10 Tips For International Business Success

I’m very pleased to announce our 10 Tips For International Business Success booklet is now available for free download. This first book in the series is a concise companion for International executives and managers. It provides 10 absolutely critical lessons when working abroad or with overseas partners and teams.

Tip #1: Time After Time

10 Tips For International Business Success (Zacharias Beckman)
10 Tips For International Business Success (Zacharias Beckman)

Americans associate being late with being unreliable. But in many cultures, timeliness is not expected and can be construed as being rigid and uncompromising.

Unlike some Western cultures, many Asian and Latin cultures have higher cultural priorities than timeliness. For example, in some cultures it would be unthinkable to end a meeting because the allotted time had run out. This would be taken as a direct insult, essentially sending the message that your host is less important than your own time. It’s understood that if someone is late, it’s because they are invest- ing time with another person. In time, your turn will come as well. This difference leads to cultural conflict and misunderstanding…

Read the rest of this tip, including which countries and regions it applies to, strategies for working successfully with these cultures, and how to adjust to different business practices by downloading your copy today!

Get 10 More Tips, Free!

We wanted to make sure you get a fantastic value here, so there are actually 10 more tips in the book, along with quotes from business leaders and luminaries throughout the Global business industry:

Relationships are built between individuals, not between companies. Thus it’s important to keep the same people coming to India so the process doesn’t have to be repeated for each neophyte. When Western companies reassign resources too quickly and put someone new in charge of an India initiative, they program themselves for failure. — Gunjan Bagla, Doing Business in 21st-Century India

Look For More Tips…

Look for our other International guides, as soon as they go to press! Our other guides will be posted here, just like this one… Look for:

  • 10 Tips For International Travel
  • 10 Tips For Managing International Teams
  • 10 Tips For Communicating Globally

We’re delighted to offer them to you completely free, and hope you will enjoy reading them as much as we have enjoyed creating them.

The Changing Global Landscape

Domo and CEO.com recently released an intriguing infographic focused on the shifting landscape around Global Fortune 500 firms around the world. As Josh James of Domo writes:

Domo and CEO.com researched a decade’s worth of data about the Global Fortune 500 to see how the Global F500 landscape has shifted over the past decade. The research showed that even though there’s been quite a bit of change due to globalization and innovation, much has stayed the same. For an interesting look at the data, check out our new infographic. — Josh James, Founder, CEO & Chairman of the Board

The Shifting Global Landscape

The Changing Global Landscape
The Changing Global Landscape — by Domo and CEO.com

There are some intriguing changes worth mentioning in this infographic, but the most interesting change is evident over the past few decades. Over the past 20 years of so we’ve seen the United States’ dominance as “the” #1 World Power erode. Today, America seems to be coming to terms with the idea that it’s going to be duking it out for a spot in the top five.

Many of the financial market gurus I network with believe America’s #1 position as a World Power, at least from a financial perspective, is a lost cause. Taking a look at the inset graphic, their position seems justifiable. China rose from  6th to the 2nd position last year, in terms of countries with the most GF500 firms. With that kind of momentum is there any way the U.S. will hold on to position #1? (Note that this chart is showing only the number of GF500 firms, not economic strength… but it’s still a telling tale).

There are signs that the U.S. is waking up to the Global landscape, and taking action. For example, Domo’s infographic points out that last year marked the end of a decade-long decline in the number of GF500 companies from the United States. A good sign, but it’s still a “bottom of the curve” position.

In the meantime, China and Taiwan are experiencing phenomenal growth: Both countries representation on the GF500 has increased six-fold in the same decade.

Where’s It All Heading?

I believe the United States is at a critical juncture. It has been the number one World Power for a long time. It claims to have outlived almost every other democratic nation (though others may have better claim). But its position is rapidly eroding, and soon the U.S. may be the second, or the third, world power. As Americans start to realize this, they are looking around. We represent less than 5% of the world’s population, and the rest of the world has been watching us for a long time. The question is, how will America react to this changing world dynamic? Will it shift course, and become the global power it can become? Or will China and India overtake the U.S.? Whatever the outcome, the world is now global, and businesses operate on a world-wide scale. It’s a growth time. It’s an exciting time. And Hyrax is ideally positioned to guide, nudge, educate, and participate in that growth.

Good Management In Asia Is Hard To Find

There’s a stark scarcity of qualified management throughout much of Asia. According to the European Chamber of Commerce in China, the scarcity of qualified workers is the number one human resource challenge in China. This is causing two growing problems. First, creating effective, reliable teams, the kind that Western partners expect, is proving to be a serious challenge. Another is cost: With so few qualified workers, those few can command very high paychecks. Mercer recently reported that the median salary for an upper-middle manager in Beijing has risen to over $105,000, which is more than two-thirds the salary in the U.S.

That cost is translating directly into a changing Global landscape. Today, an upper-middle manager in India makes well less than $60,000, compared with $105,000 in China. The cost of labor in China has been sky rocketing, leading Boston Consulting Group to advise that manufacturing costs in China will roughly equal that of the U.S. by 2015 (taking into account rising wages, labor productivity and other factors).

Two Cases: Management in Asia

According to Bob Boyce, CEO of Shanghai-based Blue Horizon Hospitality Group, the scarcity of capable managers “is the biggest thing holding our business back.” Boyce has had to train his managers from scratch. None of his 800 employees had the management experience he needed, so instead he developed a training program that immersed trainees in different aspects of the business. He weeded out the ones that couldn’t cut it, and promoted those that proved to have management skills. Even so, the managers coming out of the program aren’t like Western managers. He’s had to put a lot of oversight and redundancy in place that wouldn’t be needed in the U.S. Responsibilities are narrowly defined, with individual managers given clear, well-defined roles. Boyce had to create detailed procedures and checklists on everything from how waiters interact with customers, to hygiene procedures, to how food is prepared in his restaurants. And everything is double-checked by a general manager. Boyce estimates that, to compensate for the lack of mature management skills, he employs about 30% more people than in the U.S.

Similar challenges face companies seeking to do business in (or with) India. Richard, CEO of a technology firm in Southern California, outsourced his project development to India. He soon learned that the quality of his product wasn’t meeting expectations. To compensate he set up an elaborate oversight program. Rather than having a single project team, development work was given to one vendor while quality assurance was handled by another. A third, independent firm, provided general management over the other two and kept everything running smoothly. “We had to make sure there was a segregation of responsibilities. And we had redundancy. This way, the management firm had one job to do: Cry foul if things weren’t going perfectly.” Richard estimates the entire workforce was probably about twice the size a U.S. team would have been. Even so, he adds, “it probably cost us half as much as doing it in the U.S.”

Taking Western Management East

Ascribing Western expectations to Eastern business managers is part of the problem. Many firms are just starting to understand that the best practices of Western management theory are, in fact, only useful in “the West.” Taking those theories East just doesn’t work, and changing that fact won’t be easy.

Many Asian cultures — including China and India — emphasize exam-based, fact driven education. This approach excels at grilling students on rote memorization and recall of facts. But while this style of learning creates strong skills, both countries have frequently been lambasted for failing to develop creative thinking and critical analysis. According to a recent article in Time Magazine, Premier Wen Jaibao complained that “students don’t only need knowledge; they have to learn how to act, to use their brains.” (Nov. 2013)

Another reason Westerners have a disconnect with Eastern management style is business culture. The best thinking in Western management theory relies heavily on empowering workers — both to think critically, and to express ideas and criticisms freely. Neither of these approaches fit well with Asian culture. Challenging the status quo is a foreign, Western idea. Most Asian countries have rich, long-lived histories, embedded with ideas about respect, hierarchy, and an individual’s role in society. A strong sense of “place” within that society includes the notion that decisions are better made by elders, and challenging those decisions is rarely acceptable. Telling your boss his ideas aren’t suitable is an affront to “face.” Your boss could lose face in front of the team, and consequently you lose face for breaking from a socially acceptable role.

[quote]The new iPhone 5s is assembled in China. Very little of the phone’s innovation comes from China, though. It was designed in the U.S. and three-fourths of the production cost is from imported components. — Time Magazine, Nov. 18[/quote]

These traditions and ideas are firmly rooted, often in literally thousands of years of rich cultural heritage. Changing how people are raised and educated, and how society functions, won’t happen overnight.

Solving the Management in Asia Conundrum

Many Asian cultures are going to be intensely task oriented, and that means looking for innovation elsewhere. Critical thinking and a willingness to challenge assumptions will be hard to instill in a team raised and educated to believe it’s not socially acceptable. Conversely, these same teams will be excellent at executing well-explained plans and carefully thought out procedures.

Creating high standards of output and quality will mean having more oversight. Separating verification into a completely independent role is important, too. While many Western teams are used to the idea of looking at their own ideas critically, this won’t typically work well in some Asian cultures.

[quote]Without proper managers, everything has to be over-engineered. — Bob Boyd, CEO, Blue Horizon Hospitality Group[/quote]

Another way of looking at it is simply this: Everything will have to be over-engineered to avoid mistakes.

It’s also important to keep in mind, the landscape is changing. As the cost of labor in China rises, we’re starting to see the workforce of China evolve. At the same time, China is starting to outsource its own work to less expensive countries, and American firms are starting to look for alternatives as well.

Developing a business partnership with any overseas firm needs careful forethought and planning. Most important, you’ve also got to have real experience on your team. That means having someone familiar with your target culture, who understands the business economy and business preferences of the region.

7 Ways Western and Eastern Business Relationships Differ

Something that always surprises Westerners about Asian, South American, and Middle-Eastern (or “BRIC”) business culture is how deeply relationship driven it is. Westerners tend to think business in the East is much like business in the West, and that a good sales pitch makes a good sale. After they try this approach, we hear those same business people saying, “We’ve made so many trips to India, and it seems like there’s a lot of interest but nobody is closing the deal!” Sometimes we hear, “They don’t seem to want to spend any money, but they keep meeting with us and nobody commits to anything. We should pull out, there’s no market here.”

Eastern Business Relationships

The fact is, BRIC culture will not engage in business until a strong personal relationship has been built. It takes months, if not years, to build these relationships. In China, for instance, it is assumed about half a dozen dinners, over many months, is about right to get to know each other. During these largely social experiences, conversation is about life, children, philosophy, the arts, and a host of other topics that have nothing to do with business (a few things that should be avoided include politics, and anything related to business). Only after a potential partner gets to know you, and trust you, will the door be opened to discuss business.

Relationships are so close in many Asian cultures that the distinction between “business” and “personal” becomes blurred. For instance, Indians are welcome to drop by the home of a potential partner to get to know them better, and it would be rude not to invite them to stay for dinner or even to spend the night if they have travelled far. This holds true in many countries across Asia and the Middle-East.

Years ago I hadn’t done my research before making my first Indian business trip (there wasn’t much information available at the time). That first trip was difficult, not only for me but also for my Indian business partner. My brusque American nature and “let’s get it done” approach didn’t fit well with local culture. Twenty years later my trips around Asia are far more successful. I know the importance of slowing down my “American clock,” and of building those strong relationships. I focus on building strong business connections that are much more resilient than Western ones. On my last trip, I spent every evening having dinner with different groups of people, or spending some time at their homes. It was during these social periods that I learned important things about our project: Who we could trust implicitly, what problems we might run into, and where the political lines lay. These things aren’t discussed in the office because it’s too formal a setting — so if you don’t build the personal connections, you miss out. By the end of the trip, we knew each other better — and that means today we know how to do business together.

Eastern cultures, at least in comparison to Western norms, place higher value on strong relationships, saving face, and long term planning. Of course, ascribing the same attributes to all of the BRIC and all of Asia would be misguided. Keep in mind that the following is a list of core cultural traits that Easterners will generally value more highly than Westerners.

  1. Relationships are emphasized more than the “letter of the law”
  2. Aspiration and intentions matter strongly, not just measurable performance
  3. The good of the group outweighs the needs of the individual
  4. Face-saving tact is absolute (I’ll post an article on this complex topic soon)
  5. Long past history and achievement matters, often more than recent history
  6. Rewards should be consistent with effort, not just results
  7. Long-term thinking (years ahead, not just this year) versus short-term gains

Of course, jumping in with both feet and no preparation is the worst thing you can do. Take the time to prepare. Something as simple as talking over your plans with someone from the target country can go a long way. And if you really want to know how well your team will do, consider a cross cultural assessment or workshop.

The Changing Face of the U.S. Job Market

Official unemployment levels are down, showing fits and starts at improvement. Setting aside arguments about whether these figures are ignorant of the real picture, signs of improvement have taken root. Nevertheless job creation still isn’t what it should be, and the amount of time it takes find a lost job is hovering around a record of 35 weeks — longer in many cases. So, what’s the hold up?

Are we experiencing a jobless recovery, or facing something much more fundamental? Should we be challenging the assumption that job recovery will automatically follow on the heels of economic recession?

Historically job recovery has always followed times of recession. However, if we are facing new, fundamental shifts in the economy, history need not necessarily repeat itself. The changing economic landscape could be forcing the U.S. into a structural change, not a cyclical one.

This article originally appeared in 2011, but has been updated and reposted here as we move to our new system. We hope you find the revised article interesting. We feel that the changes to the U.S. and global economies discussed here are still very relevant, and just beginning to take root.

The Shifting Job Landscape

The influence of the global economy is undeniably bringing about changes that are both new and unanticipated. As information flows around the world instantly, new possibilities open up — particularly in markets that deal with intangible assets, such as intellectual property, market data, and ideas. Technology is combining with the global landscape, forever altering how we do our work, and what the end product of that work looks like. The result is a truly global work force, where our “office mates” could well be halfway around the world, where companies leverage 24-hour work cycles by spreading their staff around the globe, and formerly distant economies are suddenly right next door.

Combined with the effect of a global work force — in fact, fueled by that very force — comes the inevitable realization that the U.S. market is a small part of a much bigger system. Coca-Cola saw its revenue more than triple in Q4 of 2010, bringing in nearly 75% of its revenue from international markets while domestic growth lags at 7% compared with 11% internationally. At the same time, IBM has more workers outside the U.S. than inside it. As international barriers and distance continues to shrink, the U.S. will increasingly find itself a member of a global community — one with nearly 7 billion members, of which less than 5% live inside the country.

The influence of the global economy, technology, and developing globalization trends have combined to create a “megatrend,” a fundamental change in the nature of the job market. With massive numbers of workers available, and markets that dwarf the value of domestic markets, the U.S. must change its perceptions. We have to realize that the manufacturing jobs that have left the country aren’t coming back. Likewise, the global nature of information and intellectual property means we must adapt to a world in which global workforces play a part in domestic economics on a daily basis.

Surviving The Shift

U.S. businesses need to learn new tricks, and U.S. workers need to keep pace. The global economy is not tolerant of insular economies or attitudes. In contrast to shrinking distances, the consumer market is growing faster than ever before. We have to face that realization that companies such as Coca-Cola are seeing a world where domestic markets matter less than global ones.

To survive in this new landscape, the U.S. will need to strengthen its global position. This means a greater focus on education, not only to strengthen our domestic work forces’ position in the new economy, but to re-establish the U.S. as the preeminent source of higher education. Many countries have long regarded the U.S. as the best possible place to send their best and brightest for education, but that distinction has slipped in the past decade or two.

Having a strong education program won’t, by itself, solve our long-term concerns. As a whole, the U.S. needs to integrate into a global culture that represents this newly emerging market. Formerly, the U.S. has been notoriously insular. We are one of very few countries in the world where the educated speak only one language. Our appreciation for the arts, culture, and mannerisms of foreign people is poor, at best. As a people, U.S. citizens pay precious little attention to world politics. The effect is like that of a child raised without adequate social interaction. We don’t know how to play with the rest of the world, and are often perceived as ignorant of social and economic events. In the landscape of this shifting economy, we need to develop a better understanding for who our neighbors are, and fast.

This means a more educated professional work force, and business services that are more attuned to the needs and wants of a global people. Executives of the future will be expected to converse with global partners, understand the subtle nuances of international communication, and readily connect with counterparts in foreign countries. Americans without international skill sets and only one language to rely on will be left behind.

The Good News

According to the Bureau of Labor Statistics; Moody’s Analytics, 37.6% of forecast shares of newly created jobs in 2012 will demand a Bacholor’s degree or higher, up from less than 8% in 2010. Moody’s indicates that in 2011 the better educated will control 60.1% of all new jobs, but by 2015, the projection rises to 66.4% even after construction bounces back. According to Time (Where The Jobs Are, January 17, 2011), the University of North Carolina at Chapel Hill’s career services office reports that 7% more interviews were scheduled by companies on campus this past fall than the year before, a fact that seems to support Moody’s projections.

Time also reports that Gautam Godhwana, CEO of SimplyHired, is seeing dramatic signs of job market improvement. “Before the downturn happened, we had 5 million job openings. This dropped to 2.1 million job openings in the first months of 2009, and lo and behold, in the second half of 2009 the bottom fell out of the economy.” But he notes that the reverse is now happening, “In the last six months we’re back to 5 million jobs in our database. So there are some reasons to be optimistic.”

All of this seems to support the idea that the U.S. is beginning to perceive the need for change. The education market and professional services will do well in this climate. According to Moody’s, technology is leading the way. The strongest growth (defined by more hires combined with more job openings) will be in professional and business services, specifically, the technology sector. Network systems and data analysts, and professionals suited to global IT projects, are among the fastest growing sector after biomedical engineers. Bill Saporito, Time Magazine, writes:

And [the recovery] will favor companies that sell abroad rather than those that depend solely on domestic demand. “Any industry that is very focused on exports will do well,” says Nariman Behravesh, [chief economist for IHS Global Insight]. “Agriculture, aircraft, high tech.” He would include education in that segment, since so many foreign countries send their best and brightest here.

Education, professional services, and technology are the gateway into the new global economy. It will take time for the shift to take root, likely years before we find out if the U.S. can successfully discard outmoded ideas about where the jobs are. Until then, we still have record levels of unemployment to deal with, and a work force that needs to adapt to change.

But the U.S. still has a stable economy that is the world’s largest. It can handle short term unemployment and restructuring, provided that it stops treating the current change as temporary. Many jobs in sectors such as manufacturing and even technology are gone forever. The next step is to assess the new landscape and begin to change accordingly. We need to refocus our sights on superb education and technological leadership, where the U.S. was once undisputed leader. Likewise, cutting-edge infrastructure will be necessary to deliver on the promise of being a world leader once again. The U.S. has to change its perceptions — and until we do, we’ll keep playing catch-up.