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Why cultural understanding is key to international success

31 March 2021|Business Growth, Latest Posts

Why cultural understanding is key  to international success
Why cultural understanding is key to international success

By Nicole Sahin, CEO and Founder, Globalization PartnersAs the world moves towards democratisation, we are seeing an increasing number of business leaders adopt a global entrepreneurial strategy from the offset. For growth-minded business owners, the rest of the world is their oyster. 

However, before dipping their toes into international waters, it is important that entrepreneurs understand the challenges and opportunities of building teams across varying geographies and cultures. While some employers favour a ‘one size fits all’ approach to corporate values and behaviour – embedding each local culture into an organisation ensures a better relationship with employees and customers alike. 

Why culture matters

Culture refers to the shared practices, beliefs, and common expectations around how people behave and conduct their business. When two different people or cultures come together and have conflicting expectations for how something should be done, it can cause friction or disconnect – impeding the ability of teams to collaborate and deliver on shared goals. 

According to a recent report by PWC’s Katzenback Center, 71% of C-suite and board members now view culture as a top issue, with 65% saying culture is more important to performance than an organisation’s strategy or operating model. Indeed, business leaders who have experience expanding their companies globally often say that learning the ins and outs of local cultures is one of the first steps on the road to success. From sales and brand loyalty, to staff retention and wellbeing, cultivating local culture can have a significant impact on a huge range of success factors. 

The benefits of cultural education

From startups to large global conglomerates, training international management teams on how to understand cultural nuances of their employees, partners, and customers, will almost always be of benefit. Teams that commit themselves to cultural understanding will reap the numerous advantages: helping to eliminate pre-conceptions and unconscious biases, in turn bolstering long-term working collaborations and relationships between varying nationalities.

Whilst there can also be numerous financial benefits to educating a company on international culture, failing to do their research can have costly repercussions. Walmart’s expansion into Germany in 1997, for example, failed in part due to an inability to understand and adapt to local culture. Whilst staff were trained to communicate with friendly chit chat while customers packed their bags, as they did in the US, locals felt harassed by the conversational approach. The seemingly minor cultural miscommunication contributed to the company’s reported loss of $1 billion and a retreat out of the German market in 2006. 

This shows that no matter how successful a company is in its home country, disregarding locality can be of serious detriment when expanding into new regions. 

Cultural blunders cost

In an era where globalisation has become a mainstay of successful business, cultural failure can have a serious impact for individuals and organisations alike. It is important that business leaders research and understand cultural nuances when branching into new markets, adapting their approach accordingly. 

Indeed, whilst the cultural mistakes of international businesses don’t always have serious long-term implications, they do offer a note of caution to other companies. For example, when Pepsi chose to directly translate their slogan “Come alive with the Pepsi generation” in China – they later discovered that this reads locally as “Pepsi will bring your ancestors back from the dead”. 

One of the most notable examples on a long list of cultural blunders is attributed to the Gerber baby food company, whose use of an image of a baby on their labels proved extremely embarrassing, considering that in the African region it is typical for images on food packaging to show what they contain. 

For any international business, there is a pressure to ‘get it right’ when expanding internationally. However, for growth businesses that often have more at stake, cultural blunders can be a costly mistake. These examples serve as a reminder that having a good understanding of local culture is crucial to long term growth and success. 

Cultural inclusion must go remote

Over the past year, the Covid-19 pandemic has caused a seismic shift in the way we live and work. It has also had a significant impact on cultural integration. In many ways, the remote-first work culture has opened up possibilities for international communication and collaboration, allowing organisations to break free from the constraints of geographical location. However, it has also hindered the ability for people to create meaningful in-personal connections with colleagues. Having an awareness and understanding of important cultural differences is made difficult when communicating virtually via Skype or Zoom, sitting behind a screen at home. 

It is important for business leaders and their teams to keep humanity at the center of communications. In normal circumstances, ‘traditional’ meetings would normally begin or end with a few minutes of personal conversation. Whether about weekend plans, family news or cultural events – these small discussions allowed teams to connect and compare life from different perspectives. 

Whilst harder to achieve whilst working remotely, personal discussions should remain key tenants of virtual communication. Digital tools must not be allowed to dehumanise workplace culture – especially across international borders – and businesses should remain mindful to facilitate cultural chat and small talk, both now and in the future. 

For entrepreneurs looking to expand their business internationally, cultural inclusion must be a priority across every region where it plans to operate. In addition to defining the values, practices and beliefs that are core to the corporate culture, organisations also need to find ways to manage the risks that are implied in cultural distance. That means ensuring products, staff training and ideals resonate in every territory so organisations don’t have to pay the price of cultural ignorance. 

About the Author

 Nicole Sahin, CEO and Founder at Globalization Partners
Nicole Sahin, CEO and Founder at Globalization Partners

Nicole Sahin, CEO and Founder at Globalization Partners

Nicole Sahin’s mission is to eliminate barriers to doing business internationally and building global teams. As founder and CEO of Globalization Partners, she is recognised for having created an innovative solution that enables companies to hire great talent anywhere in the world, without the complexity of setting up international branch offices or subsidiaries. 

Author Twitter: @nicolemsahin

Author LinkedIn: Nicole Sahin – https://www.linkedin.com/in/nicolesahin/

Company Twitter: @GlobalPeo

Company LinkedIn: https://www.linkedin.com/company/globalization-partners/