In recent years, researchers have begun to suggest that companies invest time and resources into better understanding cross-cultural leadership practices as a part of their overall leadership development strategy. Their reasoning? Without taking into account the unique power dynamics that can influence how a company operates in a global context; business leaders are setting themselves up for failure and hardships. So, the question then becomes how does a professional lead well across cultures? And, what does it take for their organizations to excel in the global market?
Cross-cultural leadership requires building trust among people of various cultural traditions and more than likely, differing perspectives.
The difficulty in this is that culture often provides the context and framing in which a person’s understanding of specific issues is rooted. Culture shapes how relationships are formed, how conflict is managed and what accountability means to one person versus another. When working in a multicultural setting, these underlying issues concerning culture may soon bubble to the surface.
Take Amazon for example. Many know Amazon as a one-stop shop for nearly everything under the sun. Most famous for advancing shipping practices across the world, Amazon has been considered one of the leading companies in its field and has forced many of its competitors to offer incentive services ranging from rapid grocery pick-up to one-day shipping options on most online products to stay relevant. Their success and effectiveness, both domestically and internationally, has resulted in other organizations often viewing their business strategy as a best practice, of sorts.
Yet, underneath the high functioning global giant that Amazon is today is a long history of lessons learned when entering the international market.
In 2004, Amazon acquired Joyo, an online bookstore as a means of entering the Chinese market. Though the company was rebranded as Amazon China, they quickly learned that their rather successful United States business model of entry by acquisition, would not fare well for them in their new market base. Their misstep resulted in nearly $6 billion in estimated losses over ten years. Many would wonder how such a successful company could experience such significant profit losses. The answer: a lack of cultural consideration in their operations and failure to recognize differences in Chinese and American management styles and market demands.
Amazon isn’t the only company to fall victim to the hardships that come with cultural neglect. Other companies such as Groupon and eBay also offer concrete examples of what not to do when working with others from different cultures, and within the global market.
Blatant disregard of cultural differences for the sake of convenience, uniform operating practices and the stance of “they will eventually come around to doing things our way” is the quickest strategy for ensuring not only profit losses on a company’s monthly financials, but headaches for the professionals placed in this position.
Instead, the pressures of interconnectedness in global business require a new kind of leader that can communicate and work with individuals from diverse backgrounds and that is flexible enough to adjust their engagement strategies to meet the needs of their current environment. Take it from Amazon.
Additional reading: 2 Daily Practices of a Cross-cultural Leader
