all employees.
  
  
• Develop common policies & procedures for the combined organization
  
  Policies & procedures of the newly combined organization must have a great amount of commonality - but without imposing it forcefully on the employees. By this I mean, the new policies/procedures must be developed which takes both sets of employee’s interests into considerations and avoid imposing the policy/procedures of the acquirer company on the acquired company. The new policy & procedures must be accepted by both sets of employees.
  
  
• Build a cultural integration Roadmap
  
  Cultural integration will take a long time - often several years. It is therefore essential to have a roadmap for this integration which shows important milestones and accomplishments. Some of the milestones & accomplishments can be: Cross-Cultural training, Success of Inter-company transfer employees (rather % success of the transferred employees), measurable aspects such as employee behavior & attitudes towards coworkers from the "other" organization, level of cultural awareness etc.
  
  
• Hire a Cross-Cultural Consultant
  
  During cultural integration, it is important to be seen as fair and reasonable by all employees. Often times, existing company managers are influenced by the past records & history and their decisions cannot be guaranteed to be fair or neutral - more over there is an element of mistrust by one set of employees. It is therefore very important to hire an outsider - a neutral third party consultant to deal with sensitive issues.

The main advantage of having a third-party consultant is that they bring in the expertise needed to carryout the cultural integration. Consultants have the expertise in developing company policies, establishing procedures, conducting survey’s, analyzing these survey results, conducting the required training's etc., Due to their high level of expertise, employees often have a high regard to these consultants and are seen as neutral arbiters in a conflict situation. (which is often in the early days of acquisition)

Closing Thoughts

Benefits of global acquisitions are HUGE, and so is the risks. To make these global acquisitions succeed, one must overcome the challenges of cultural integration - which are complex and hidden.

In this article, I have just highlighted the main issues of cultural integration involved in a global M&A. There is lot more to it and I can keep on writing about it. If you need more information, please feel free to contact me at - kvarun@hotmail.com or arun@ninedots.in

Cultural Diversity & Affirmative Action

Infy turns to more states for affirmative action for SCs
India's Affirmative Action Rocks the Boat

Private companies in India are slowly waking up to the new corporate responsibility - Affirmative Action. Public sector in India and the government has been promoting affirmative action in form of forced reservation through the ‘quota’ system for decades. But only now, private companies have started to look at taking an active step towards voluntary affirmative action.

A voluntary affirmative action will be tough to manage for most Indian organizations. To begin with, most organizations are not exposed to the concepts of affirmative action - most people confuse affirmative action with reservations and have a negative mindset towards it. Given the recent public backlash to reservations at IIM & IIT, the private sector in India can expect similar backlash from their own employees to affirmative action. In addition, most employees are not aware of how to handle & manage affirmative action. Almost all Indian companies do not have policies and procedures to handle affirmative action. There is virtually no grievance cell to handle any discrimination cases and the list goes on. Implementing affirmative action implies a radical shift in company’s policies.

Thus implementing a voluntary affirmative action will have a deep impact on Indian organizations. It is therefore very important to understand the how people react to cultural differences - before embarking on a plan to improve cultural diversity via affirmative action.

Reactions to Cultural Diversity

History shows that throughout the entire human civilization has repeatedly demonstrated four distinct reactions to cultural diversity:

1. Genocide
   
   Genocide represents that the society is willing to kill other human beings who are culturally dissimilar with that of the society. Genocide is usually the first animal instinctive reaction to diversity, or the most primitive of the human reaction. As the society advances and develops, the society realizes that Genocide is not a good option - and the reaction evolves into segregation.
   In India for example, there has been several examples of Genocide. By Genocide I mean demonstration of extreme anger or discomfort or even killing. In an extreme cases, whole groups of people may be killed. In India, there has been no recent instances of large scale murders - but caste based massacre is quite common in rural India. In office environment, an example of Genocide may be that of extremely public demonstrations - strikes and public intimidation of the minority groups.
   
   
2. Segregation
   
   Segeragation is the isolation of minority group within the organization. Large organizations will often have several groups of people - with each group having its own cultural identity.
   
   Segeration in the corporate world can take several subtle forms - such as glass ceiling, blaming, racial slurs etc. In India however, segregation is still common. Though caste based discrimination has reduced, but the society is yet to evolve into a truly integrated one. Segregation is more prevalent in the rural areas and in areas with low education standards.
   
   Segregation in form of "Glass Ceiling" is also prevalent all over the world - especially at the higher end of the organization - i.e., senior management levels. India is no exception to it. Almost all ~100% of Indian CEOs are from the upper castes.
   
   Segregation is the second stage of social evolution. Once a society learns that it cannot destroy the ones which do not conform to its norms, the society will tolerate it - but will maintain an arms length distance.
   
   
3. Assimilation
   
   Assimilation is next phase of social evolution. This occurs when the society learns that it can no longer afford to keep the cultural minority group segregated - it will try to assimilate it - i.e., try to make the minority group accept the norms and practices of the majority group and see to it that there are no/little cultural differences.
   
   France, in year 2006 passed a bill banning all public display of religion. This is a perfect example of forced assimilation.
   
   In the corporate world, the power to assimilate a minority is so immense that it usually succeeds at least at the surface level. For example, In US, all holidays are centered around Anglo-Saxon culture. People from Asia, Africa are forced to accept that. Hindus, Buddhists & Muslims do not have the option of taking a different set of holidays which are in-line with their religion. In India, corporate too have the same problem.
   
   Normally assimilation will be welcome if the minority group is really small or negligible But as the population numbers of the minority group grows, there will be resentment. But this resentment will be demonstrated by small gestures - such as celebrating their local cultural events publicly etc. For example look at how the Irish Society in the US displayed its culture during St. Patrick's day during late 1800’s. Or see how Indians in Silicon Valley or Indians in London display their culture during Divali.
   
   
4. Integration
   
   Integration is the final and the most evolved phase of the society. In this phase, both the majority & minority groups will have build a mutual respect & trust. This takes a lot of efforts from both sides. But once it is achieved the society is very stable. In Corporate India, several castes and religious groups have been successfully integrated. But these are mainly forward castes, and a few backward castes. Getting to a total social integration in India will take some time.

Closing Thoughts

Corporate India is now embarking on the inevitable, irreversible path of social integration by means of voluntary affirmative action. Company managers - especially HR must tread cautiously. Organizations must research the possible implications of voluntary affirmative action and then develop plans to mitigate any adverse reactions before implementing the plans.

Voluntary affirmative action is not enough, companies must make plans to integrate the entire organization in a phased manner - and have plans, procedures and practices inplace to avoid any segregation. Mistakes in this process will lead to lots of negative publicity, low employee morale and high attrition - and this will inevitably lead to losses.

Indian corporates can look at some of the best practices at the Tata Group, Wipro and see how these companies have fared at social integration.

Clash of Cultures - Greg Chappell Quits

Today most Indian Newspapers carried the headline "Chappell Quits as Coach". While this was not a surprise for most Indians, there is a very good lesson to learn for expats who are working and living in India.

Greg Chappell was appointed as coach of Indian Cricket team in 2005. Since then he has been through one big roller-coaster ride. As a coach he took Indian cricket to new heights - a world record of 17 wins in a row - while chasing, first ever test series win in West Indies, but he also had his share of lows - a disastrous tour of South Africa, and an early exit from the world cup 2007.

Greg Chappell, an Australian was appointed as coach of Indian team with a certain expectations in mind - mainly to infuse the Australian sense of professionalism into India cricket. Greg Chappell was ideal for this job. He has an excellent record as Australian captian and is known to be tough coach. Greg Chappell has all the qualities of a good coach and he had demonstrated success with Indian team - but in the end he failed to understand the Indian culture and that caused his downfall.

Indian culture is vastly different than the Australian culture. Greg Chappell tried to enforce the Australian norms on performance on Indian team - which was very much resented by the team members and the public. To begin with, Greg asked Ganguly to take a break - and use the time to regain his form. The Indian Public and Ganguly reacted to this suggestion as unwanted interference by the coach. Public protested at Greg Chappell when he visited Kolkata - and the decision to drop Ganguly did not go well with a section of cricket adminstrators and public. ( though the decision to drop Ganguly was eventually proved right, Indian public still does not appreciate it)

After the defeat in cricket worldcup, the actions of the coach came under severe public review - and Greg's comments on Senior members of the team did not help either. In the end, Greg Chappell had to resign.

Admist all this, there are a number of lessons for other expats working in India. Some of these lessons can be summarised as:

1. Power & position/status is more important than performance.
   Indians tend to respect power/position/status of a person more than his current performance. But to get that position, one must have displayed great performance in the past.
2. Continious back-to-back failures will not be tolerated for long.
   Indian tend to forget failures only when it is followed up with a big success. Continious failures will not be tolerated - this applies universally to all Indians and foreigners. One can also say that Indians can tolerate a few failures - but one must show success. Indians do not tend to discriminate between natives and foreigners when it comes to rewarding/punishing success or failures.
3. Do not criticise others in Public
   This aspect of culture can be seen throughout the history. Chanakya has documented this feature as a key political techique in his book: "Arthashastra". One must take care not to criticise others in public - Indians will tolerate criticism if it is done in private. But any form of public criticism will be met with a brutal backlash.
4. Indians aspire to be world leaders and will not tolerate any discrimination
   People from US & Europe in particular tend to think of India and Indians as third world country and as a backward nation. Many times this thinking is reflected in their actions and words. I recall once an European said to me "I will be visiting your wretched nation in April". Making such statements will be meet with deep resentment - and the person who made such a statement will be "blacklisted".
   As a rule of thumb - never criticise India or anything related to India when speaking to an Indian - even if it were to be meant as a joke.
5. Shower praises when it is deserved
   Indians tend to build good relationship with people who praise them. So when a person has done a good job reward it with a praise.

Greg Chappell was an excellent coach, but he missed reading the finer points on Indian culture and that caused his downfall. In the end, It is just another story of an highly accomplished expat failing in a foreign location.

How to Avoid pitfalls in Cross-Cultural Negotiation

My work in International sales, marketing, and project coordination has given me rich experience in working with people from other cultures. Cross-cultural communications has always been a tricky subject - particularly when there is business negotiations going on between two parties who are from different cultures.

Business negotiations is always a delicate business - even when the parties are sitting across the table and are from the same culture. The complexity of negotiations increases when the parties are from different cultures. But when both the parties are negotiating via electronic media - the challenges are immense often putting the negotiations at risk.

Cultural Differences are Invisible

Recently I had written an article on Challenges of Multi-cultural Teams, the problems encountered in managing multi-cultural teams are magnified exponentially when it comes to business negotiations. The problems of parochialism and ethnocentric attitude come into play without people noticing it during negotiations. To illustrate this consider the following example:

A group of Texans in Bangalore who were here to setup their R&D center in Bangalore, India. We started discussions of working across cultures. One of the senior managers in the group was quite unimpressed and he went on saying that cross-cultural issues does not bother him - "I am not worried about working with Indians." He said, "I have lots of Indians working in my group back in Austin, and there has been no cultural issues in the past." Since I lived in Austin, Texas and went to University of Texas, I knew it was better not to rebut his statement - but at a later time, I gently asked him how many of his Indian colleagues in Austin does he count to be his friends? How many of his Indian colleagues participate in the company’s annual Christmas parties? These questions slowly woke him up to concede that there were some cultural issues but they were not affecting the organizational work. I then slowly asked him to think about the challenges he has had as a project manager when dealing with an Indian who is fresh out of college, and then asked him to imagine the set of problems he will have to face when that person is sitting several thousand miles away in Bangalore? These questions made him aware of the challenges he will have to face when he has to manage a team of engineers who are working in Bangalore. Then I asked him to imagine the problems he will have to face when he has to negotiate from Austin with an Indian vendor in Bangalore.

Cross-cultural negotiations are always very challenging. Unfortunately, people do not realize these challenges before starting the negotiations - mainly because cultural differences are subtle and are often invisible.

A Case study

Harry in Austin and Harsh in Bangalore - both speak excellent English. Harsh studied in California, watches NBA and listens to rock music. All this makes Harry think that Harsh is just like any other fellow American - and starts the business negotiation right away. After few rounds - the negotiations come to a screeching halt due when Harsh decided to take a break during the negotiations.

The problem? Both parties had different perceptions of the negotiation process itself and misinterpretations of the other’s behavior. For Harry, negotiation is about pushing through a quick deal. When Harsh took time - Harry became increasingly impatient and become more forceful in the meetings. Harsh interpreted this with suspicion that Harry was pulling a fast one on him - therefore he needed some more time to study Harry’s proposals.
Though the negotiations concluded successfully, it took a longer time than Harry initially anticipated. This negotiation example shows how cultural differences are often invisible for both the parties and it affects the negotiations itself - when both the parties ignore the cultural differences.

Negotiating Across Cultures

There is no right way or no perfect way to overcome the cultural differences in negotiations. International negotiations are always a delicate business - requiring skill, tact, and diplomacy. Here are some tips that can help one negotiate with a foreign counterpart.

Tip-1: Take time to setup the negotiation process

This step is very important when you are negotiating with a new partner. People in other cultures have a standardized ritual process for all negotiations - particularly in the initial phase. Indians for example, tend to focus more on confidence building during the initial phase. Chinese on the other had have to establish a relationship before they start the serious negotiations. Americans would go over the main objectives in few minutes and then start off with the main negotiations. This approach is however not appreciated by other cultures. The best way to start negotiations is to start with explaining each one’s negotiation process. Take time to explain your process - and ask the other party if they understand it & encourage them to share their process. This helps to build a common ground for all negotiations.

Tip-2: Understand Expectations

In any negotiations parties involved will have different expectations - both sides would like to win but they will have different perceptions of victory. In cross-cultural negotiations it is difficult to guess other side’s expectations. It may make sense to talk about the expectations of both sides at the beginning of the negotiations - but fall short of disclosing their BATNA. Take time & effort to understand the other side’s expectations. Indian, Arab, Chinese and Japanese negotiators do not really like contentious style of negotiations - which is often perceived as "I win - you lose" style negotiations. Instead they prefer a more harmonious "problem solving" approach. It would be therefore useful to frame the negotiations in a problem solving mode when dealing with Asian negotiators and explain that is the approach to them. On the other side, Asian negotiator may assume that the American negotiator will adapt a contentious style and will prepare accordingly. So it will be better to explain the approach in the beginning itself.

Tip-3: Explain the decision making process

Decision making is a complex process in most cultures. Unlike in American culture where the decision maker will be at the negotiation table - Asian negotiators may not be the final decision makers. In Indian and most Asian companies, the final decision maker would be different and may not even enter the negotiation process directly but will be watching and monitoring the negotiation process closely. It is important to know who the decision makers are, and how decision will be made - and on what criteria. So take the initiative to explain the decision making process openly to the other party and encourage them to do the same.

Tip-4: Manage the negotiation

Multi-country, cross-cultural negotiations often take a long time. In the process the negotiation stalls due to various reasons. When issues are being exchanged or for seeking more information etc., the negotiations may come to a halt because one of the parties may be taking time to verify or find information. And at times negotiations come to a halt when one of the parities get distracted by other business needs. In all such cases, the best solution is to manage the progress of the negotiation in a methodical manner. Ideally it will be best when one person from both sides take up the role of project manager for the negotiation process and manage it like a project. This will prevent the negotiation from getting off course or getting stalled for a prolonged period.

Closing Thoughts

Cross-cultural negotiations are always tricky. In most cases parties involved in the negotiation process will not have a good understanding of the other’s culture and hence the negotiation process starts off with a set of false set of assumptions and if those assumptions are not tested, the negotiation process will fail. It is therefore a good practice to verify those assumptions and make things transparent and clear at the very onset of the negotiation process and then work towards successful conclusion.

Also see:

Improved Cross-cultural Communication Increases Productivity
Nature of International Negotiations
Hidden Aspects of International Negotiations
International Negotiations - Impact of Location on Business Negotiations
Preparing for Negotiations
Negotiations as Core Business Competency
Negotiating with Tough Customers - "Take it or Leave it" Situation
Challenges of Working Across Cultures

Global Retail Giants are Eager to Enter India

Recently I went to a movie in Bangalore. It had been quite some time since I did that - for the fact that I was in London. In the last 6 months so many things have changed in Bangalore - that I was surprised by all the new development. Old buildings have been torn down and new one being built all the time. And these new buildings are housing new shops, offices - that I had seen in the US & UK. A walk in a shopping Mall in Bangalore reveled so many international retail stores - Marks & Spencer's, Swaroski, Lewi’s, Bose, Nike, Reebok, Sony, D’mas, etc. All these started operations in last 2-3 years. But the real surprise is the fact that 100’s of global retailers are eager to enter India.

According to AT Kerney’s report, India is the most favored destination for global retailers. AT Kerney’s Global Retail Development Index 2005 puts India at the top.

India Offers a Vast Opportunity

The sheer size of Indian retail segment - almost $1 trillion! - and growing at 15% is exciting enough for all global retailers. Wal-Mart recently entered into a JV with Bharti and will soon be setting shop in India. Other retailers waiting on the wings are: TESCO, Carrefour, IKEA, Target, VF brands, etc. The rush to enter India intensified in 2006, when government opened up Foreign Direct Investment in retail sector. Added to this is the fact that Indian consumers are under served by the existing retailers. A vast portion of Indian population lives in Villages or non-metro cities - which are poorly served. This implies that almost 70% of Indian consumers do not have access to quality retail markets - And that segment is worth more than $350 Billion.

Opportunity has Road Blocks too

However, foreign retailers are subject to host of regulations. For example, only single brand retailers can now own upto 51% of the equity - this forces them to enter into JV with a local partner(s). Large format discount retailers - like Wal-Mart, Sears, Target are still not allowed in India. Yet global retail giants are eagerly waiting. Wal-Mart had setup two offices in India - mainly to study the Indian market. TESCO has setup an office to source from India and to learn the local operations.

Another big problem in setting up operations in India is the availability of real estate space. Traditional Indian shops have been small ~ 1000 sq. feet. Many of the inner city buildings are old & depilated and is unfit for global retailers. This is forcing retailers to build in the outskirts of the city and hope that people come to them. Metro built huge stores at the edge of the city - these stores are in Cash-and-carry format catering to small shops. Setting up new super stores on outskirts of the city is not easy either. Tax laws in the country and social pressures have caused fragmentation of land holdings. So if one wants to buy a large plot of land, one has to negotiate with hundreds of land owners - which will take time and endless negotiations.

The next problem in setting up organized retail operations is that of supply chain logistics. India lacks a strong supply chain when compared to Europe or the USA. The existing supply chain has too many intermediaries: Typical supply chain looks like:- Manufacturer - National distributor - Regional distributor - Local wholesaler - Retailer - Consumer. This implies that global retail chains will have to build a supply chain network from scratch. Which might run foul with the existing supply chain operators. In addition to fragmented supply chain, the trucking and transportation system is antiquated. The concept of container trucks, automated warehousing are yet to take root in India. The result: Significant losses/damages during shipping.

A surprising challenge for Organized retailers - especially global retailers in India is shortage of talent. Yes, for all the population that exists in India and for all the shops, India has a serious shortage of experienced people resource for retailing. Number of people experienced in managing complex supply chain, people who have basic merchandising skills, people with store planning skills are very few. As a result, most of the existing retail stores have poorly organized merchandise, inadequate inventory, and excessive inventory - leading to lost sales and increased capital requirements. (see: Increasing Sales in a Retail Store - An Indian Context ) Global retail giants will have to spend substantial resources in terms of time & money to train local workforce and bring them on par with their global standards.

The Hidden Challenge

Lastly, there is a HUGE hidden challenge. The challenges mentioned above are just the tip of an iceberg. The biggest challenges are well hidden: and that is cultural differences, political challenges, policy regulations, and ethical standards.

Indian consumers are different. The cultural differences have to be accounted when designing the store, setting up the merchandising mix, servicing the customer in the store etc. These cultural factors come in several flavors depending on which part of India you are looking at. Writing about all the cultural factors that pose a challenge to global retailers is beyond the scope of this article. I will write about them in future. The cultural nuances of the Indian consumer is so complex that it cannot be documented in a blog - instead one needs to write a whole book on that topic.

Political challenges are something which the global retailers will have to deal with. India is a federal state. With a national government at the center and state governments ruling the states. This implies that there are multiple sets of political and governmental clearances are needed for retailers. Having a national license from New Delhi will not suffice. One also needs clearances from various state governments, city corporations, district administration etc. Negotiating this for a global retailer will prove to be a challenge. For example, POSCO - Korean steel manufacturer found out to their dismay - that having a Government clearance is not enough in India.

Another challenge for most retailers is that of ethics. Global companies tend to have a different ethical standards - which may be against giving bribes or supporting local political candidates etc. But adhering to these standards in India will surely cause lot of problems to their local operations. How companies go about resolving this problem is a serious question. Many companies therefore prefer to have a local partner who can take care of these issues - but this has some serious implications.

India is a socialistic democratic country with a strong labor union movement. Global retailers will have to deal with the concept of unions. US based companies such as Wal-Mart has a strict policy of no unions in their company. However that policy will be severely tested in India in the long run. Local unions will not impose themselves on the global retailers in the beginning - but over a period of time, unions tend to creep in. Even in ITES/BPO sector, unions are trying to muscle their way - but is being resisted by the government and investors.

Hidden Competition

On the first appearance, the fragmented Indian retail sector looks like it may not offer serious challenge to the global giants. But the truth is far from it. Indian retailers are a resilient lot and will offer intense competition - against which the global giants will find it tough. It will be more like an army of ants bringing down an elephant. To understand this consider the case of Metro - the German retail giant in India. Metro entered India in 2003 with a superstore format. Metro wanted to sell to other small shop owners/retailers on a cash-and-carry basis. Initially Metro was able to give a significant price discount when compared to other retailers - but soon that advantage disappeared. Local retailers are now able to beat Metro on price on most items.

Closing Thoughts

India offers the greatest opportunity for retail business - But it also offers the most complex challenge for them. Global retailers who have succeeded abroad in multiple countries will struggle in India. But the size of Indian opportunity is so much that global retailers will take their chances. Success in India will depend on the local partners, consultants and executive leadership.

Also See:

Trans-cultural Business Failure: Wal-Mart Exits Germany
Increasing Sales in a Retail Store - An Indian Context
Wal-Mart is in Trouble in UK too!
Partnerships for Increasing Business Opportunities

Technology for Collaboration Across Cultures

In my recent articles I had written about the challenges involved in working across cultures. The challenge of work collaboration across cultures becomes more acute as organizations grow and have operations across multiple geographies. Most companies respond by deploying various collaboration tools (mostly software tools). While these tools are essential to improve collaboration, the value of these tools will not be realized fully unless these address the complete needs of the organization.

For example at my previous firm, the initial challenge of collaborating across Sunnyvale office and Bangalore office was met with VoIP, Video Conferencing, Internet, Intranet, Shared drives and a Project workflow Management software. While these tools were useful in the beginning, but as the company expanded operations in Taiwan and Israel these technologies were not enough. We found out that people in Taiwan & Israel were not using these collaboration tools to the extent that was needed to maintain a standard level of collaboration. To get over this problem, the company deployed a knowledge portal and several other region specific Internet portals to help in Taiwan & Israel.

The Challenge

Collaboration across cultures is always a challenge. With the advent of multiple collaboration tools, collaboration has improved - but this is only a temporary reprieve. As companies grow in size, the need for collaboration increases and so does the complexity of the joint tasks. As the organizational complexity increases, companies tend to do one of the following:

1. Deploy more tools and invest in newer collaboration tools
2. Believe that existing tools are sufficient and refuse to invest in additional collaboration tools

Often times companies respond to this challenge by deploying more software, more tools and technology. Deployment of multiple tools - improves collaboration but beyond a point, increasing technical solutions does not promise a similar return on investments. The law of diminishing returns will apply to organizations - and the cost of maintaining these collaboration tools will exceed the return on these investments.

In my experience, Silicon Valley companies tend to favor the first option, while rest of the world tend to favor the second option.

Recently, I was involved in a case where a leading Telecom company in UK had deployed 23 web portals - all to do the same job. After some prodding, the program director decided to optimize this into a set of 6 web portals. This type of rationalization is very rare in the industry and the reason for it is quite obvious - there is no single department or a group which deals with improving cross-border, cross-site, cross-cultural collaboration. Most of the collaboration tools were deployed on ad-hoc basis and once they were deployed nobody ever reviewed its value or its performance.

At the same time, there was another IT services company serving the largest British telecom company - which had serious operational issues because the company had not invested in proper collaboration tools. This was the 7th largest Indian IT services company with more than 15000 employees spread over 6 countries - and the company had very few collaboration tools to talk about.

Few companies deploy collaboration tools on ad-hoc basis - any tool to overcome the current problem. This is done by individual groups and is independently of the corporate planning. The result is reinvention of the wheel, repetition of work and an endless list of collaboration tools which are rarely used. This leads to excessive investments and lower ROI.

Most companies are usually very reluctant to deploy collaboration tools - and will invest only if it becomes a critical bottleneck. Indian IT companies, manufacturing companies typically tend to work this way. Companies are scared to invest in things on which ROI is easily measured. As a result, these companies do not collaborate very well - resulting in poor performance, disjoint efforts and wasted resources.

In both cases the results are not optimal - thus resulting in lower ROI. The root cause for this type of problem in both the companies is surprisingly common. Companies do not have a plan or a process to review its collaboration needs and then develop a solution that is geared to meet those needs.

Current Collaboration Tools in a Glance

Today, there are several collaboration tools available for any company. Some of these tools are widely used such as Telephone and Emails etc. The following table lists the current set of tools that can be used.

Phone Based Tools

1. Land lines with International dialing
2. Cell Phones with SMS, ISD and email ( blackberry)
3. Voice mail on land lines & Cell phones
4. VoIP: Connect remotely or direct dialing
5. Video Conferencing
6. Tele-Conference facility
7. Voice to Text transcription
8. Digital voice recording
9. Voice to Text Transcription services
10. Video Broadcasting

Internet Based Tools

1. Web based Email
2. Shared Drives & mapped drives
3. Microsoft Net Meeting or Web Ex
4. Instant Messaging
5. Microsoft exchange or Lotus Notes
6. Company Web Pages
7. FTP gateways & servers
8. Knowledge Databases or portals
9. Project workflow manager
10. Issue Tracker
11. Secured Internet Portals
12. Microsoft sharepoint services
13. CVS or revision control tools
14. Podcasting
15. P2P networks
16. Intranets
17. VPN
18. Blogs
19. RSS
20. Wikis
21. Online forums
22. Chat Rooms
23. Bulletin Board Service (BBS)
24. Salesforce.com or web based third party services
25. Social Networking web sites

The list of tools is ever growing. But the fact is that several tools are now available to enhance collaboration. The usage & deployment of these tools are beyond the scope of this article.

Challenges in Selecting the Right set of Collaboration Tools

Most organizations agree that they need collaboration tools, but the major challenge lies in selecting the right set of tools based on their needs and budgets. Often times, companies do not have a firm understanding of the organizational needs: Managers do not have a firm understanding of their organizational structure and organizational design, Managers do not understand the cultural differences within different parts of their organization, Managers do not understand the impact of collaboration tools on the organizational structure and employee culture.

The gaps in understanding results in either over/under investments in collaboration tools or lack of utilization of the deployed collaboration tools - which ultimately affects the nature of collaboration between various parts of the organization.

Deploying the right technology and the right tool is critical for the success of work collaboration. To illustrate this consider an example of British Petroleum. BP developed and installed a video conferencing system on all its oil rigs - this system was called “Virtual Teamwork”. Virtual teamwork stations platform stressed on the richness if the communication between and the company implemented the state of the art technologies (in 1993) to make this happen. Virtual teamwork platform consisted of Video Conferencing system, multi-media computer system, e-mail, desktop application sharing, document scanner, digitally shared chalkboards, video recording facility, groupware software - Lotus notes/domino, and Internet. Back in 1993, this was the state of the art technology. Even today, most companies do not have all the above collaboration tools in every single location.

This investment paid off regularly and handsomely. This system allowed BP experts in one location to troubleshoot problems on different oil rigs. When one of the rigs in North Sea had a problem - causing a complete halt in production, an expert from Houston was able to join the video conference and see the malfunctioning equipment visually over the video. He quickly diagnosed the problem and guided the site engineers through the necessary repairs. Without this Virtual Teamwork system, it would have cost BP lots of money - the cost of lost production was running at $150,000/day, in addition the expert had to be flown in to the oil rig on a helicopter - all this meant big savings for BP and higher operational efficiency.

Development & Deployment of Collaboration Tools

A common problem in developing & deploying collaboration tools is that the onus of developing and deploying these tools often falls on the IT department or the project managers or divisional directors. In all these cases, the people whom are entrusted with this task do not have a clear vision or strategy for their intercompany collaboration. This leads to ad-hoc deployment or non-deployment.

Often times, companies take great interest in developing and deploying a custom built collaboration tool. Once the tool is deployed, all the relevant employees are trained to use it - and then something stupid happens: forget to support the tool. As the organization grows & expands in other georgaphies, or when new employees join, they will not be trained on how to use the tool. As a result new employees or employees in other locations do not use this collaboration tool - and eventually the tool is discarded.

Another common mistake in deploying collaboration tools is that the tools are developed with only one language interface (mostly English) and the same tool is imposed on their subsidiaries in non-English speaking nations. People whose native language is not English will find the tool difficult to use and thus do not make full benefit of it. Ideally multi-site collaboration tools should have multi-language interfaces so that people from different cultures can make use of it. If multi-language support is not available, then the language used in the tool must be simple enough for everyone to understand ( if not, please provide a good thesaurus built into the tool)

Ideally, the person or department who is entrusted with this task must have a thorough understanding of the organizational needs, must understand the impact of culture on the usage of collaboration tools, account for cultural differences between various parts of the organization, account for the need for continued training and support for the deployed tools.

Closing Thoughts

Global business delivery, and global sourcing requires excellent collaboration between various business units. In the world of global outsourcing - either IT services or production or distributed production etc., the need for collaboration is now greater than ever before. Selecting the right collaboration tools is just the beginning. Deploying these collaboration tools, supporting and maintaining these collaboration tools is the biggest challenge. Often times companies fail to invest adequately for deploying various collaboration tools - and even when the company spends the money, it is not spent wisely. Companies often times fail to take cultural, language and operational issues into considerations while deploying these collaboration tools.

The key to success today is effective collaboration between various business units (this includes internal business units, business partners, and vendors). Collaboration tools are there only to help and improve the work collaboration. Without the right set of tools, the level of collaboration will never reach its full potential.

To successfully deploy collaboration tools, one needs to consider the cultural issues, organizational design, technical competence of the users, adequate training for the users and continued support of the tools.

Also See:

1. Offshoring Requires Better Collaboration
2. Collaborate to Innovate
3. Challenges in Offshoring to India
4. Challenges of Multi-Cultural Teams
5. Making Multicultural Virtual Teams Work
6. Managing Virtual Teams - Use of Collaboration Tools
7. Build a Multilingual Web Site to cater to your Global Customers
8. Virtual Scale - Alliances for Leverage
9. Cutting Edge R&D in India
10. Global R&D Network
    
    

Challenges of Working Across Cultures

In the last several articles I have written about benefits of cultural diversity, the need for cultural diversity and how to manage cultural diversity in an organization. Today, almost all companies in Silicon Valley have embraced cultural diversity and have learnt to thrive in a culturally diverse world. But outside the silicon valley, American companies are yet to understand the impact of cultural diversity - let alone manage cultural diversity.

Recently, I was talking to a senior executive at an American company based in Austin, Texas. This company has drawn up ambitious plans to expand operations in Bangalore, India. Few months ago, the company setup an office and started staffing up its Indian operations for a major R&D project. Within months problems arose - managers were unable to resolve the conflicts between its Indian team members and their American counterparts. The collaborative work environment collapsed into a battle zone. The CEO was then informed about this problem rushed into Bangalore to take stock of the situation. But even his intervention would probably fail to stem the rot and the company may have to start its operations all over again.

The problem here was mainly of cultural integration issues - I had briefly touched upon it in my previous articles titled "Offshoring Requires Better Collaboration", " Challenges in Offshoring to India"& "Challenges of Multi-Cultural Teams". In this case the problem was much deeper and was deeply rooted into the "Texas Style" of business. Since I lived in Texas for a long period of time and also in Bangalore, I was quickly able to root cause the problem as the one caused by cultural conflicts that can be attributed to:

• Ethnocentrism
  
• Parochial Attitude
  

Ethnocentrism and Parochial attitude is the result of interaction with a different culture. Managers who are often sent abroad have little knowledge or experience in dealing with a foreign culture. As a result, these expat managers tend to respond to cultural differences which can be called as "Ethnocentrism" and "Parochial Attitude"

Ethnocentrism

Ethnocentrism results when managers recognize the differences in cultures - but have a tendency to think that their culture and their way of doing things is the right way, their way of doing things is the only way and their way of doing things is the best way. Any deviation from their culture or from their way of doing things is seen as "distortion" or as a "mistake" or as "Wrong way".

Most people have the tendency to follow ethnocentrism. Americans, Japanese, Chinese, Germans, French, Scandinavians, and Russians are more prone to ethnocentrism than other cultures - when compared to other Asians, Latin Americans, British, Australians, Africans and Indians. ( I do not have a scientific evidence to prove this - but the above statement is based from my experience.)

Ethnocentrism is often ingrained into almost all cultures. Every dominant culture tends to think of itself as the center of the world. For example, the word "China" means the middle kingdom. At the height of the Chinese empire, China truly believed that China was indeed the middle kingdom and even the Japanese, Koreans and Cambodia - all referred to China as the middle kingdom. The British empire drew the modern world maps with the Zero longitude passing through London - thus making England as the center of the world. US today refers to non-Americans as "Aliens" - a term which shows the ethnocentric attitude.

Parochial Attitude

Parochial attitude refers to a persons inability to see cultural differences. This is exactly the opposite of ethnocentrism.

Managers who are sent abroad often meet people who are also dressed in suits and speak their language - this prompts them to ignore all other cultural differences and make them think that all others are "just like us". In today’s business world, most people tend to dress similarly - in suits or other formulas and talk in English, But this does not mean that all people have the same culture - but people often only see the surface and assume that the other person shares the same cultural values.

Expat managers from US/UK often tend to display a strong parochial attitude - mainly because the people with whom they interact on regular basis can speak English and are dressed similarly in suits or western dresses.

Impact on Businesses

Often times, expat managers tend to display both parochial attitude and ethnocentrism at the same time. Problems in the organization are often blamed on cultural differences or on the culture of the local employees while successes are attributed to the culture/practices at the head office.

The inability of the managers to recognize the benefits of cultural differences puts these expat managers in a constant state of cultural blindness which at first seems to have no negative impact on the organization. On the contrary, by failing to recognize cultural differences, organizations and managers initially succeed abroad. This initial success is often due to the fact that the local employees tend to play the role of a gracious host - and accommodate the demands of the expat manager. But over a longer period, local employees tend to settle down to their usual practices and that's when the expat managers find it difficult to manage.

Parochial Attitude and Ethnocentrism together tend to pull off a 1-2 punch on the expat managers. The problems/failures are often blamed on the local culture while successes are attributed to the expat’s culture. This demotivates local employees and trouble starts in the local operations. Parochial attitude forces the expat managers to ignore local culture and in the process his/her behavior would have offended local sensibilities - thus creating discontent among the local staff.

Companies - especially MNCs tend to openly display their Parochial Attitude and Ethnocentrism. Examples of this are:

1. Use of common company wide HR policies
2. Use of common operating procedures
3. Use of common posters, advertisements and other PR material

Closing Thoughts

Companies which are newly going global or expanding into a new country have to be on the guard against some of the common management mistakes - Parochial Attitude and Ethnocentrism. The problems faced by expat managers are often blamed on the local employees - without fully understanding the true situation. This results in several false starts, misguided efforts and wasted resources.

Even established global companies tend to suffer from Parochial Attitude and Ethnocentrism from time to time. This is mainly because the expat managers who are sent to manage the local operations are not fully briefed or aware of the impact of culture on business operations.

The best solution to this problem is to create awareness among all managers. Both expat managers, company bosses in the head offices, and local employees must have a good understanding of each other’s cultures and have a working plan to benefit from this cultural differences. Often times, the managers and top executives are so busy working on operational issues - that they might be better off hiring external consultants/coaches who can guide them though this maze of cultural differences and bring out the best from that organization.

Also See:

• Offshoring Requires Better Collaboration
• Collaborate to Innovate
• Challenges in Offshoring to India
• Challenges of Multi-Cultural Teams
• Making Multicultural Virtual Teams Work
• Building a Diverse Workforce
• Cultural Assessment - Prerequisite for successful Mergers
• Soft Skills For Global Managers
• Global Manager
• Improving communication with Indian Engineers
• Leveraging Diversity-Use Brainstorming Session
• Common Mistakes in Recruiting a diverse workforce
• Managing Virtual Teams - Use of Collaboration Tools
• Improved Cross-cultural Communication Increases Productivity
• Managing Diversity for High Performance
• Keep Overseas Staff Focused on the Right Goals

Offshoring Requires Better Collaboration

In my previous article titled “Challenges in Offshoring to India”, I had discussed about the five major challenges in setting up a captive development centre in India, The main challenges are:

1. Office Infrastructure Challenges
2. Recruitment Challenges
3. Employee Training & Skill enhancement Challenges
4. Team Coordination Challenges
5. Maintaining Service Level Agreement

Of these five challenges – the last two challenges are the toughest. Maintaining team coordination goes hand in hand with guaranteeing SLA. Over coming these two challenges involves improving inter company collaboration: formal collaboration between departments; formal collaboration between individuals; and Informal communication between members.

Challenge of Internal Collaboration

Most big companies – even MNCs find it more difficult to collaborate internally. Company executives often talk about improving “networks”, but in reality these companies often tend to run up against a wall: The natural tendency or the human nature to ignore what other colleagues in other business units (often out-of-sight) are doing. This “out-of-sight & out-of-mind” tendency of people makes collaboration between disparate teams difficult – almost impossible. Different departments tend to act in silos and tend to operate under a formal structure.

Company management first has to identify different departments within the organization. (There will always be more departments in reality than that declared on the paper) Next step is to develop a formal structure: A formal organizational hierarchies, leadership roles & titles, and communication networks. The logic of a formal structure is largely based on the predictability of how an organization should work. But in reality, organizations do not work that way.

The truth is that companies can create an environment for collaboration, but the actual collaboration happens between people. People must connect with other people – for collaboration to work. For this collaboration between people to happen, people need to understand the work cultures of their colleagues, understand the relationships, know the network, and must be emotionally motivated to work together.

The next impediment to collaboration is the lack of communication tools. Even in the era of Internet, companies are reluctant to allow their employees to use Internet – due to security threats. On the contrary – companies tend to restrict the use Internet – and Internet based tools. Most companies rely on Email, Telephone and Intranet for inter-department communications. Organizations often fail to take full advantage of all the communication tools available to them.

( Shortly I will post an article on use of different technology and tools to improve communication and project collaboration. Also see: Managing Virtual Teams - Use of Collaboration Tools )

People Need to Meet Face-to-Face

Technology has facilitated all sorts of communication. But it is not a substitute for a face-to-face meeting. Meeting people is essential for building relationships. Raj Subramanian, senior VP for International Marketing at FedEx Canada says “I made a commitment to meet every single employee across the country at least once a year”. Such commitment is essential for one to build a network with other departments.

Project team members also must meet face-to-face at the beginning of the project. Even though the team members are diverse and scattered all over, they need to meet face-to-face during the team forming stage.

Meeting face-to-face is expensive when parts of the team are scattered all over the world. Companies often tend to avoid/minimize face-to-face meetings – but this has a serious impact on the team productivity. As an alternative, teams should have video conference meetings on regular basic. Seeing a face & associating a face with the voice and email is essential in building rapport between diverse team members.

Meeting face-to-face helps build confidence and trust between team members. This also helps break down departmental barriers and improve communication between members of the team. Having a team outing or a day out-of-office is a good way to build a team camaraderie.

Collaborate with an Objective

Having the right team, having all the communication technologies and having all the formal networks are useful but it is not enough. The collaboration is primarily driven by the need to achieve something. It is the goal that provides the coherence to the organization. The objective of the collaborative efforts must be clearly established and understood by all. Members must have a holistic view of the objectives and that will then drive the activities. It is this focus by the members that makes any collaboration successful.

Cross-cultural teams or departments often find it difficult to converge and agree on the objective. Multi-cultural teams tend to take a longer time to reach consensus. Management team driving this collaboration must account for this longer time frame to converge on the objective.

Closing Thoughts

Successful collaboration needs the right environment, communication technologies, and a focus towards the goal. Inter company collaboration is a constant challenge – that needs constant attention from all the stakeholders. Setting single, achievable goals, building formal & informal networks and enabling employees to create informal networks are a must for successful collaboration.

Also See:

1. Collaborate to Innovate
2. Challenges in Offshoring to India
3. Challenges of Multi-Cultural Teams
4. Managing Virtual Teams - Use of Collaboration Tools
5. Virtual Scale - Alliances for Leverage
6. Global R&D Network
7. Global Dimension of Project Management
8. E-Dimensions of Project Management
9. Managing Outsourced Projects
10. Global Product Development Teams