"Managers must be able to face divergent views and be able to reconcile them." Mansour Javidan
When companies decide to expand overseas, they can allocate the capital, recruit the teams and install the infrastructure within a matter of months. But mindsets move more slowly.
Just because a company has built up global operations, it does not automatically follow that it has a global outlook.
Implications for business
How can your company prepare for shifting mindsets to work better overseas?
- Appreciate and reconcile cultural differences.
- Know when to tolerate contradictions and when to reject them.
- Consult with diverse management teams to understand the implications of headquarters-based decisions on other markets.
- Make sure that there is a link between company values and employee behavior; management incentives can be a useful tool to strengthen this link.
- Increase the diversity of management teams so that they better reflect the breadth of the company's geographical footprint.
- Allow executives to express their diversity rather than conform with a homogenous corporate culture.
Global leaders play a key role in shifting their business to a global mindset. This mindset requires leaders to:
Tolerate ambiguity and integrate multiple perspectives. Companies that operate in multiple international markets constantly encounter contradictions. Marketing strategies that work in one country may be inappropriate in another.
Leaders must adopt a balancing act to ensure cultural differences don't lead to roadblocks.
Adopt an interdependent approach to decision-making. Decisions taken in one part of the world can have unintended consequences in another. A CEO may decide, for example, to ramp up investment in R&D to develop new premium products at the company's global headquarters.
This may be good for business in the core developed markets, but may mean that the company's Indian subsidiaries end up with a product range they will be unable to sell to customers who expect high-quality but lower-cost products.
Look to underlying values to bridge cultural differences. Global companies must find a dynamic integration between local autonomy and centralized control. Autonomy gives regional managers the freedom to take advantage of market-specific opportunities and adapt the business to suit local needs and customs. But control enables an efficient allocation of resources and facilitates the sharing of global capabilities and resources.
Value the expression of diversity. Most companies understand that diversity is good for business. But as we explored in our report Winning in a polycentric world business leaders struggle to convert this belief into action.
Four imperatives for global leadership
A recent EY report titled The new global mindset: driving innovation through diverse perspectives revealed four imperatives for successful leadership in a global business environment.
- Stir the pot: leverage conflict (sparked by differing viewpoints) to generate new ideas
- Anticipate the Next Big Thing — or better yet, drive the Next Big Thing! Use diverse perspectives to develop new products and services
- Nurture a spectrum of talent: find talent in unexpected places and forge creative collaborations
- Get the mindset: focus on transformational leadership