Global Mindset

Prashant Pansare

Executive Program in Global Business Management 02

IIM-C
 Necessity of Global Mindset
Increasing Liberalization of International trade leading
to ..
Increasingly interconnected and truly global business
environments
Mobility of Talent : Global Workforce
To have strategic competitive advantage supply chain is
diverse and global [ Suppliers , Creditors , Partners ]
Diversity across Cultures
> Multinational and Multicultural Workforce
Increasing market coverage
> Global and Diverse Customer base ..
 But today, companies increasingly need softer people skills.and perhaps
most important, working across cultures with Chinese, Germans, Indians,
Italians, Russians, and a world full of suppliers and partners.
Editorial
BusinessWeek
April 18,2005

Do you have such a team ???

 Global Leadership defined:
Global leadership is the process of influencing
individuals, groups, and organizations inside
and outside the boundaries of the global
organization, representing diverse
cultural/political/institutional systems to
contribute towards the achievement of the
organizations goals.
 Global Mindset

The ability to influence

individuals, groups,
organizations, and
systems that are unlike
the leaders.
 Global Mindset is a set of individual attributes that enable and
facilitate global leadership.
 Global Mindset
Global mindset to me means that the individual has
a global passport, but in their head.
Its the ability to understand the similarities and
differences among cultures and their reasons.
 Global Mindset
understanding and respecting other cultures
rather than judging them.
The ability to avoid the simplicity of
assuming all cultures are the same, and at the
same time, not being paralyzed by the
complexity of the differences.
Rather than being frustrated and intimidated
by the differences, enjoying them and seeking
them out because you find them fascinating.
 Global Mindset
Someone with a global mindset enters a new
and different situation with many more
questions rather than answers, assumptions
and presumptions.
Its being able to make sense of contrasting
frames of reference and the ability to
simultaneously see oneself as American and
German.
 Phases of Globalization
Phases of Globalization
Parameter
Domestic Multi-Domestic Multinational Global

Focus Product/ Market Price/Cost Strategy

Service
Share of World Marginal Important Extremely Important Dominant
Business
Cultural Sensitivity Marginal High Low Critical

Beliefs One best way Many good ways One least-cost way Many good ways

Todays Managers, therefore, need to develop a mindset which will help

them work globally across geographies and diverse cultures.
 Mindset in 2 * 2
Low
High

High Parochial Global mindset

[narrow]
INTEGRATION Mindset
(Ability to integrate
diversity across
cultures and
markets)
NA Diffused

Low

DIFFERENTIATION
Openness to diversity across cultures and markets
The Globalized World of Business
 Culture
Judges you, and makes you a judge
Defining features:
Shared motives, values, beliefs, identities, and interpretations of
significant events
that result from common experiences of members of collectives
and are transmitted across generations
Cultural orientation: Attitudes of most people most of the time,
NOT of all people all the time

" Culture is more often a source of conflict than of synergy. Cultural

differences are a nuisance at best and often a disaster.
Prof. Geert Hofstede,
Emeritus Professor, Maastricht University.
 Cultural Intelligence
Cultural Intelligence (CQ) is the ability to cope with
national, corporate and vocational cultures.
CQ is the ability to understand unfamiliar contexts, and
then to adjust.
One must be aware of cultural diversity and differences
and respect these while interacting with people.

Christopher Earley and Elaine Mosakowski: HBR of October 2004.

http://12manage.com/methods_earley_cultural_intelligence.html
 C.Q.
THREE SOURCES OF CULTURAL INTELLIGENCE

The Head / Cognitive. Rote learning about the beliefs, habits and taboos of
foreign cultures, will not work well.
The Body / Physical. You will not disarm your foreign hosts, guests, or colleagues
simply by showing you understand their culture; your actions and demeanor must
prove that you have already to some extent entered their world.
The Heart / Emotional/motivational. To adjust to a new culture involves
overcoming obstacles and setbacks. People can do that only if they believe in their
own efficacy.

While CQ shares many of the properties of emotional intelligence, Cultural

Intelligence goes one step further by equipping a person to distinguish behaviors
produced by the culture in question from behaviors that are peculiar to particular
individuals and those found in all human beings.
 C.Q.
Why Cultural Intelligence?

In an increasingly diverse business environment, managers

must be able to navigate through the thicket of habits,
gestures, and assumptions that define their coworkers'
differences. Foreign cultures are everywhere. In other
countries, certainly, but also in corporations, vocations, and
regions. Interacting with individuals within them demands
sensitivity and adaptability. And the people who have those
traits in abundance, are not necessarily the ones, who
enjoy the greatest social success in familiar settings.
 Cultural Orientations
How People See Themselves
Peoples relationships to the world
Individualism Vs Collectivism
Activity
Time
Space
 Two Major Studies of Cultures
GLOBE: [Global Leadership and Organizational Behavior Effectiveness]
17300 middle managers in 950 organizations
Importance of local knowledge
62 societies (quantitative) and 25 societies (quantitative +
qualitative)
As is and should be parts of culture and their relationship
At least two of three industries
Food processing
Telecommunications
Financial services
Prof Geert Hofstedes Framework
[http://www.geert-hofstede.com/]
 Managing international business means handling both national and organization
culture differences at the same time. Organization cultures are somewhat
manageable while national cultures are given facts for management; common
organization cultures across borders are what holds multinationals together.

Prof Hofsted
 Prof Geert Hofstedes Framework
In international business environment, it is sometimes
amazing/shocking how different people in other cultures behave.
We tend to have a human instinct that 'deep inside' all people are
the same - but they are not. Therefore, if we go into another
country and make decisions based on how we operate in our own
home country - the chances are we'll make some very bad
decisions.
Geert Hofstede's research gives us insights into other cultures so
that we can be more effective when interacting with people in
other countries.
If understood and applied properly, this information should reduce
your level of frustration, anxiety, and concern.
But most important, this will give you the 'edge of understanding'
of cultures which translates to more successful results.
 Prof Geert Hofstedes Framework
These ideas were first based on a large research project into
national culture differences across subsidiaries of a multinational
corporation (IBM) in 64 countries. Subsequent studies by others
covered students in 23 countries, elites in 19 countries, commercial
airline pilots in 23 countries, up-market consumers in 15 countries,
and civil service managers in 14 countries.
These studies together identified and validated
five independent dimensions of national culture differences
1. Power distance
2. Individualism
3. Masculinity
4. Uncertainty Avoidance
5. Long Term Vs Short Term Orientation
All Sources are from personal Website of Prof Hofsted
[ http://stuwww.uvt.nl/~csmeets/ ] and related linked web pages
 Prof Geert Hofstedes Framework

Power Distance
Power Distance is the extent to which the less powerful
members of organizations and institutions (like the
family) accept and expect that power is distributed
unequally.
This represents inequality (more versus less), but
defined from below, not from above. It suggests that a
society's level of inequality is endorsed by the
followers as much as by the leaders. Power and
inequality, of course, are extremely fundamental facts
of any society and anybody with some international
experience will be aware that 'all societies are unequal,
but some are more unequal than others'.
 Prof Geert Hofstedes Framework

Individualism
Individualism on the one side versus its opposite, collectivism, that
is the degree to which individuals are inte-grated into groups.

On the individualist side we find societies in which the ties between

individuals are loose: everyone is expected to look after him/herself
and his/her immediate family. On the collectivist side, we find
societies in which people from birth onwards are integrated into
strong, cohesive in-groups, often extended families (with uncles,
aunts and grandparents) which continue protecting them in
exchange for unquestioning loyalty. The word 'collectivism' in this
sense has no political meaning: it refers to the group, not to the
state. Again, the issue addressed by this dimension is an extremely
fundamental one, regarding all societies in the world.
 Prof Geert Hofstedes Framework

Masculinity
Masculinity versus its opposite, femininity, refers to the distribution
of roles between the genders which is another fundamental issue
for any society to which a range of solutions are found.
 Prof Geert Hofstedes Framework

Uncertainty Avoidance
Uncertainty avoidance deals with a society's tolerance for uncertainty and
ambiguity; it ultimately refers to man's search for Truth.

It indicates to what extent a culture programs its members to feel either

uncomfortable or comfortable in unstructured situations. Unstructured situations
are novel, unknown, surprising, different from usual. Uncertainty avoiding cultures
try to minimize the possibility of such situations by strict laws and rules, safety and
security measures, and on the philosophical and religious level by a belief in
absolute Truth; 'there can only be one Truth and we have it'.

People in uncertainty avoiding countries are also more emotional, and motivated
by inner nervous energy. The opposite type, uncertainty accepting cultures, are
more tolerant of opinions different from what they are used to; they try to have as
few rules as possible, and on the philosophical and religious level they are relativist
and allow many currents to flow side by side. People within these cultures are
more phlegmatic and contemplative, and not expected by their environment to
express emotions.
 Prof Geert Hofstedes Framework

Long Term Vs Short Term Orientation

Long-term versus short-term orientation : Refers to how much
society values long standing as opposed to short term traditions
and values

It can be said to deal with Virtue regardless of Truth. Values

associated with Long Term Orientation are thrift and perseverance;
values associated with Short Term Orientation are respect for
tradition, fulfilling social obligations, and protecting one's 'face'.
Both the positively and the negatively rated values of this
dimension are found in the teachings of Confucius, the most
influential Chinese philosopher who lived around 500 B.C.;
however, the dimension also applies to countries without a
Confucian heritage.
 France

http://www.geert-hofstede.com/hofstede_france.shtml
http://www.cyborlink.com/besite/france.htm
http://spectrum.troy.edu/~vorism/hofstede.htm
 U.K.

http://www.geert-hofstede.com/hofstede_united_kingdom.shtml
http://www.cyborlink.com/besite/united_kingdom.htm
http://spectrum.troy.edu/~vorism/hofstede.htm
 India

http://www.cyborlink.com/besite/india.html
http://spectrum.troy.edu/~vorism/hofstede.htm
http://www.geert-hofstede.com/hofstede_india.shtml
 GLOBE
GLOBE is the acronym for Global Leadership
and Organizational Behavior Effectiveness,

A cross-cultural research effort that exceeds

all others (including Geert Hofstedes
landmark 1980 study) in scope, depth,
duration, and sophistication.
 Introductory Overview of the GLOBE Research Effort

Conceived in 1991 by Robert J. House of the Wharton School of the

University of Pennsylvania, and led by Professor House, the GLOBE Project
directly involved 170 country co-investigators based in 62 of the worlds
cultures as well as a 14-member group of coordinators and research
associates. This international team collected data from 17,300 middle
managers in 951 organizations (for details about the research sample, see
Note 1). They used qualitative methods to assist their development of
quantitative instruments. In order to accurately and sensitively record the
nuances of local meanings, all instruments were developed in consultation
with members of each target culture, and instrument translation was done
with enormous care. Specific attention also was paid to the effect of
"response bias" on data-gathering and -analysis (Note 2). Relevant
previous literature was exhaustively reviewed and, as appropriate, applied
(making the book being overviewed here a veritable bibiographic
goldmine). Ultimately, 27 research hypotheses were tested.

http://www.grovewell.com/pub-GLOBE-intro.html
GLOBEs Standards for Measurement:
Nine "Cultural Dimensions"
Assertiveness
Future Orientation Scale of 1-7 used

Gender Egalitarianism
Another significant fact about
Humane Orientation GLOBEs nine cultural dimensions
is that each one was
In Group Collectivism conceptualized in two ways:
Institutional Collectivism practices or as is, and values or
should be.
Performance Orientation
Uncertainty avoidance
Power Distance
 Cultural Dimensions (1)
Assertiveness: The degree to which individuals are assertive,
confrontational and aggressive
Future Orientation: The degree to which individuals plan,
invest in future, delay gratification
Gender Egalitarianism: The degree to which gender role
differences are minimized
Humane Orientation: The extent to which individuals are
rewarded for being fair, kind, and caring
Institutional Collectivism: The degree to which collective
action and distribution is rewarded
 Cultural Dimensions (2)
In-group Collectivism: The degree to which individuals
express pride in and loyalty to small groups such as family and
friends
Performance Orientation: The degree to which higher level
people reward performance
Power Distance: The degree to which unequal distribution of
power is encouraged
Uncertainty Avoidance: The degree to which people avoid
uncertainty by relying on norms, procedures, etc.