Banter Without Borders

Global Relocation: Executive Challenges

Contrary to Thomas Friedman's mantra of yore, the world is not flat. In fact, as the Financial Times commented in an August 28th editorial entitled “Rough and Smooth,”* “reality is more messy. Recent history is littered with tales of CEOs from one culture who, for whatever reason, have not stayed the course when put in charge of a company with deep roots in another.” Stuart Chambers aptly phrased it when he resigned as head of Nippon Glass: “I have learned I am not Japanese.”  

What executives must grasp is that the behaviors and attitudes that got them to the top in one culture would not necessarily translate when they assumed control of a company in another country. Culture does matter, and on several levels. For executives to succeed in crossing cultures, they must realize that the greatest attribute they bring to the table is not their previous successes or reputation; in fact, these can hinder their effectiveness in a new market. Their greatest strength in moving to a company in a different country is their ability to be nimble and adaptible, open to events as they unfold. As the Financial Times article concludes, “…there is no template for how to run an Asian business – or, for that matter, a British, French, or Russian one. Running any business requires political savvy and managerial flexibility, going outside one’s comfort zone simply requires a double dose. Different business cultures are there to be navigated, not flattened into mush.”

Every culture has its own set of values that govern not only management styles, but all aspects of business, from advertising & marketing to sales to R&D. And, the range of stakeholders, their attitudes and their issues may be quite different from anything the executive had previously encountered. Laws and regulations, investor relations, unions, employee behaviors, and corporate structures are seldom identical from one culture to another, and they seldom exhibit any degree of flexibility in the short term. So, it falls to the executive to be able to adapt to a very different environment if he or she hopes to achieve any degree of success in a foreign company.

Often, however, it is not the above-mentioned workplace related challenges, but the family issues that force an executive either to refuse a lucrative overseas position or to abort it. Family relocation issues can, for example, undermine the effectiveness of an executive when his loyalties and time are split between his family in one country and the company in another. The Japanese media often attacks Sir Howard Stringer for not spending enough time in Sony’s head office. Indeed, the importance of the family's success in managing the overseas move was given top billing in a recent Harvard Business Review* article on the subject. Simply put, "You can't be successful in your new role if your home life is in chaos." So obvious, yet so often overlooked.

Corporate boards of directors are surprised again and again by the failure of CEOs who have not succeeded in running a foreign corporation. The onus is on them, the board members, to be diligent in their search for the right executive, one who has not only the name recognition (the “his PR precedes him” syndrome) or the technical skills, but also an attitude of openness and flexibility, a satisfactory family situation, and a willingness to learn about new cultures. While that may seem an overwhelming task for a board, the consequences of not doing the requisite due diligence in their search can be even more daunting. However, finding the right executive for the right job with the right skills for a particular company and culture can send the company to new levels of success.

*http://www.ft.com/cms/s/0/673ce6aa-9406-11de-9c57-00144feabdc0.html

*http://hbr.harvardbusiness.org/2009/10/three-keys-to-getting-an-overseas-assignment-right/ar/1

Global Marketing Challenges: Carrefour's Turn

In his posting on the many cultural challenges of global marketing teams, as well as international organizations in general, Jack Brown discusses Wal-Mart's rocky path to worldwide success. He attributes this in large part to the careful attention it is now paying to local markets on a deep level after years of what he rightfully terms 'missteps.' Companies are increasingly finding that a superficial nod to local practices and preferences is not nearly enough. Rather, understanding the most fundamental cultural tenets, ethics and principles of one's customers is what will bring success for the long term, avoiding costly gaffes and  errors along the way. In its rush to bulldoze into emerging markets, Wal-Mart certainly learned this the hard -- and some would argue the American -- way.

Now, it seems that Carrefour, second in command in the retail market, is also having to pull back and consider culture as it re-examines its image and business model. This time, though, it is not the buying habits and idiosyncrasies of foreign cultures but rather its own French terrain under scrutiny. With 43% of Carrefour's market on domestic soil*, and nearly a million customers in Carrefour hypermarkets daily*, this seems imperative in light of the company's marked drop in earnings and gloomy forecast ahead. Its perception as a premium retailer is now being re-examined, along with the image and function of French hypermarkets themselves. Its new CEO (not French but Swedish, interesting in itself) is said to be focusing much more on discounted prices, in-store and outside promotions, private label products and loyalty cards, in very much the same way as Tesco, its longtime rival, has done with considerable success.

This re-examination of 'premiumization' is not limited to the hypermarket sector alone. L'Oréal and Diageo have both been in the news lately with reports of disappointing earnings and resulting strategies to, like Carrefour, manage the fallout from the current economic downturn through new price point considerations and possible re-branding. Similarly, on a national level, Japan has, in response to economic hard times, been experiencing a seismic shift in consumer habits, away from its legendary emphasis on quality with more focus now on price and value. This surely poses a major threat to brand loyalty, if not to global business overall. Wal-Mart has, to its credit and following countless blunders, continued to rise to the challenges of today's uncertain economy. Whether Carrefour and other global giants will be able to do the same remains a formidable question.

                                      

*Wall Street Journal, August 29 - 30, 2009: "Carrefour Posts Loss on Discounting" 

*http://www.ft.com/cms/s/0/6390eb24-9432-11de- 9c57-00144feabdc0.html