Where To Invest Around The World In 2014

Are you looking to diversify your investments, spreading your money around the world? It’s a great idea. A multinational investment strategy protects you from fluctuations in one region. But in today’s tumultuous world, with geopolitical upheaval and unsteady markets, where should you invest?

Daniel Altman may have what you need. In Foreign Policy’s Where To Invest Around The World, 2014 Edition, he offers some great insight. His Baseline Profitability Index (BPI) maps economic growth, financial stability, physical security, corruption, expropriation by government, exploitation by local partners, capital controls, and exchange rates. His goal: To map the total pre-tax return on investments in a region.

Baseline Profitability Index (BPI)
Baseline Profitability Index (BPI)

Darker countries indicate a higher score on Daniel Altman’s Baseline Profitability Index for 2014, meaning they are a better bet for foreign investment. The index considers asset growth, preservation of value, and repatriation of capital. Botswana ranks the highest in 2014 with a BPI value of 1.31; Venezuela ranks the lowest at 112, with a score of 0.63.

As Altman writes, the shifting global landscape has moved a lot in the past year: “In just the past 12 months, quite a lot has changed in the global investing environment. Some struggling economies have found their feet, notably in Europe, while others around the world have fallen victim to conflict. A few have improved their economic institutions, too; neighbors Greece, Macedonia, and Turkey all bolstered legal protections for investors, and nearby Azerbaijan strengthened its property rights.”

This year’s edition of the index has a few changes over last year. Most notably, a new source is used for measuring the likelihood of government expropriation. Altman is using the Index Of Economic Freedom in this 2014 edition.

The index suggests that not every fast growing country around the world is a great target for investment. You need to take into account the risks of each market — that’s the purpose of the index, after all. But it’s also important to make an educated decision. All indexes have their limits. For example, after switching to the Index Of Economic Freedom, China dropped from position 21 to 43 on the BPI. While the new approach is hopefully more accurate, it also illustrates why it’s important to understand the data.

Despite the change to the Index Of Economic Freedom, and shifts in the geopolitical landscape in the past year, India has maintained its position at number 6 on the index. Altman feels this is, “In large part because of the potential for real appreciation in the rupee.” He adds, “This may now be more likely than ever, thanks to Narendra Modi’s supposedly reform-minded government and the strong hand of Raghuram Rajan at the central bank.”

Time Orientation And International Success

If you missed the first part of this six-part series, see: Part 1 of the series, Creating An International Culture Of Success, or see the entire series right here.

How we think of time is a tricky subject, and one that varies from one culture to another, as I’ve talked about before. Does your culture view time as more fluid, a resource that is infinite? Or is timeliness and meeting deadlines of critical importance?

Time, Projects, And Business

In the project context, time becomes very meaningful. To the business, meeting a product delivery date can be the difference between success and failure — but, at the same time, different cultures will view the importance of meeting that date relative to other priorities. In strongly relationship-driven cultures, for example, the date is subordinated to relationship building. Customer happiness may be more important than shipping before the Christmas buying season. It can also imply an expectation of tolerance and understanding when dates slip.

Time can have a dramatic impact on our business relationships as well. When Japan and Australia entered into a sugarcane export agreement, conditions where beneficial for both parties. As time changed market conditions, Japan ended up with the “dirty end of the stick.” But the relationship-centered business model of Japan led to a huge misunderstanding when Australia refused to renegotiate business terms — in essence, Australia felt the timing of the deal was good fortune for them, while Japan expected that business terms would adjust as time went on. A very fixed versus fluid perspective (and one that resulted in a long and nasty dispute).

The American phrase “time is money” indicates how the typical American prioritizes time, but this approach never works in a culture that prioritizes the relationship (meaning, most of the Middle East, South America, and Asia). To these cultures, it’s more important to get to know each other, to build a trusting relationship, and then begin talking about business. There will always be time to make money together — in the future. Anyone that rushes the process is probably going to be viewed as impetuous, unreliable, or even untrustworthy.

The Global Project Compass™ identifies the following management disciplines as being most directly affected by time orientation:

  1. Project Time Estimation
  2. Quality Assurance Plan
  3. Requirements Management
  4. Testing Plan
  5. Acceptance Plan
  6. Performance Measurement

Project Time Estimation

Probably one of the most obvious consequences of viewing time differently is how we estimate time. Is that estimate a “drop dead” date that we absolutely will meet, no matter what? Or is it an average of where we’ll end up if all goes reasonably according to plan? Might it merely be a hopeful guess at what could be possible?

Depending on your culture, any of these options will be true. Understanding how your partner’s culture views time is crucial to knowing what a project estimate means.

Quality Assurance Plan

Planning the successful — and problem free — launch of any product demands forethought. It demands awareness and convergence of many different plans: Research, development, supply, construction, testing, marketing, customer support, distribution, and more. In a multinational situation, supply chain logistics and regional conditions ranging from weather, product availability, and local holidays play into it.

Assuming a quality assurance organization that is timely and schedule driven, it’s not hard to imagine how difficult their job must be. Consider a global team, where different offices have different notions about the priority and meaning of “time.”

And finally, ask yourself: How does our quality assurance organization, itself, think about time? Is being on time important? Is it one of the quality metrics they are watching out for?

Requirements Management

Are the requirements known at the outset of your project? Or are they vague and fuzzy, with new features “popping up” here and there? Scope creep, or the unending addition of new requirements, is one of the most dramatic influencers on a project.

If your business cares about setting a clear end-point for a project, the team needs to understand that. In cultures where time is fluid, the idea that a product is set in stone and cannot change will seem irrationally rigid and short-sighted. At the same time, projects that seem to shift like a sand dune under someone’s feet will drive a sequential, time-oriented person crazy.

Setting the right expectations is part of the solution, but also knowing how to leverage the strengths of each perspective is key.

Testing And Acceptance

Different products take different approaches to testing. Software can begin testing early in the product life cycle, while manufactured goods need to be tested once they come off the production line. In all cases, though, testing and acceptance is critical and needs to happen at the right time, and in the most effective way.

Both are “critical paths,” too. This means that someone, somewhere, is waiting on the results of testing or acceptance.

Will your testing team be ready to go at the right time? Will the right urgency be applied to the process — or will testing be run like like a fluid project, adding new requirements on the fly?

Time Orientation: Fixed Or Fluid?

Understanding time orientation means knowing how to build a healthy organization — one that supports the time orientation of its employees, without sacrificing necessary business goals. It’s a tough topic to master, because how we think about time is so deeply ingrained in our subconscious. It’s a part of who we are, and changing that doesn’t come naturally.

Think about how you feel, when kept waiting in the conference room for the other team. Are they late, rudely wasting your time — or are they instead thoughtfully giving you a few extra minutes to prepare, while they respectfully and unhurriedly wrap up another meeting?

Think about how hard it will be to change that initial, first reaction, the next time someone is “late,” or seems offended that you are not “prompt.”

Cover graphic attribution: The artist and visual designer Yang Liu was born in China and lives in Germany since she was 14. By growing up in two very different places with very different traditions she was able to experience the differences between the two cultures first-hand.

Communication Style And International Success

If you missed the first part of this six-part series, see: Part 1 of the series, Creating An International Culture Of Success, or see the entire series right here.

I’ve posted a lot about how communication style varies dramatically from one culture to another (including this great infographic on how different cultures negotiate). It’s both very obvious, a clear variation in how we interact, and at the same time deviously subtle in how quickly it can derail an otherwise healthy team and project.

Different Styles Of Communication

Low context cultures, most often associated with Western, industrialized countries, pride themselves on a directness that is unparalleled in other cultures. Lack of subtlety and being “honest and straight-shooting” is the norm. But these cultures end up missing most of the conversation when confronted with high context, rich communication styles.

High context cultures (especially Middle Eastern and Asian, but also South American, some European, and African countries) don’t know how to communicate in this simple, direct style. Confronted with direct, low-context partners, it’s as if 90% of their vocabulary is stripped away. The rich subtlety conveyed in circumstance, timing, silence, body language, story telling, deference, saving face, and tone are missing — leaving behind nothing but blunt, inelegant words (often, to make matters worse, in a second or third language on top of it).

Communication Style: Expressing Opinions (East vs. West)
Communication Style: Expressing Opinions (East vs. West)

Understanding one another’s communication style and being able to adapt, and interpret signals from both cultures accurately, is critical.

The Global Project Compass™ (introduced in Part 1)  identifies the following management disciplines as being most directly affected by communication style:

  1. Continuous Improvement Plan
  2. Segregation of Duties
  3. Project Management Plan
  4. Project Monitoring, Execution, & Control
  5. Change Control & Management
  6. Communications Plan
  7. Performance Measurement

Continuous Improvement Plan

Your continuous improvement plan is absolutely affected by other business cultural preferences, but communication style has a huge impact. Continuous improvement relies on understanding each other without ambiguity. Anything that stands in the way will throw sand into a delicately working machine. Processes like CMMI (the Capability Maturity Model) rely on putting complex, integrated processes into action. Everyone has to understand the process, support it, and pursue it’s objectives.

Segregation of Duties

The Compass also identifies segregation of duties as highly affected by communication style. Clearly defined roles are important in any organization. Segregation of duties is intended to create checks and balances to enforce standards or, in some cases, prevent fraud or malfeasance. One way of looking at this is whether control is unchecked in one person (or one office). A common reason to separate quality assurance, giving it authority on its own, is to support a separate office that has the authority to enforce quality (or at least, stop a project that is not going well).

For this to work, communication lines must be clear. How can quality assurance know how the project is going if there is limited, inaccurate, or unclear communication?

It’s important to note that power distance also deeply affects segregation of duties. The political alignments and often muddied visibility of some organizations create complex, co-dependent relationships. These relationships interfere with the goals of segregating duties.

Project Management, Monitoring, and Change Control

Excellent project management relies on clear communication as well. Across a culturally diverse organization, “clear communication” can mean many things. How does the American manager interpret his Chinese subordinate’s silence, when critical feedback is expected? How will an Indian employee react to the direct communication of a German boss causes him to lose face? Building a project management plan that works well within the multiple, diverse cultural environments of a multinational organization is a challenge.

Performance Measurement

Knowing how your team, and your company, is doing demands no ambiguity. You’ve got to be able to assess performance accurately. For business performance, that means getting accurate, timely information. To assess your team, you need to understand and assess your team member’s contribution. That means understanding what everyone has to say, in their own subtle or not-so-subtle communication style.

Western-style “360 evaluations,” where employees critically evaluate their peers, subordinates, and superiors, rely on American-style direct communication. When used in other cultural settings the 360 evaluation completely fails. When compared to typical American feedback, French and German respondents more easily criticize, but hold back compliments — so evaluations appear much less positive. In many Asian cultures, the idea of openly criticizing is taboo. Here, evaluations come back with seemingly perfect marks — and that can lead to incorrectly concluding that the Asian office is perfect.

Communication: The Tip Of The Iceberg

Most often, problems between multinational teams get put down to bad communication. It’s true that communication is important. It’s also true that most cross cultural situations have communication barriers (and often serious problems). How well people communicate — or, how poorly your team is communicating — is a very visual indication that there are problems.

Just like an iceberg floating in the ocean, this visual indicator usually means there is more going on beneath the surface. When your team isn’t communicating, it’s time to look for other problems too.

Cover graphic attribution: The artist and visual designer Yang Liu was born in China and lives in Germany since she was 14. By growing up in two very different places with very different traditions she was able to experience the differences between the two cultures first-hand.

Power Distance And International Success

If you missed the first part of this six-part series, see: Part 1 of the series, Creating An International Culture Of Success, or see the entire series right here.

I’ve posted in depth on power distance and how it varies from one culture to another. To recap, power distance, or “PDI,” is the degree of inequality in society and the emotional distance that separates subordinates from superiors.

Many Western cultures thrive on very low power distance principles. Since most of today’s modern management theory has come directly from the West, this means these theories work great in Western cultures but tend to have problems in the East.

Most modern management expects employees to think independently, be honest and critical, question the status quo, and openly voice disagreement. Many recent management tools, such as Scrum and Agile methods, empower the employee so much that the line between “boss” and “employee” becomes blurred and — sometimes — almost eradicated.

Across much of the Middle East and Asia, this approach fails miserably. Traditional organizational structures don’t tolerate this approach. Direct criticism and questioning tends to be viewed as dissent. Respect for seniority, wisdom, and age play into it. Decision making happens at higher levels in the company, and decisions flow downward. Employees are expected to act in unison, provide information when requested, and respond like a well-oiled machine to the strategic decisions of their senior management.

The Global Project Compass™ (introduced previously) covers 27 project management disciplines. It identifies the following management disciplines as being most directly affected by power distance:

  1. Goal Setting
  2. Organizational Structure & Policy Setting
  3. Standard Compliance
  4. Business Case Validation
  5. Positive Assurance of Compliance

Goal Setting

As pointed out in the introduction, different cultures have different expectations about where their goals come from. Employees that are used to low power distance will feel slighted if they are not closely involved in setting goals, or if their voice is not heard. On the other end of the spectrum, those accustomed to being told what to do may conclude that their boss doesn’t really know what’s going on if too many questions are asked or if the boss seems to rely on subordinate opinions.

Organizational Structure & Policy Setting

Closely related to goal setting is policy setting, and that includes the hierarchy (or lack of hierarchy) in an organization itself. Employees from high power distance cultures tend to feel far more comfortable in an environment that provides clearly defined roles. That translates into greater hierarchy, and more clearly responsibilities. As Honeywell learned, without adequate training and management programs, their Chinese R&D department really had no idea how to go about inventing truly new products.

Standards Compliance

Compliance is an interesting topic to explore, because it shows off a reversal of competence along the power distance spectrum. Employees accustomed to high power distance and being given clear guidelines tend to flourish when it comes to compliance. Such standards provide a clear set of instructions, set boundaries, and make the job an easy one to follow (at least, when the standards are well documented).

Unfortunately, with poorly defined or conflicting standards, problems occur. Poorly written rote instructions rapidly lead to chaos when those instructions are in conflict — and high power distance cultures also tend to demonstrate little critical thinking or problem solving here.

On the other hand, with a team that is used to low power distance, standards can become a “thorn in the side.” These teams — trained to think critically and voice their opinions — often struggle to see the rationale or validity of standards. They might push back against them, although when the standards themselves are questionable this can be a boon: Those same teams will quickly point out flaws (and perhaps push to have the standards disqualified).

Business Case Validation

Critical thinking, scenario planning, and a talent for seeing the future are traits needed when validating a business case. These skills tend to flourish at the executive level in high power distance cultures, while the critical thinking of low power distance teams can be incredibly valuable to examine every aspect of a business model.

Positive Assurance of Compliance

Making sure that you are complying with standards is often the responsibility of the quality assurance department or a separate standards body. Power distance and organizational structure play a huge role. Assurance of compliance carries with it a need for authority. Failure in compliance means, potentially, putting a stop to project activities, and challenging the organization and the team (at least, in so far as ensuring products conform to agreed standards). Organizational structure is important, but often the standards compliance body is not set up with adequate authority — in some cases, being subordinate to conflicting objectives (such as project management). Ensuring that the right structure exists; that there is a separation of concerns; and there is authority to act, is critical, and very dependent on the cultural biases at play.

Cover graphic attribution: The artist and visual designer Yang Liu was born in China and lives in Germany since she was 14. By growing up in two very different places with very different traditions she was able to experience the differences between the two cultures first-hand.

Creating An International Culture Of Success

The International Business Dimension

Multinational teams present new challenges for the International manager. There are logistics problems: How do you coordinate teams that work in different time zones? What kind of collaboration can you create in a team that rarely sees one another?

As well as the logistic problems come cultural problems. For example, successfully creating a culture of innovation can be a challenge. Honeywell experienced this, according to a November, 2013, Time article, when Rameshbabu Songukrishnasamy began working as general manager of the company’s R&D centers in Shanghai and Beijing. He found his employees were not innovating. They weren’t tinkering or inventing on their own — not a positive sign in an R&D lab! “They were happy just doing what they were asked to do,” Rameshbabu says. The problem is, R&D is about doing something new.

A project manager for a large corporation in Brazil recently told me that the PMI Book of Knowledge is used infrequently at best inside Brazilian projects. He also warned against assuming that someone with a PMI certification has extensive experience, as is the case in the US. — Moore, Brandi, The Little BRIC Book.

Rameshbabu found that his Chinese workers had a fear of failure. They worried that the company would be upset if their work did not yield positive results, so they didn’t experiment. Another problem is that some Chinese engineers “tend to shy away from critical questioning,” a process that is fundamental in R&D. “The reason they are able to make so much innovation in Silicon Valley is that people question the status quo and find alternative ways,” says Rameshbabu. But he found that Chinese culture and education focused on rote learning, not critical thinking.

Creating A Culture Of Success

Creating successful International programs requires understanding and adapting to different business cultures. Applying Western management practices in Asia will fail, just as surely as transplanting Western employees into an Eastern environment. Imagine an independent, critical thinker from Silicon Valley landing in Foxconn, Shenzhen — where challenging the status quo is forbidden.

Team dynamics play a huge factor in management style, objectives, and capabilities. Building a culture of innovation is just one example of where these dynamics become complicated. Power distance will affect everything from goal setting to how problems are socialized. Communication style can quickly lead to misunderstandings. Differences on the fluidity of time can mean completely missing the mark with customer deadlines. And differences in identity and engagement style can lead to initial confusion, bad first impressions, or distrust.

This is why understanding business cultural practices is so important. Hyrax International LLC has a program that explores each of these five preferences. The program examines each of 27 different management disciplines, such as goal setting, risk management, change management, and assessing outcomes. The affect of business culture on each discipline is explored and explained, providing a road map to success on the International management scene. The company also offers many free resources to explain and explore International project management, and is also sponsoring Successful International Project Management, an in depth book that maps project management processes to cultural preferences.

We’ll be posting five more parts to this article (read Part 2, or see the entire series right here) in the coming couple of weeks. Each post will look at one of the five business cultural preferences, and briefly introduce how that preference impacts and affects the 27 management disciplines.

Hyrax International LLC’s Global Project Compass™ is the only visual map that clearly shows the connection between business culture and business process. This is what makes Cross Cultural Management™ so much more effective than traditional management.

The Compass maps 27 project management disciplines directly to business cultural preferences, and shows how these preferences affect business. The goal of the Global Project Compass, and Hyrax International’s associated management program, is to show how culture affects businesses worldwide — and to provide a clear map on how businesses can adapt successfully.

Where In The World…?

Have you ever wondered what makes the Global economy work? How your country makes most of it’s money? Or perhaps where people are migrating on a global scale? What language to speak in the U.S. if you don’t speak English? Here are some fantastic interactive maps and graphs to give us answers to a few of our Global questions.

What Does Your Country Export?

Do you know which export makes your country the most money? Using data from the CIA Factbook, the Global Post labeled every country in the world by its highest valued export (meaning, the commodity that makes the country the most money in the global market).

It’s probably not a surprise to learn that much of the world run’s on oil, and that Europe is where most machinery and automobiles are made (perhaps because of modernization but, also, a wonderfully centralized location). Take a look at the Global Post’s original article for a fully interactive map.

World Commodities Map
World Commodities Map: What is your country’s major export?

The Global Flow Of People

Did you know that from 1990 to 1995, about 366,000 people moved from Thailand to America — but only 72,000 did so between 2005 and 2010? Or that in the early 1990’s, most of the roughly 7 million people migrating around # moved between Pakistan, Iran, and Afghanistan — but that after 2005, that changed dramatically as people started to spread across India, Asia, North America, and Europe?

It’s fascinating to see how people migrate around the world, and even more interesting to wonder what motivates these changes in global flows of people. Thanks to Nikola Sander, Guy J. Abel & Ramon Bauer, we now have a fantastic interactive map to explore. Their Global Migration Flows Map was published in Science recently.

Global Migration Flows Map
Global Migration Flows Map

12 Charts To Make An American’s Blood Boil

Thanks to the article Overworked America: 12 Charts That Will Make Your Blood Boil, published by Mother Jones, we now know that while the U.S. economy has grown by about 60%, and corporate profits are up by about 20%, the American worker is not so lucky. “Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000,” writes Dave Gilson.

Take a look at Gilson’s article, which features a dozen interesting (and infuriating, if you happen to be American) graphs such as the following one, which shows how the “top 1%” wage rates have skyrocketed in the past decade, and productivity has been steadily pushed upward, but overall wage averages remain stagnant.

US Wage Gains
US Wage and Productivity Gains, 1979 to 2009

Most Common Language Other Than English

Finally, Ben Blatt at Slate brings us the definitive answer to the question: “In the U.S., what’s the most common language spoken besides English?” He breaks it down by State, which makes it all the more interesting. I would certainly have expected some diversity, given his research and source. “One of the most interesting data sets for aspiring mapmakers is the Census Bureau’sAmerican Community Survey. Among other things, that survey includes a detailed look at the languages spoken in American homes,” writes Blatt.

His first pass was revealing. The answer is Spanish, at least in all but a few of the 50 United States. In retrospect, perhaps this shouldn’t be surprising, but it did drive Blatt to take another pass, excluding both Spanish and English. Visit his original article for a more thorough breakdown.

Languages By State
The Most Widely Spoken Language in the U.S. Other Than English

Problem Solving Around The World

Have you ever wondered how different cultures approach problem solving in different ways? Here’s a quick, satirical, but not entirely inaccurate perspective on different approaches to problem solving.

How Does Your Culture Approach Problem Solving?

  1. German: I don’t know how to do this, but I’ll figure it out.
  2. Swiss: I don’t know how to do this, but we’ll figure it out.
  3. Indian: I don’t know how to do this, so we can’t do it.
  4. Chinese: I don’t know how to do this, but we can copy it to show our respect.
  5. Japanese: I don’t know how to do this, but we’ll figure it out, make it smaller, faster, and add some features.
  6. Spanish: I don’t know how to do this, but there’s plenty of time to work on it tomorrow.
  7. American: I don’t know how to do this, so we’ll buy it.
  8. Mexican: I don’t know how to do this, so I’ll work on something else right now.
  9. Italian: I don’t know how to do this, so let’s do something we know how to do very nicely.
  10. English: I don’t know how to do this, so we’ll build a team to tackle the job.
  11. French: I know how to do this.
  12. Russian: I know how to do this better than you.

Of course, country culture is much more complicated and this is just a humorous take on first impressions some cultures may give off. Really want to know how one culture might approach problem solving? Take a look at this post about negotiation styles.