A global outlook will prosper in a diverse world
IN an increasingly complex world where emerging markets will offer the most attractive growth prospects in the coming years, companies that embrace a wider diversity of backgrounds, genders, perspectives and, above all, ways of thinking — not only in local markets but also at corporate headquarters — will have an advantage.
An understanding of local consumer tastes and customs, as well as the sophistication to engage with business counterparts in these countries will increasingly represent a passport to sustainable performance.
To build and develop the next wave of multicultural leaders with the skills and capabilities to excel in global business, companies should follow three approaches.
First, executives must understand the dynamics that are reshaping the global business environment — an environment that is at once more volatile, uncertain, complex, and ambiguous (VUCA) than ever before. Then, they must re-evaluate their efforts to attract, retain and develop the next generation of leaders.
Finally, by injecting a global mindset into all levels of the organisation, executives can develop a strong vision and effective strategies to respond to each relevant market factor and increase the odds of achieving sustained growth.
While today’s global business environment is characterised by a world full of growth opportunities, companies face a raft of challenges in new markets that serve to reinforce the interconnected and mercurial nature of the international landscape.
Traditional competitors are becoming more cut-throat to survive in lower-growth developed markets, while executives must also be prepared for new, muscular, and sometimes asymmetrical global competitors from developing economies.
THE biggest growth opportunities require placing larger bets in more fluid, less familiar markets. Add in the factors accelerating the pace of change in a highly integrated global economy — from disruptive technologies and big data to exogenous elements such as natural and man-made disasters — and it is little wonder that the old approaches to managing predictability are falling short.
As business leaders seek to develop effective strategies that can adapt to this new level of complexity, they have borrowed the term VUCA — coined by US military leaders at the end of the Cold War — as an umbrella term for the many interlocking factors that executives must balance. Since so many of these factors are beyond the control of executives, the goal is to monitor and adjust to changes in the global landscape while still adhering to a well-defined business strategy.
The work of Prof Paul Kinsinger, of the Thunderbird School of Global Management, is quite instructive. Kinsinger served in the Central Intelligence Agency for nearly two decades before directing his energies to the study of global trends and how to balance competing trends in a VUCA world. As part of his continuing work, Kinsinger has identified several attributes of VUCA leaders.
Business leaders will have to gauge progress on the basis of new and constantly changing metrics, so an ability to adapt old approaches and embrace new ways to measure success is critical.
Many organisations are living increasingly in a world of paradoxes — where challenges and opportunities often come in "both/and" rather than "either/or" decision points. Executives who eschew clear-cut answers and develop a tolerance for gray areas can function more effectively.
Two globally focused, European-based organisations exemplify the commitment to cultural diversity. The first, based in London, has leaders from nearly 70 countries at headquarters and encourages its employees — from managers to top executives — to pursue international careers. The other, headquartered in continental Europe, has a dozen nationalities represented on its management board alone.
These organisations are solid examples of the real commitment necessary to build global talent across functions and regions. To be sure, cross-cultural awareness and familiarity is more a fact of life in Europe than in the US.
INTERNATIONAL experience should remain a mandatory career path but it should be a personal and professional lifestyle, a passion that fulfils intellectual curiosity and is fuelled by a desire to learn.
Today’s business dynamic requires more. Sending a leader to a new location on his or her first international assignment is no longer sufficient to qualify that individual as a global executive. Fluency in a language, for instance, must extend beyond reading the newspaper, ordering a meal or even leading a meeting and conducting negotiations.
It should, over time, enable a global leader to gain a sense of culture, nuance and local customs — critical but often overlooked factors in building credibility, developing strong relationships and achieving results.
Companies must understand that being able to travel to global destinations such as London with ease is not the same as having the skills and comfort to conduct business in Lagos, Ho Chi Minh City, Buenos Aires, or other up-and-coming developing markets. Similarly, executives who take occasional visits to foreign markets cannot hope to gain the international fluency required for success on the global stage.
Over the past decade or so, the growth of emerging markets has ramped up the battle for global and local talent considerably. As a result, the pool of available executives in local markets that US companies once relied on is now highly sought after — not just by other multinational companies but also by hungry, local organisations.
The bottom line: there is no limit to how far talented individuals can go if they wish to become global leaders in organisations domiciled in their native country.
A true understanding of the multiple dynamics of each mature and emerging economy cannot come as a result of occasional market visits, standardised reports and annual presentations.
Rather, a deep, sensible and thorough expertise of what is required to be successful across regions will come from building hands-on knowledge, managing brands and businesses locally, leading diverse people, interacting transculturally and even living in many areas of the globe.
The perspective gained from such experiences will also imbue the organisation, including headquarters, with a culture that welcomes, praises and treasures a diversity of backgrounds and ideas.
In addition to a diverse background, candidates should have what Thunderbird School of Global Management’s Prof Mansour Javidan calls "the global mindset". Javidan uncovered three dimensions of this mindset that future leaders must have.
PROMISING executives must have in-depth knowledge about how to do business in other countries, including knowledge about the competitive landscape, economic conditions, political systems and regulations. Leaders with the skills to analyse, digest and synthesise this information will be better able to make sound business decisions.
High-potential leaders should be quick learners, enjoy interacting across cultures and possess curiosity about how things are done elsewhere. Executives must be willing to push themselves to try new solutions, embrace situations for the first time and become comfortable with uncertainty.
Executives who know how to interact with people from other geographical areas will have an important advantage. Key attributes of social capital are a willingness to listen, pay attention, and understand what is happening in multicultural operating environments. Critically, executives must serve the role as facilitator to elicit divergent views and build consensus.
All this starts with buy-in from the CEO and the top team. The world of business is highly heterogeneous, and corporate leadership should replicate that. Moreover, high-potential candidates pay attention to the environment around them and generally know which companies champion cultural diversity and diversity of thinking and which pay it lip service. Designated diversity champions within the organisation can help, but the key is recognising that moving from local to global to transcultural represents a significant cultural change.
Organisations that embrace the opportunity to articulate their purpose and shape their cultures will win in the global marketplace through superior talent.
Deeper international experiences will help to mould leaders with credibility, sensitivity, trust and respect for multiple cultures. Sophisticated global executives who can articulate a clear vision, define the organisation’s purpose and inspire legions of collaborators towards a common goal will be able to turn VUCA’s primary challenges into advantages.
• Lamarca is a partner at Heidrick & Struggles’ New York office and a member of the global Consumer Markets Practice. This is an edited version of his report, Sculpting Tomorrow’s Borderless Leaders.