LeadershipWatch

Cross-Cultural Leadership: The One Secret Success Ingredient

cross-cultural leadership

Do business leaders and HR departments pay sufficient attention to equipping people preparing for international assignments, as well as managers leading cross-cultural teams, with sound cross-cultural leadership skills? Research conducted at Dutch Neyenrode Business University suggests they don’t. And that’s a pity, the same research points out: costs related to failed international assignments are sky high, while the one secret ingredient that turns the odds in favor of success – developing the right cross-cultural mindset – is something that can be trained and coached.

In our fast-paced globalized economy, international assignments are on the rise. According to KPMG’s yearly survey of global assignment practices, companies generally make it easier for employees and their families to work and live abroad, both for short- and longer-term assignments. They also invest significant amounts of time and money to make expatriate assignment a success.

Unfortunately, says Dutch economist Matthias Spaink who recently presented the results of his PhD study on “Characteristics of Intercultural Competence among International Business Assignees”, many such international assignments fail. ‘Failure rates of expatriate assignments have been estimated anywhere in between 16 and 50 percent, with financial consequences ranging from $200,000 to $1.2 million’, according to Spaink. Failed cross-cultural assignments can be very painful for the expat and his or her family, returning home without a sense of accomplishment. And they are always painful for the company concerned, both in terms of direct costs and in terms of reputational damage.

‘So what went wrong?,’ the question then becomes. Neyenrode’s Spaink, himself a seasoned businessman, decided to dig into the subject. ‘I wanted to provide more insight in key factors determining intercultural competence among Western international assignees, so that Western multinational companies can improve their decision making on both selection and training/development of international assignees, ultimately leading to reduced failure costs related with failed international assignments.’

What does his research (click here for background information) tell us? What determines a person’s effectiveness in cross-cultural business situations?

People will be most successful in cross-cultural business situations, the study finds, if they possess, or develop, the following leadership characteristics:
  • A curious mind;
  • Explorer’s mentality;
  • Emotional intelligence;
  • The genuine will to understand what lies behind the habits, traditions and patterns of interaction that are different from one’s own (‘the curiosity and will to understand what’s different should be positive, open, and nonjudgmental,’ Spaink adds);
  • A sense of humor (humor, even mixed with self-mockery, can take away a lot of tension);
  • Strong self-identity (self-reflection and self-knowledge, combined with awareness of your own cultural identity and the way you perceive other cultures and differences).

 The key ingredient determining success in unfamiliar cultural settings is: MINDSET.

Sounds logical, right? And yet, companies pay very little attention to this aspect according to Spaink (which is in line with what I witness when supporting multinational companies and their leaders in improving cross-cultural effectiveness).

Not in the recruitment & selection process, where the focus is mainly on technical and functional competences.

Not in training & development processes. These traditionally focus on knowledge and skills as key elements of expat trainings. In fact, the development of attitudes is equally, if not more, important. Most importantly attitudes like “being open for the unexpected”, “strong self identity” and “seeking for diversity”.

In other words, preparing people by simply training the do’s and don’ts of cultural etiquette is not enough.


Cross-Cultural Effectiveness Workshop, brochure

Cross-Cultural Booster Programs (find out more)


I see a huge potential for companies to increase their success in managing international expansions and assignments, and the cross-cultural challenges these bring. It is essential to pay more attention to stimulating people to develop an effective cross-cultural mindset. By incorporating this in the learning & development processes of the organization, by making it an important aspect of leadership development and team development programs. Not by focusing only on training, but by also putting in place on the job coaching and mentoring programs. And I mean coaching and mentoring in which the leaders of the organization play a central role.

Leaders who are able to support and coach their people and teams to deal effectively with cross-cultural challenges will boost the company’s success (read more here).

What are your thoughts? Do companies pay enough attention to developing cross-cultural competence? What is your experience?

 
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Photo: Hey Paul/Flickr (Creative Commons)

___________________

Aad is a global business advisor, change leader, executive team facilitator, leadership coach, and frequently asked keynote speaker. He is founder and managing partner at HRS Business Transformation Services where he works with senior executives and leadership teams globally in three key domains: ‘leading complex change’, ‘cross-cultural leadership’, and ‘post-merger integration’. Find out more about Aad and HRS’ services. If you would like to invite Aad to your organization contact us.

Strategy Execution: Why It Often Fails

Grey Maze with blue arrow, strategy road map

A senior executive recently shared with me: “I have been explaining our new strategy for months, and last week in a leadership meeting I got astonishing feedback. The main message was ‘we have no clue where we’re going with our strategy’. How is this possible?! Defining a good strategy, and executing this strategy successfully are two separate things. Why does strategy execution often fail?

The CEO of Philips, Frans van Houten, recently remarked: “We often have good ideas, but we have to execute these well, otherwise they are useless.”

In the words of former CEO of Royal Dutch Shell, Jeroen van der Veer: “The biggest danger for an organization is that you go too slow. You need to make clear choices and swiftly execute these.”

Defining a good strategy, and executing it successfully are two separate things.

In my work I see a lot of executives struggle with the switch between strategy development and strategy execution. Executive teams put a lot of time and effort in defining the new strategy, they put it on paper, communicate it, and expect the organization to take over and roll it out as was communicated. But that hardly ever happens …

Successful strategy execution (especially in today’s business environment with a high rate of change and complexity) requires leaders to be aware of three essential pitfalls. Pitfalls that occur regularly, and that you maybe also witness in your organization.

1) The communication about our strategy is not creating focus

Communicating your strategy in a way that does not lead to a collective focus is very likely creating confusion, scattered actions, a lack of motivation, or even chaos. But still some leaders believe that a road show with a deck of slides filled with data and charts will do the trick.

Successful leaders approach it differently and pay special attention to creating a strategic road map, which communicates a clear message to everybody. And they engage their team or a group of key stakeholders in creating this road map; they make it ‘our’ road map. Their strategy road map describes:

  • where do we want to go (our vision)
  • why do we want this change (the gap with the current reality)
  • which choices do we make to get there (our strategic priorities)
  • what do we want to get out of it (our desired results)
  • how do we want to achieve these priorities (the steps, timing and resources).

A powerful strategy road map is channeling the energy and actions of the people involved. It creates focus and drive instead of a feeling of ‘more workload’. Make no mistake, having a collective focus has a direct impact on motivation and performance (read more about this in this New York Times article), and therefore on successful strategy execution. A good strategy road map stimulates this.

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Leading Complex Change

For more on our strategy execution services, click here.

 

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2) There is a lack of ‘disciplined execution’

Intermediate developments and issues that absorb people’s attention easily sidetrack strategy execution. Leaders are sometimes not aware of the negative consequences this can have on the longer-term success of their company. They sometimes even trigger this sidetracking by jumping on operational issues, which not necessarily have strategic relevance. They sometimes allow people to postpone strategy execution because of these operational issues. By doing this they create a feeling among employees that strategy execution is something that comes on top of their daily work; something that is actually less important.

Successful leaders understand the importance of creating a culture of disciplined execution. Jim Collins and Morten T. Hansen, the authors of ‘Great by Choice’, describe what this means in their article ‘How to Manage Through Chaos’ with the following nice example:

Imagine you’re standing with your feet in the Pacific Ocean in San Diego, looking inland. You’re about to embark on a 3,000-mile walk, from San Diego to the tip of Maine. On the first day you march 20 miles, making it out of town. On the second day you march 20 miles. And again, on the third day you march 20 miles, heading into the heat of the desert. It’s hot, more than 100˚F, and you want to rest in the cool of your tent. But you don’t. You get up and you march 20 miles. You keep the pace, 20 miles a day. Then the weather cools, and you’re in comfortable conditions with the wind at your back, and you could go much farther. But you hold back, modulating your effort. You stick with your 20 miles.
Then you reach the Colorado high mountains and get hit by snow, wind, and temperatures below zero — and all you want to do is stay in your tent. But you get up. You get dressed. You march your 20 miles. You keep up the effort — 20 miles, 20 miles, 20 miles — then you cross into the plains, and it’s glorious springtime, and you can go 40 or 50 miles in a day. But you don’t. You sustain your pace, marching 20 miles. And eventually, you get to Maine.

Now, imagine another person who starts out with you on the same day in San Diego. He gets all excited by the journey and logs 40 miles the first day. Exhausted from his first gigantic day, he wakes up to 100˚ temperatures. He decides to hang out until the weather cools, thinking, “I’ll make it up when conditions improve.” He maintains this pattern — big days with good conditions, whining and waiting in his tent on bad days — as he moves across the western United States. Just before the Colorado high mountains, he gets a spate of great weather and he goes all out, logging 40- to 50-mile days to make up lost ground. But then he hits a huge winter storm when utterly exhausted. It nearly kills him and he hunkers down in his tent, waiting for spring. When spring finally comes, he emerges, weakened, and stumbles off toward Maine. By the time he enters Kansas City, you, with your relentless 20-mile march, have already reached the tip of Maine. You win, by a huge margin. (read full article here)

Successful companies are recognized for being excellent in defining and achieving their strategy, but this is always related to having a strong culture of disciplined road map execution.

3) Our strategy road map is a static document (that everybody has already forgotten)

When I am asked by leadership teams to advise and support them with their strategy execution one of the questions I always ask is: ‘In what sense has your strategy road map changed over the past year’? Quite often the answer is ‘not much really’, or ‘oh yes, maybe we should revisit our road map once again’.

A successful strategy road map is not a static document. It is actually never complete, but always evolving. Your strategy road map should tell a story that people listen to and are eager to follow. It should be checked, discussed, updated, and communicated on a regular basis. The aim is to create a kind of rhythm, like a drumbeat, in the organization. Everybody knows it and it is simple for everybody to follow. Separate people can be the ‘owner’ of the strategic priorities in the road map. This means they update their part of the road map on a regular basis, communicate it, and gather feedback from colleagues. Business environments change, so do our strategic priorities, and so does our road map. If it never changes (or worse, nobody can remember it) something might be wrong.

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Let me know: how do you stimulate successful execution? How do you engage your team in this process and create disciplined execution? Share your comments below!

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Aad is a global business advisor, change leader, executive team facilitator, leadership coach, and frequently asked keynote speaker. He is founder and managing partner at HRS Business Transformation Services where he works with senior executives and leadership teams globally in three key domains: ‘leading complex change’, ‘cross-cultural leadership’, and ‘post-merger integration’. Find out more about Aad and HRS’ services. If you would like to invite Aad to your organization contact us.

Why Great Leaders Read Books

Business leaders do not often take the time to read (e)books. Are they making a mistake? Why do great leaders read books?

“Each employee is required to read one recommended book per year.” Here is what Chinese business tycoon Wang Jianlin, who leads the Dalian Wanda Group, asks his entire staff to do (The ‘Read One Book Per Year’ requirement is part of the company’s official mission statement).

While the book lover in me does not believe that reading should be mandatory, Mr. Wang’s action made me reflect on the possible leadership advantages of cultivating reading habits. Can reading – and not just expert articles and business books but also novels, narrative history and well written biographies for instance – make people better leaders?

Scientific research and experience suggest it can. Here is how.

1. Reading literary fiction improves empathy

Empathy, or the ability to step into other people’s (business partners, team member, clients) shoes and understand their feelings and perspectives, is a crucial leadership quality. Empathy, research suggests, is a something we can train. By showing genuine interest in the people we meet and work with, for instance, and be attentive listeners. Or by reading books. Psychologists David Comer Kidd and Emanuele Castano of the New School for Social Research have shown that reading, literary fiction in particular, enhances one’s ability to understand other people’s emotions. In a series of experiments, 1,000 participants were randomly assigned texts to read. The researchers then used a variety of techniques to measure how accurately the participants could identify emotions in others. Scores were consistently higher for those who had read literary fiction than for those with non-fiction texts. Discover more about how reading books can improve empathy.

2. Reading helps to create vision

When Jane Goodall, the 80-year young global leader in the effort to protect chimpanzees and the environment, spoke in Brussels in May 2014, she shared the following story:

‘I had the most amazing mother. She supported this love for animals that I had (…). She found books for me to read, about animals, because she thought ‘that will make Jane read faster.’ When I was ten years old, I found for myself a little book, called ‘Tarzan of the Apes.’ I had just enough pocket money to buy it, and I took it home with me, and took it up my favorite tree and I read it from cover to cover. Of course, I fell in love with Tarzan. This glorious lord of the jungle, of course I fell in love with him. Living with the animals… And what did Tarzan do? He married the wrong Jane! That is when I knew: I will grow up, I will go to Africa, I will live with animals and I will write books about them.’

What makes Goodall such a charismatic leader? Why do people all over the world listen to her message – ‘There is still much beauty left, but we have to get together to save it, for our children, and our children’s children’ – feel inspired by it, and decide to take action? Because she has such a strong and compelling vision. And it’s a book that helped her to create it.

If you only read the books that everyone else is reading, you can only think what everyone else is thinking. – Haruki Murakami

3. Reading across cultures increases cross-cultural effectiveness

In our globalized economy, a leader’s ability to build successful teams and collaboration across cultures has become a crucial competency.

Reading across cultures can help you to develop your own cross-cultural leadership. By helping you to see beyond the cultural do’s and don’ts, and focus on the people behind unfamiliar habits and behavior. As Chinese writer Xue Xinran tells Westerners dealing with Chinese people: ‘Understanding the Chinese is just like how you would try to understand a tree. It is not just the leaves and the branches, your have to understand the roots as well.’ (Find the China books Xue Xinran recommends on FiveBooks.com).

In addition, reading across cultures will likely make you question your own assumptions and business habits more. Research by Harvard Business School’s Roy Chua shows that leaders who develop this kind of ‘cultural metacognition’ build stronger trust, and increase cross-cultural effectiveness. Find more about Roy Chua’s findings here.

.4. Reading across time can put your own leadership challenges into perspective

To conclude: history is littered with business leaders who successfully led change, often in the face of obstacles at least as big as leaders face today. Reading their stories can give you fresh perspectives, and make the leadership challenges that you face look less daunting.

Some examples:

Andrew Carnegie, born poor, built a steel imperium in times of unprecedented change, and proceeded to give his fortune away.

Gerard Heineken, recently brought to life by Dutch writer Annejet van der Zijl, bought a small brewery in Amsterdam – even when he knew nothing about beer and people at the time did not like drinking it. Thanks to Heineken’s leadership, that small brewery became the Heineken company the whole world knows today.

Or read how a more recent business leader, Richard Branson, ‘survived, had fun and made a fortune doing business his way’.

Books serve to show a man that those original thoughts of his aren’t very new after all. – Abraham Lincoln

Let me know:

If you could name one book to recommend to others, which one would it be? Share it below!

 

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Hanneke is Research Partner and Writer at HRS Business Transformation Services, and author of several books. Her research focuses on how leaders build successful organizations by increasing the quality and effectiveness of people collaboration, particularly in cross-cultural environments. She has a special interest in China and East-West relations. Her work is a constant source of refinement and enrichment for the HRS alignment methodology. Find out more about Hanneke and HRS services. If you would like to invite us to your organization, contact us here.

4 Tips to Make Your Team Embrace Accountability

People pulling a rope, accountability

Accountability is a crucial ingredient of successful collaboration, and it is often underestimated.

For multinational (and other) enterprises, competitive advantage and successful strategy execution increasingly depend on getting cross-company collaboration right. Executives understand that creating a culture of collaboration and trust, and building and leading teams that work effectively across company units has clear benefits (increased agility, higher level of innovative thinking, cost savings, etc.). ‘But what about accountability?’, I often hear. ‘How to ensure that collaboration in my teams is balanced with personal accountability?’ And it is a good question! The goal of collaboration, after all, is not collaboration but results (read more about the importance of successful collaboration).

And in order to achieve results, the last thing you need is a team where people hide behind each other and don’t feel personally accountable for their actions, where teams are merely brainstorm groups without taking ownership for results. Nevertheless, this is often what happens! You can assign tasks, but you cannot force people to be accountable. Accountability is an act of will.

LeadershipWatch Quote on blue backgroundA prerequisite for successful team collaboration is that team members embrace accountability. Accountability in the sense that they feel ownership for the team’s objectives, feel committed to achieve these objectives, and feel personally responsible for their contribution to the team’s success. Leaders play a crucial role in stimulating this.

What can leaders do to boost accountability in their teams?

These are 4 essential tips that help you create a culture of accountability, based on years of experience in working with teams in different organizations, business environments, and cultures.

1) Focus on creating a shared purpose

Your team exists for a reason. What is the background/reason for establishing this team? What should be our contribution as a team to the organization and its strategy? What are our objectives? How are others depending on our output as a team? What are our key drivers for successful performance as a team? The more team members feel involved in defining the answers to these questions, the more they will embrace accountability.

Don’t:

  • Skip this crucial part of team development, and jump straight to ‘let’s get to action’
  • Make team members feel they have no say in the team objectives and tasks
  • Make the team a group of people who execute assigned tasks, nothing more
  • Create a team that is not aware of its role in the grander picture, its impact on the company’s success

Do:

  • Engage your team actively in answering these questions
  • Align your team members around a shared team purpose, and goals
  • Create clarity about the importance of achieving these goals
  • Define together your team’s operating principles

 

2) Be open and specific about expected results

Team members start to feel accountable when they feel they are in charge of their own success. A feeling of being accountable is often hindered by a lack of clarity about the results we expect from each other and from us as a team.

Don’t:

  • Focus only on tasks (who is doing what)
  • Allow team members to be vague about what they will contribute to the team (‘as long as I have finished my task I’m in the clear’)
  • Allow your team to avoid discussions about mutual expectations

Do:

  • Focus on clarifying expected results (what do we need to achieve)
  • Be clear about the results you expect from your individual team members
  • Involve your team actively in this discussion and stimulate team members to express their expectations towards each other’s contribution, as well as the support they will give to each other
  • Ask your team members to openly confirm their accountability

 

3) Pay special attention to team behavior when things go wrong

When everything goes well, practicing accountability– and taking credit – is easy. But what if things are not going as planned, what if expected results are not met? If you really want to know the level of accountability in your team, watch what happens when something goes wrong, and support your team to respond effectively.

Don’t:

  • Allow your team to develop an atmosphere of ‘blame and shame’
  • Encourage this process yourself by blaming people and spreading negative energy*
  • Accept that team members hide themselves behind others
  • Focus your team’s energy on ‘what if this would not have happened’
* Is even more important when you have people from Eastern cultures in your team, when loss of face situations can have disastrous consequences (read more about the importance of avoiding personal blame and loss of face)

Do:

  • Show your team actively that the team’s success matters to you
  • Give priority to becoming a stronger team, not to punishing people
  • Reduce pressure by making clear that it’s ok to make mistakes, as long as we learn from it
  • Focus your team’s energy on ‘what are we going to do to set this straight, and how will we help each other’

 

4) Last but not least: set the right example upfront

Start by being more accountable yourself. Like Carlos Ghosn did, the French-Lebanese-Brazilian CEO credited with turning around the Japanese carmaker Nissan and making the Renault-Nissan alliance a success. When he landed in Japan in 1999, he shook his head in disbelief: ‘If the company did poorly, it was always someone else’s fault. Sales blamed product planning, product planning blamed engineering, and engineering blamed finance. Tokyo blamed Europe, and Europe blamed Tokyo.’ (read his HBR article here ).

How did Ghosn succeed in transforming a blame culture into a culture of personal accountability? By setting the right example, and explicitly assuming his own accountability upfront. When he announced the Nissan revival plan, he publicly declared he would resign if the company failed to accomplish its objectives. ‘Judge me’, he told the world. The objectives were achieved, a year ahead of schedule.

It is in your own behavior that team members will look for inspiration. Set the right example, and you will be on your way to building a team that embraces accountability.

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Photo: shutterstock.com

___________________

Aad is a global business advisor, change leader, executive team facilitator, leadership coach, and frequently asked keynote speaker. He is founder and managing partner at HRS Business Transformation Services where he works with senior executives and leadership teams globally in three key domains: ‘leading complex change’, ‘cross-cultural leadership’, and ‘post-merger integration’. Find out more about Aad and HRS’ services. If you would like to invite Aad to your organization contact us.

How Abraham Lincoln Mastered Collaboration: 4 Key Elements

Abraham Lincoln statue in the Lincoln Memorial in Washongton DC

Do executive leaders always have a clear idea of what powerful collaboration looks like? Do they always understand what it takes to build high-quality, result-focused collaboration between and across teams, and how they themselves can set the right example for the organizations they lead? What can we learn from Abraham Lincoln when it comes to collaboration?

Today in 1865, Abraham Lincoln was assassinated, and it so happens that the highest standard of powerful collaboration I know was set by Lincoln and his Secretary of War, the short and sturdy Edwin Stanton.

Four things stand out in the way Abraham Lincoln collaborated with his War Secretary to lead his country through the civil war:

1. Lincoln and Stanton turned their differences into strengths

Don’t just take my word for it, and read what Stanton’s private secretary A.E. Johnson wrote about their collaboration back in 1891:

“No two men were ever more utterly and irreconcilably unlike. The secretiveness, which Lincoln wholly lacked, Stanton had in marked degree; the charity, which Stanton could not feel, coursed from every pore in Lincoln. Lincoln was for giving a wayward subordinate seventy times seven chances to repair his errors; Stanton was for either forcing him to obey or cutting off his head without more ado. Lincoln was as calm and unruffled as the summer sea in moments of the greatest peril; Stanton would lash himself into a fury over the same condition of things. Stanton would take hardships with a groan; Lincoln would find a funny story to fit them. Stanton was all dignity and sternness, Lincoln all simplicity and good nature…yet no two men ever did or could work better in harness. They supplemented each other’s nature, and they fully recognized the fact that they were a necessity to each other.”

2. Lincoln always backed Stanton up in public, even if most of his decisions were unpopular (and that’s an understatement)

“I cannot add to Mr. Stanton’s troubles. His position is one of the most difficult in the world. Thousands in the army blame him because they are not promoted and other thousands out of the army blame him because they are not appointed. The pressure upon him is immeasurable and unending. He is the rock on the beach of our national ocean against which the breakers dash and roar, dash and roar without ceasing. He fights back the angry waters and prevents them from undermining and overwhelming the land. Gentlemen, I do not see how he survives, why he is not crushed and torn to pieces. Without him I should be destroyed. He performs his task superhumanly. Now do not mind this matter, for Mr. Stanton is right and I cannot wrongly interfere with him.”

3. Lincoln used the power of humor to get his way when needed

Or how is this for an effective order: ‘Appoint this man, regardless of whether he knows the color of Julius Caesar’s hair or not. A. Lincoln.’

4. The Lincoln-Stanton collaboration was based on mutual trust

Here’s the letter Stanton, devastated by Lincoln’s death, received from Lincoln’s private secretary John Hay:

“Not everyone knows, as I do, how close you stood to our lost leader, how he loved you and trusted you, and how in vain were all the efforts to shake that trust and confidence, not lightly given and never withdrawn. All this will be known some time of course, to his honor and yours.”

How did the two men, you might wonder, get to know each other? They first met during the trial of a patent case, six years before Lincoln was elected president. Lincoln, then an unknown lawyer, had worked day and night in preparation of his speech for the defendant. When he reached out to Stanton, the lead counsel, he was greeted with the words “Why is this long-armed ape here?” Stanton, educated at a fine university (Lincoln was self-taught), didn’t hide the fact that he looked down on Lincoln. He refused to let him give his speech. He never asked him out for lunch. He ignored him the entire trial.

Why did Lincoln, hurt and humiliated to the bone, sat down on his pride when he needed a Secretary of War? Why did he call Stanton to the White House six years later? Because he had seen how talented he was, and knew he would be the right man for the job. Now that’s collaborative leadership. That is why Lincoln still sets a great example for executive leaders, and indeed all of us, today.

‘Now he belongs to the ages’, Stanton said when Lincoln passed away in the Petersen boarding house right across Ford’s Theatre on April 15, 1865, 7.22 AM. So think about Lincoln and how he mastered the art of collaboration, and pass this story on.

All quotes are taken from the (Dutch) book ‘Abraham Lincoln, About Myself’ (Abraham Lincoln, Over Mezelf), Hanneke Siebelink , 2009.
 
Photo: Shutterstock.com
 
If you want to receive upcoming LeadershipWatch articles and news in your mailbox, then simply register at the top of this page. Your personal information will be kept strictly confidential.

Hanneke is Research Partner and Writer at HRS Business Transformation Services, and author of several books. Her research focuses on how leaders create success by increasing the quality and effectiveness of people collaboration, particularly in cross-cultural environments. She has a special interest in China and East-West relations. Her work is a constant source of refinement and enrichment for the HRS alignment methodology. Find out more about Hanneke and HRS services. If you would like to invite us to your organization, contact us here.

Leading Innovation: The One Important Aspect Executives Tend to Underestimate

Tesla Motors logo on green background

Inventing new and better products, technologies, and business models. Experimenting. Realizing smart breakthroughs. We all know that innovation is crucial to stay competitive in today’s business world. Much has been written on how to boost innovation, but do executive leaders pay enough attention to the one important aspect needed for new ideas to bear fruit: creating a culture of transparency and openness in which people dare to share successes as well as mistakes?

Here is what Tesla Motors CEO Elon Musk says about it:

‘Companies are often too conservative. They want to innovate, but create the wrong conditions, leading to stagnation. In many organizations, people do not dare to think big and take the necessary risks. If they fail, they get punished heavily, and lose their jobs or bonuses. This leads to risk averse behavior.’ (Elon Musk quoted in Dutch Managament Team Magazine, November 2013)

‘Companies are often too conservative. They want to innovate, but create the wrong conditions, leading to stagnation.’ – Elon Musk

Asked how he ensured his companies (Tesla Motors, Space X, Solar City) remained innovative, and what he would recommend to other people leading innovation, the 42-year old CEO explained:

‘My philosophy is: reward people who come up with daring ideas that work, and only ‘punish’ them lightly if they fail (…). But I expect my people to bring me the bad news immediately and clearly. Everybody makes mistakes, but somebody who doesn’t tell me about it, wants to solve things on his/her own and lets the situation spiral out of control: that person is in trouble.’

What can we take from Musk’s experience? When it comes to creating an environment where innovation thrives, what can leaders do to encourage that culture of transparency and openness?

1) Adjust your communication style to stimulate openness

There is a direct relationship between your communication style and the openness the other person will show. In this earlier article you find useful advice on which specific communication skills stimulate openness (the article refers to a situation with a cross-cultural team, but the communication tips are also applicable in other situations).

 2) Create an environment where people dare to make, and share mistakes and learning experiences

Read here specific tips on how to break through the fear of mistakes.

Musk’s advice made me think of something I read the other day: the story of explorer Henry Hudson’s first journey as a ship commander in 1607. Europe’s growth back then was running out of steam, much as it is today. The English Muscovy Company, dreaming of new horizons, hired Henry Hudson to find a northern trading route to Asia. Hudson, in for an adventure, tried something nobody had ever tried before. Instead of sailing northwest (via Canada) or northeast (around Russia), Hudson steered his 25-meter sailing ship straight up north, in the direction of the North Pole. Hudson and his crew of twelve (amongst which his own son John) battled their way through mist and ice. They lived off rotten bear meat, survived heavy storms and a head-on collision with a whale. Hudson’s first undertaking was, in the words of Russell Shorto who wrote about it in his book ‘The island at the center of the world’, ‘completely insane.’  As insane as some of the decisions Elon Musk took as he set out to build Tesla Motors (premium electric cars) and Space X (quickly reusable rocket technology that could be used to colonize other planets)? You tell me.

How did the Muscovy Company react when Hudson returned empty-handed, reporting that it had all been for nothing, that there was no passage via this route to be found?

Did they yell at Hudson for not living up to expectations?

Did they fire him?

Did they consider the trip to be a total loss?

Far from it! Hudson had seen numerous whales in the region (this opens up new hunting possibilities, they thought). One route could now be crossed of the list of possible passages to Asia (progress, they thought). The Muscovy Company listened to the details of Hudson’s stories, saw the trip as a success, and stimulated Hudson to have another go at it.

Henry Hudson, by the way, ended up discovering the fertile grounds that would become New York.

 
Photo: Robert Scoble/Flickr (Creative Commons)
 
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Hanneke is Research Partner and Writer at HRS Business Transformation Services, and author of several books. Her research focuses on how leaders create success by increasing the quality and effectiveness of people collaboration, particularly in cross-cultural environments. She has a special interest in China and East-West relations. Her work is a constant source of refinement and enrichment for the HRS alignment methodology. Find out more about Hanneke and HRS services. If you would like to invite us to your organization, contact us here.

Mergers and Acquisitions: To Create Value We Need to Focus on People Aspects

Mergers and acquisitions, people shake hands

Let me make a bold statement: When it comes to mergers & acquisitions we spend approximately 75% of our energy in the pre-deal phase on financial, legal, and technical aspects to come to a deal, but when it comes to the actual post-deal value creation it turns out that approximately 75% of our energy is taken by people aspects. This tells us something, doesn’t it? It is no secret that many mergers and acquisitions, a whopping 70 percent researchers claims, fail to achieve their promised value.  And when that happens, the costs can be painfully clear: synergies fail to materialize, morale drops, people start heading for the exits. If we really want to create long-term value out of mergers and acquisitions we need to pay more attention to people aspects in the pre-deal phase.

A couple of days ago, I had a pleasant chat with the executive leader of a multinational company, which had recently acquired, and successfully integrated, another company. What preparatory action, I asked this executive, did he take to maximize the chance that this investment would live up to, even outperform, initial expectations?  What aspects, in addition to choosing the right company and doing the necessary legal financial homework (due diligence), did he and his team pay close attention to?  What, in his view, was the secret to a successful post-merger integration?

Here is what he said.

“The secret words are ‘people’ and ‘together’: creating something TOGETHER that will be, quite literally, more valuable than what existed until now.  In my very first meeting with the CEO of the company we were looking to acquire I asked what the ground rules would be of what we wanted to achieve together.  They thought we had a pre-cooked plan.  But we were aiming for the best for all people concerned, not only for our people or for theirs.  We worked together on this list of ground rules, paying close attention to people aspects within both organizations.“

Smart leaders know that focusing only on M&A’s financial, legal, and operational aspects does not guarantee success, and can even destroy value.  Paying attention to the people and related cultural (corporate cultures and national cultures) aspects early in the process pays (read here why cultural alignment is a prerequisite for value creation).

What people aspects should we specifically pay attention to in the pre-deal phase?

Two main aspects stick out:

1.    What will the new top team look like?

Create clarity about who will join the new top team. At the moment the deal is closed this should be clear to everybody. The new top team will play a crucial role in the post-merger integration phase. It will be the initiator and facilitator of the integration process, set out the direction and short-term focus, stimulate synergies, and ensures stability and confidence. Lack of clarity about the top team will not only lead to loss of time in the integration phase, it will create confusion, doubt, and apathy throughout the organization. It is an important and often mentioned reason for integration failures.

2.    Know which people issues could cause integration problems

What are the specific mechanisms that drive people performance and collaboration within both organizations? What are the core values that drive people behavior? What do people expect from the merger? What are the key elements of the culture and corporate identity? Who is considered as key talent within both companies? At what points do all these elements match, or not? What are crucial differences? What are potential consequences if we do not address these aspects effectively? Starting to think about these questions when the integration starts is too late! The C-suite needs to be aware of these potential risks before the deal is closed. Not necessarily because it could be a deal blocker, but to be prepared for it and ready to deal with it as soon as the integration starts.

I hear you thinking: the heat of deal making precludes the luxury of an extended effort to assess soft people variables.  How can this be done in a phase where confidentiality and non-disclosure agreements are essential?  True, but there are ways to do this! A specific and focused approach that respects confidentiality can lead to a very insightful and important overview of potential integration risks. A report that is crucial input for the C-suite.

A thought to conclude.  Major agreements freeing trade and investment across continents are currently being negotiated, or have recently been concluded. To name but a few:  the Transatlantic Trade and Investment Partnership (TTIP);  the Trans Pacific Partnership Agreement (TTP); the EU-Canada Free Trade Agreement, … The EU also just launched investment negotiations with China. If paying attention to the people and cross-cultural aspects of mergers & acquisitions is important now, imagine its importance in the future!

Let us know what your ideas are about people aspects in M&A. Leave a comment!

 If you want to know more about how to address people aspects in mergers and acquisitions, check out our services page or contact us.

Join me in London at the MERGERS & ACQUISITIONS DUE DILIGENCE CONFERENCE on 17–18 July 2014 where I speak about this topic.

 
Photo: thetaxhaven/Flickr (Creative Commons)

___________________

Aad is a global business advisor, change leader, executive team facilitator, leadership coach, and frequently asked keynote speaker. He is founder and managing partner at HRS Business Transformation Services where he works with senior executives and leadership teams globally in three key domains: ‘leading complex change’, ‘cross-cultural leadership’, and ‘post-merger integration’. Find out more about Aad and HRS’ services. If you would like to invite Aad to your organization contact us.

Cross-Cultural Leadership: Why Learning Chinese Business Etiquette is Not Enough

Chinese New Year cake with symbol of The Year of The Horse

Do you want to be successful in doing business with the Chinese? Do you want to build lasting relationships? Then understand why learning Chinese business etiquette will be important, but not enough.

Your company is looking for a Chinese business partner, and you and your team are about to enter an important meeting.  You have only met your would-be partner once, and are eager to make the meeting a success.  You prepared yourself by taking a crash course in Mandarin (though you know your counterpart speaks perfect English).  You have also learned some vital do’s and don’ts, for instance:

  • Chinese surnames come first, not last;
  • Pay close attention to hierarchy;
  • Accept business cards with both hands and read them carefully;
  • If you bring gifts wrap them in bright red, NOT in white (white signals death and mourning);
  • And never, ever blow your nose in public.

Ready, you think? Only if you realize that learning Chinese business etiquette, though important, is not enough to build successful longer-term relationships with Chinese business partners, suppliers, employees or customers.

Western executives and managers need to understand that, when it comes to creating effective work relationships with people from China (and generally from Asian countries with cultures very different from our own), more is needed than business acumen and awareness of cultural differences.

I have talked to many China veterans, and what they are telling me is this.  Working successfully with the Chinese has everything to do with the WILL to go beyond customs and habits, the cultural do’s and don’ts, and focus on the people behind those habits.  It is about the will to understand the deeper level of their culture.  It is about listening to learn, about asking the right questions and formulating appropriate responses (indirectly is sometimes better than directly).  It is about understanding what concepts like ‘losing face’ really mean (how to avoid making people lose face). It is about building mutual trust, despite cultural differences (how to build mutual trust).

Easy?  No. Rewarding?  You bet.

Does all this mean that, to make your dealings with the Chinese a success, you should forget about your own cultural identity and values?  It doesn’t!

Successful cross-cultural leaders build effective relationships across cultures precisely because they don’t try to be somebody else. Because they are transparent about themselves and their cultural background. Being transparent about your own cultural traditions and values, being transparent about the differences you experience between your own culture and identity, and the other person’s culture and identity, will most likely increase respect and trust between you.  It will help you to build stronger and more effective relationships.

Author and former corporate executive Scott Seligman captures this delicate balancing act like this:  ‘On the one hand, it is about understanding and accommodating people with unfamiliar patterns of interaction that may seem, at times, to be gracious, strange, funny, obsequious, indirect, refreshing, counterproductive, or downright maddening.  On the other hand, it is also about being yourself: being true to your own cultural traditions and values, and behaving in accordance with the best of these.  Such balance is difficult, but your success with the Chinese requires that you strive for it, since you won’t achieve much by tilting too far to either side.’ (source: Scott Seligman, Chinese Business Etiquette, p. 258)

Thoughts?


Cross-Cultural Leadership

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3 Rules of Thumb for Building Smart Cross-Company Networks

Net with yellow connections under a blue sky

How well do people in your company work together across organizational units?  Is your company structure rather hierarchical and formal or does it stimulate people to create cross-company networks? Are people able to collaborate effectively with people working in different company divisions, in other countries with different cultures?  Are people willing to share their expertise and information with colleagues in other units?  ‘New products will increasingly be the result of co-creation processes,’ the CEO of a leading chemicals firm recently said to me. ‘What we really need is social innovation. Not only innovation in a technical sense, but innovation of our organization.  How to organize work in a flexible way?  How to stimulate cross-unit collaboration that brings tangible results?  There is no doubt in my mind that we need better collaboration across company units, across different companies even.  But organizing this is easier said than done.’

Building cross-company networks among people that cut across formal lines of reporting, can be a useful way to stimulate effective transfer of best practices and technologies, agility, innovative thinking – all of which increasingly determine your company’s competitiveness in this era of relentless change. (Read more about the power of cross-organizational networks).

This not to say, however, that hierarchical structures and efficiency-based management processes have outlived their usefulness.  Nor do I think that cross-company networks are always a good thing.  Networking with no intelligent strategy behind it can undermine performance.  The challenge is, therefore, to complement the good management processes in your company with result-based cross-company networks.  Networks that add value, because benefits outweigh the costs.

How to build effective cross-unit networks in your organization

There is no golden rule, as the specific barriers preventing people from collaborating across borders (divisions, countries, cultures) differ from company to company.  But I have helped executive leaders to increase the quality and effectiveness of cross-company collaboration for many years now.  When it comes to building effective cross-company networks, I have found 3 rules of thumb particularly useful:

1.  Map existing networks first

Every organization has its own informal networks.  Make sure you understand where they are, who is in it, how they operate, and what their outcome is.  Creating a cross-unit network map is a good way to start.  If you know where the valuable and the weak spots are, you can tailor your interventions – instead of shooting in the dark. Focus on the networks that add value, and eliminate the networks that do not.

2.  Focus on diversity in relationships, not on number of connections

Remember why diversity  – diversity in age, personalities, experience, technological skills, etc. – is good for business teams (read more about the value of diversity)? Research shows that it is diversity in cross-company networks that leads to faster and better innovation (source:  Morton Hansen, Collaboration, p. 127).  So build diversity, not size. This requires special attention of leaders. In many situations this diversity in relationships means that people are pushed outside of their comfort zones. People maybe need to be stimulated to engage in relationships that do not feel natural at the beginning. The quality of the collaboration probably will not be high at once, but will need to be developed and coached.

3.  Tackle people alignment issues head-on

‘I wish we had done this earlier.’  I often hear it after team alignment sessions, when cross-unit teams have experienced a deeper level of understanding, openness and trust, resulting in mutual commitment, a higher quality of collaboration and more effective execution.  Here is an easy list of questions that can help you clarify whether you are dealing, in cross-company teams, with genuine commitment, or compliance. Tackling people aligment issues head-on is important.  In my experience, a focused and targeted approach to support and coach people at building effective cross-company relationships will facilitate effective networks, and will save lots of time and money later on.

Thoughts?

Co-author: Hanneke Siebelink
 
We help executives, leaders and their teams to increase the adaptability of their organizations while maintaining focus. By bringing the quality and effectiveness of collaboration to a higher level, within and across company borders. By creating stronger alignment within and between teams on vision and strategy. Implementation will be faster and more effective.  Find our servicesFeel free to contact us!
 
Photo: 360around/Flickr (Creative Commons)


Aad is a global business advisor, change leader, senior executive team facilitator, leadership coach, and frequently asked keynote speaker. He is founder and managing partner at HRS Business Transformation Services where he works with executives and leadership teams globally in three key domains: ‘leading complex change’, ‘cross-cultural leadership’, and ‘post-merger integration’. Find out more about Aad and HRS’ services. If you would like to invite Aad to your organization contact us.

Leading Change: 3 Misconceptions about Successful Collaboration

White lines of a sailboat wrapped around brown wooden pins

Are you leading change? Do you believe in the importance of a collaborative culture in your company? Do you want to encourage successful collaboration between people and teams across organization units, even across companies?

Let me share a few considerations, which might help to avoid frequently occurring misunderstandings. Pitfalls in our thinking that create a false conception of what good collaboration is! I invite you to take a moment to reflect on the following three important misconceptions about successful collaboration.

1)    Vision and strategy come first and collaboration is an  outcome

The dominant reasoning in this misconception is that successful collaboration is an outcome of a strong vision and strategy coming from the top. If executive leaders at the top are capable of defining a strong and compelling vision and strategy, people will follow and successful collaboration will be a logical result. This misconception exists more often than we think. I regularly witness leaders having this reflex, particularly in organizations facing complex changes.

But it is false! The most powerful visions and strategies are built on involvement and collaboration between a broad range of people early in the process. Successful organizations handle change faster and more effectively, because they focus on establishing a collaborative approach to define the new direction and destination (vision), and the best way to get there (strategy). Collaborating successfully to define a collectively shared vision and focused strategy that people commit to! It is important for leaders to find the right way to stimulate this.

2)     Successful collaboration means everybody needs to have a say

“People always had a good reason for meeting. You’re sharing best practices. You’re having good conversations with like-minded people. But increasingly, we found that people were flying around the world and simply sharing ideas without always having a focus on the bottom line.” (Executive leader quoted by Morten Hansen in his excellent book ‘Collaboration’, p.12)

Do you recognize this? Mistaking extensive, crowded and long meetings for successful collaboration. Yes, sharing ideas, experiences and expertise across the organization is very important. But successful collaboration implies efficient and effective decision-making, and successful execution of these decisions! The goal of collaboration is not collaboration itself, but results (innovation, revenue growth, …)

Successful leaders stimulate collaboration that is focused on efficient decision-making and on fast and effective execution of these decisions. They make sure their organization does not get infected by ‘committee-fatigue’, which will destroy the positive energy and drive of people. They are very aware of their own role in the decision-making process, and know when to step in and take decisions themselves to keep everybody on course and to maintain speed. Or as Morten Hansen puts it: we need ‘disciplined collaboration’, not ‘over-collaboration’.

3)     Successful collaboration depends on the level of friendship and camaraderie between people

The misconception here is to think that collaboration will be easier and better if we are friends. In other words: the better our friendship, the better our collaboration. But this is not always the case!

I have worked with organizations that suffered from poor collaboration because people were afraid to discuss sensitive topics and to criticize each other. They were afraid to do this out of fear of damaging the friendship. Apparently, friendship and successful collaboration are two different things. Sometimes successful collaboration arises because of friendship, but there are as many examples of situations where friendship arises because of successful collaboration. And there are as many examples of situations where people collaborate successfully, without becoming friends.

“Leaders who want to create successful collaboration should focus on the ability of people to build high quality relationships driven by respect, openness and trust, despite mutual differences!”

Attitudes and skills to build high quality relationships across borders and despite mutual differences lead to successful collaboration. Leaders have an important role in coaching their teams on these attitudes and skills (read this previous article about the coaching role of leaders). Organizations that master this are more adaptable, more flexible, faster and more successful in dealing with change.

Are you encouraging successful collaboration? Feel free to share your experiences below.

If you would like to increase the quality of collaboration, then our Team Alignment Approach might interest you.

If you want to receive upcoming LeadershipWatch articles and news in your mailbox simply register at the top of this page. Your personal information will be kept strictly confidential.
 
Photo: John and Elza Bakker/Flickr (Creative Commons)

___________________

Aad is a global business advisor, change leader, senior executive team facilitator, leadership coach, and frequently asked keynote speaker. He is founder and managing partner at HRS Business Transformation Services where he works with executives and leadership teams globally in three key domains: ‘leading complex change’, ‘cross-cultural leadership’, and ‘post-merger integration’. Find out more about Aad and HRS’ services. If you would like to invite Aad to your organization contact us.

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