Is Cultural Intelligence a Key to Profitability?

For over thirty-five years, I’ve been advising businesses that are working (or contemplating working) abroad on the cultural differences they will encounter. Essentially, how to work more effectively, more profitably, “elsewhere”.

For many that meant having to deal with culturally different ways of getting things done that they did not know existed and did not know how to successfully manage. Some obvious such as greetings, taboos, “do’s and don’t’s”, and many not-so-obvious like differences in how to manage teams, motivate, critique, communicate, negotiate, run meetings, make decisions, and solve problems…it’s a long list.

All of them usually unexpected, and almost always putting the success of an expensive global initiative or project abroad at risk. Understand it, manage it, and it becomes a tool that can help accelerate your global success.  Ignore it, misunderstand it, and it will take you – and your organization – down.

Back then, I was usually called in after cultural misunderstandings were already causing problems.  But over the years, organizations realized that a better organizational strategy to avoid problems was to become “culturally competent”.  It’s always easier – and far more successful and cheaper in the long run – to prevent the glass from breaking than having to clean up the mess after it’s broken.

It became a no-brainer to strategize and leverage cultural differences to achieve goals and increase profitable advantage. The place to start was to know what they were, and then figure out the best ways for you, your team and your organization, to work with them. Simply put, cultural intelligence was profitable.

Cultural differences are a priori: you don’t have to value them, you don’t have to like them, you may wish you didn’t have to deal with them, but, like it or not, they are there nevertheless. You can’t wish them away or make believe they don’t really exist. You can, if you choose, delude yourself into believing that they don’t matter (they do), that they won’t affect your business success (they will), or that they aren’t as powerful as they once were (they are, but their power, masked by globalization, is just not as obvious as it once was).

For that reason alone, and as clinical, cold and calculating and bottom-line oriented as it is, it’s just plain dumb to ignore the cultural facts that any businessperson is up against when working “abroad”.

But the real value of cultural intelligence is not just in the immediate rewards that it brings to a particular project or business initiative. In the bigger picture, being open to how people do business differently means being open to new ways of thinking, new possibilities of finding new solutions to old problems that one single way of thinking could not possibly provide. Being willing to admit that one perspective is limiting, while a variety of perspectives is liberating, could open new doors.

In fact, this priori “fact” of cultural differences, which at first is so often seen as a problem to be overcome, is really a bright and shining gift: an opportunity to experience, the full spectrum of human possibility. And, from a business perspective, a fuller, bigger range of options for greater profitability and growth.

But that was then. When the world was first globalizing, when we valued free trade, open borders, and acknowledged the benefits of cultural diversity. When the world was becoming global. Today, the world is global. And that means there are three major new concerns when working around the world that all organizations have to factor into their strategies for successful global work:

Individuals are increasingly multi-culturally influenced, and do not necessarily reflect behaviors that represent one particular culture: Millennials, Gen X’ers and beyond are more likely to be aware of the existence and benefits of cultural differences, and more likely to have had personal experiences with other cultures (global travel, education, media and tech exposure to other cultures, etc.) Ahmed, born and raised in Riyadh, may have spent his summers at his Dad’s flat in London, and gotten his graduate degree at UCLA.

This means that Ahmed knows how to behave in Saudi ways, with Saudi colleagues in Riyadh, but Ahmed can also behave in Western ways with his western colleagues in London and the US. This does not mean that cultural differences matter less than they used to; in fact, they matter more: Ahmed is no less Saudi because of his knowledge of Western ways of doing business, and westerners who do not know Saudi ways still need to in order to work in Saudi Arabia (as does Ahmed).

Culture is not, and never was, the defining predictor of any one individual’s behavior, and individuals, for any number of reasons, beginning with DNA, the influence of Mom and Dad, and, as Ahmed reminds us, their own personal experiences, can behave very differently from the norm of their culture. And this is increasingly the case for individuals today.

While culture may not be the predictor of individual behavior that it used to be, culture remains the final predictor of organizational behavior.

No matter what your own individual behaviors might be, or where they come from, no matter how similar or different you, as an individual might be, to the norm of your own culture, when you walk through your company’s doors or log onto your virtual meeting in the morning, you (and every other individual in the organization doing the same thing) must adapt your individual behaviors to the norms of the organization, and here’s the big news: those organizational norms have been deeply influenced by the norms of the culture in which the organization first emerged. If the company is headquartered in Chicago, you can bet US dollars that its corporate culture has been heavily influenced by US-American values; if it’s headquartered in Paris, you can bet your euros that its corporate culture has been heavily influenced by French values.

And this means that the way business organizations around the world work continue to reflect – and reward – traditional cultural behaviors associated with those values in the workplace.  Of course, national values can change over time, but they tend to change more slowly, with younger cultures typically being able to change more quickly than older cultures.  This means that all individuals – especially those like Ahmed who are multi-culturally influenced – must conform and adapt their individual behaviors to the requirements of the corporate culture every day (while at the same time perhaps having some influence over its evolution).  And for anyone working with the organization abroad, this means you need to understand the culture it began in.

The world is, at least in this particular, politically motivated populist moment, de-globalizing, valuing walls instead of bridges, tariffs and nationalist isolationism instead of open borders. Well, at least it appears to be, but the truth is that the toothpaste, as they say, is not going back in the tube: technology and global opportunities will not retreat, despite nationalistic populist politicians. Walls, tariffs, and denialism, in fact, insures that artificially protected domestic markets will contract, and businesses will seek new opportunities – for brain-power, for profits, for new markets – even more aggressively than they had before, elsewhere.

Smart business knows that the forces that drove globalization in the first place are more powerful than ever, and that the economics of nationalistic populism, closed borders and tariffs may have worked in the 19th century, but that it is a Luddite fantasy that it has any place in the 21st century other than as a political prop.  Smart money keeps its eye on the global arc, and that arc is powered by unstoppable technology and global opportunities. Which means that, once again and more than ever, no matter what you do, you are already very likely working with cultures different from your own.

The world today is far more global than the world “back then”, when we first started talking about the need to recognize, understand, and manage cultural differences.  And while the nature of this more fully globalized world of today is in many ways very different from the simpler, less complex just-beginning-to-globalize world of several decades ago, the need to acknowledge, understand and manage cultural differences has only increased.

The current reactionary moment, as temporary as it may be, is expressly designed to appeal to our more primitive response to cultural differences, enabling some of us to minimize their value.  But in so doing, we risk rejecting the greatest gift that cultural differences provides: that of possibility.  And no business in the dazzlingly multicultural, multi-dimensional world of the 21st century world can afford to walk away from that.

Written by Dean Foster, author of Business Beyond Borders.