I was recently asked to do a presentation for a group of business students at a university in Singapore on the topic of US Supply Chains and what makes them unique. In thinking about what to include based on the limited time and decided on a few major topics:
- The physical size of the country (I find that almost all people who have not spent much/any time in the United States are surprised at just how large it is) and what that means for logistics.
- Major exports & imports, largest trading partners and the trade imbalance.
- Some major issues affecting supply chain in the US (that may not be true for the rest of the world) such as:
o the lack of trade/skilled labor training and what that has done to our aging skilled workforce
o the insecurity due to critical manufacturing capabilities that have been outsourced to such a large percentage: think semiconductors, large scale batteries, etc. The good news here was that I was able to share the recent actions taken to drive investment in these areas.
But what I decided to start with was the differences in the general culture, and how that can affect business relationships and decisions.
When it comes to cultural considerations in business, I think there is a decent amount of effort put in when international travel is taking place – making sure you know a few phrases, know what’s appropriate for greetings, how to behave at dinner… the basics. Most people will say they do it for negotiations, but I rarely see it in action. With that in mind, it is not surprising that people don’t think through what cultural implications there are to their relationships in general – with fellow employees, customers, suppliers, with foreign agents, etc. But we should – out of respect for other individual’s culture and to make our relationships stronger and more valuable for our business.
Gerard Hofstede, a Dutch social psychologist and former IBM employee, is regarded as the father of the study of cross-cultural working groups and developed the popular framework for measuring the 6 Cultural Dimensions so you can see how cultures vary. The 6 dimensions are: Power Distance, Individualism, Uncertainty Avoidance, Masculinity, Long Term Orientation, and Indulgence vs. Restraint.
I’ll spare the detail, you can read more on the institute’s website, and you can also do your own comparison for various countries to see how they compare. I think you’ll find some surprising differences. https://www.hofstede-insights.com/
My first swing was closest to home for me, a look at the US – but until you better understand the numeric system of each dimensions rating, it means very little; but there are some good explanations. I think where it really starts to hit home is when you compare at least 2 countries. For that, I started with the country I would assume is the most like the US, the UK. Not surprisingly, the two are very similar. In fact, 4 of the six dimensions are within 5 points of each other (the scale is 100 total for each dimension.) But even with our strong similarity, there are 2 dimensions that we vary significantly.
The first is Uncertainty Avoidance: the UK comes in at 35 while the US come in at 46. Only a slight difference, but this means that Americans are slightly less tolerant of uncertainty, a bit less willing to take things as they come. I have seen this first-hand in working with leaders from both.
The largest gap is in Long Term Orientation with the US coming in at 26 and the UK at 51. What does that mean? It means that those in the UK would be more future oriented. With more and more multi-nationals, it is changing some, but the clearest example of this in business is the American emphasis on quick results, how companies live and die by the quarterly results.
Next, I decided to look to our neighbor to the South, Mexico. I’ve had the opportunity to work with many in Mexico both colleagues and suppliers. Despite our geographic proximity, the cultural differences are pretty stark. It is the opposite of the correlation with the UK – here only two categories are less than 30 points apart.
The first is Long Term Orientation, where we share that desire for quick results. The second is Masculinity, with our respective scores of 62 and 69 it means that both our cultures are more driven by competition – a good one to share for business for sure.
On each of the other 4, we are far off from one another – a quick summation of what that data tells us is:
Power Distance: US 81, Mexico 40. It means that culturally, Mexicans are more accepting of the hierarchy in society, and in business too.
Individualism: US 91, Mexico 30. Not surprising to see the US so high – its reflective of the ‘looking out for number one’ mentality, whereas Mexico’s culture is more group/family oriented.
Uncertainty Avoidance: US 46, Mexico 82. Mexico is much more adverse to uncertainty and a need for rules and security are important. I’m sure you can think how a business relationship or contract might be viewed very differently on one side with this in mind.
Indulgence: US 68, Mexico 97. The higher the Indulgence score the more a culture values enjoying life, are more optimistic and prioritizes leisure time. That may not marry well with the expectations of American hustle culture.
So what does all this mean with respect to how we do business?
First, I would say that each time you have a new interaction coming (new team, new supplier, etc.) you do some research on the culture in the country. Try to highlight where your two cultures are far apart. Then actually use that to shape your actions. For negotiations or contracts, think about potential changes or better ways to explain portions that may not be well received. Then adapt your contracts and style to better match the culture.
Do the same for interactions with colleagues and especially for employees. Do you need to explain why you do something a certain way? Do you need to adapt any processes? What about your engagement or leadership style? Will it be interpreted the same in the other country? Make sure your actions aren’t viewed inappropriate.
Outside of cultural dimensions, have you thought about how the country’s holiday schedule may affect your business cycle? Make sure you treat all holidays with similar respect and give as much leeway as your business can allow.
At the end of the day, it all comes down to two things: make the effort to understand and then actually apply it to your work. You’ll gain respect and drive more overall value for your organization.