Cross-Cultural Competency

After waiting an hour in the heat of Libya’s sun, two American salesmen give up and return to their hotel angry and spitting insults at the government employees they were supposed to meet. They booked the next flight home and the massive deal came to nothing. The Libyan government never understood why the Americans had not turned up and the deal eventually went to a Turkish company.

In today’s global marketplace, the chances of losing business due to cultural misunderstandings run high. The above example perfectly illustrates how a lack of cross-cultural competency negatively impacts business abroad. Did the Americans not know that in Libya it is the norm to be late? Did the Libyans not realise that the Americans would have expected them on time? Both parties were at fault yet also blameless at the same time. A little cultural awareness would however have radically improved the outcome.

Culture can no longer be taken lightly by businesses. None of us are exempt from dealing with foreigners anymore. Our businesses and personal lives have become more unpredictable and to guarantee success we have to adapt. Let’s be clear culture is not just about how people shake hands and exchange business cards. You could memorise a book of do’s and don’ts for India and still experience confusion and difficulty working with the Indians. It is about learning to survive in the globalized maze of modern business.

The first step to cross-cultural competency is to rid oneself of assumptions, prejudices and stereotypes. Modern business calls for modern thinking; thinking where no one is at fault and where people have differing priorities and values. Accepting that we do things in different ways and adapting behaviours to this is 80% of the battle won.

Having said all this why do businesses nowadays not prioritise cross-cultural competency training? Part of the reason is that it is still seen as a soft-skill and not as important as hard-skills like engineering or IT. Whereas one can quantity whether they have learnt IT skills, how can a business quantify if an employee has become more culturally competent? Businesses favour measurable results, and in the case of cross-cultural competency the true value may not get quantified until too late, such as when two of their sales people walk away from an important meeting with the Libyan government!

Companies that incorporate cross-cultural competency into their core values always come out on top. Not only do they lower their risk of lost revenue, but they also gain a new set of strategies and a clear perspective of what is offered by other cultures. Globalization has completely reshaped the flow of information, goods and services and it is crucial to view the business world differently. Rather than view successful cultural skills only as a means to prevent lost revenue, smart decision makers and employers emphasize the personal benefits of cross-cultural competency.

2008 – Russia’s Cultural and Socio-Economic Attributes

Cultural attributes:

Russia has long history going back to the Mongol domination of the 12th century. By the 17th century the Russian kingdom had become quite expansionistic stretching across the continent all the way to the pacific, south into the Caucases and into Eastern Europe. Russia at its most powerful controlled the mighty Soviet Union and mush of central and Eastern Europe which fell behind the Iron Curtain. Following the end of the cold war Russia was forced to grant sovereignty to its formal republics and accept a greatly diminished role in what had been its immediate sphere of influence and though out the world in general. The 1990′s may have been a low point in Russian culture and their self worth. They largely viewed themselves the losers of the cold war. They were unable to replace the political, economic and cultural controls of the Soviet period. However, following the economic collapse that Russia underwent in the 1990′s they experienced a economic and cultural revitalization of sorts. This has largely been fueled by reforms from the Kremlin and in recent years, the huge influx of Petro-dollars which has flushed the Kremlin with cash and helped create and expand a relatively new middle class. This new self assurance has brought about some tougher Cold War type posturing as they have begun to try to reassert themselves over their neighbors and former Republics. Just recently they invaded Georgia on the pretext that they were stopping genocide there. There is no way to know at this point if this is simply an isolated incident or a sign of things to come.

Socio – Economic Attributes:

Russia ended 2007 with its ninth consecutive year of growth. It has been averaging 7% annual growth since the financial crisis of 1998 which nearly crippled the Russian economy. High oil prices and the cheap rubble were initially the cause of growth. However, since 2003 both consumer investment and demand have played a prominent role. In fact over the last six years, fixed capital investments have averaged more than 10% annual growth. Personal incomes have risen by more then 12% per year. Poverty has declined steadily and at the same time an emerging middle class has continued to expand. In addition, Russia has maintained budget surpluses from 2001-2007 running at roughly 3% of GDP. Oil export earnings have allowed Russia to dramatically increase their foreign currency reserves from $12 billion in 1999 to $470 billion in 2007 which rank as the third highest holder of foreign reserves in the world.

During Putin’s first administration there were a number of important reforms that were implemented in the area of tax, banking, labor and land codes. They had the desired effect of raising investor confidence in Russia’s once weak and unstable economy. The result was a huge rise in foreign investment in Russia from $14.6 billion in 2005 to $45 billion in 2007. However, inflation has become a problem in the second half of 2007 driven by factors such as rising food costs, it was near 12% by year’s end. By the end of 2006 Russia has signed a bilateral market access agreement with the US as a possible prelude to becoming a member of the WTO.

In spite of Russia’s recent success, serious underlying problems continue to exist. For example, oil, natural gas, metal and timber account for almost 80% of Russia’s exports and 30% of their governments revenues. This their economy quite vulnerable to wings in world commodity prices. Their industrial base, while once mighty, is now dated and must be modernized to compete in today’s world. Their banking system while growing is still relatively small when compared to other emerging markets.