Cultural Intelligence in global boardrooms
Business leaders need to develop cultural dexterity to make sense of today's turbulent and fragmented global business environment, especially when it comes to China and its new role on the global stage.
Originally published by Business Brain, the Think Tank of Templar Advisors, a leading international communication consultancy.
The trade war between the US and China has marked the beginning of a new paradigm bringing a new set of uncertainties. This requires global companies to develop a new mindset that adapts to these new challenges.
Most importantly, given the increasing importance of China as an economic and geopolitical actor, it is essential for western companies to develop a better understanding of this country beyond worn-out clichés and old ideological assumptions.
In this spirit, Business Brain has recently organised an executive briefing in London for some of Templar’s top clients. Templar co-founder Joseph Bikart explains: “We are keen to promote cross-cultural awareness and help our clients make more sense of China’s perspectives and behaviours.”
Our guest was Diego Gilardoni, an international advisor and speaker specialising in global business and communication, and the author of the book Decoding China.
Diego made an initial point on the need to change the Western mental map: “The global context has been profoundly reshaped, making it essential to develop new narratives that reflect the changing nature of global competition. Too many Western companies (and political leaders) still look at this new reality with old analytical frameworks that prevent them to having a full grasp of the context.”
This is particularly urgent when it comes to understanding China: “Using Western categories to analyse China is like asking a tailor to make a suit using a plumber’s toolbox.”
It is therefore essential to make a serious effort to try to better understand China’s culture: “Too many business people still consider culture as something soft that cannot be put into numbers. But, as exemplified by the massive blunder made by Dolce&Gabbana in China (with a controversial ad that led to a boycott campaign that cost the company millions of dollars), the consequences of underestimating culture can be very hard and very easy to measure.”
Untangling the complexity of Chinese culture is not an easy task. But, at least, there are a few crucial elements that, if taken into consideration, can help avoiding many missteps and misunderstandings.
The first one is hierarchy. Compared to most Western countries, China has a much more hierarchical culture, which makes the organisational and social pyramid much more vertical than the one we are used to: “Concepts such as flat leadership or inclusive leadership might be very fashionable in Western business schools, but they couldn’t work in China.”
Another important aspect to consider is that China is a relationship-based society, not a transaction-based society: “Business is business, friendship is friendship doesn’t work in China. In order for a business to be successful, a relationship based on mutual trust must be built before, and this takes time.”
Furthermore, in China the group is much more important than the single individual, which is exemplified by the fact that surnames come before names.
Preserving the harmony within the group is therefore much more important than the single individual’s need to express himself: “Communication needs to be indirect and implicit to avoid disrupting harmony and making someone lose face. It can become much more direct once a good personal relationship has been established.”
This also has an impact on negotiations: “Westerners tend to start with the items where there is more disagreement. The Chinese usually proceed the other way around. They begin by negotiating secondary and less contentious items to create a favourable context.”
The profound cultural differences between China and the West can be seen playing out also in the context of the sino-american trade war. Quoting Henry Kissinger, Diego pointed out that “while Western tradition prizes the decisive clash of forces, the Chinese ideal stresses subtlety, indirection, and the patient accumulation of relative advantage.”
These differences are reflected in the difference between chess and the Chinese game of weiqi (or Go): “While in chess the players play a decisive battle that leads to total victory, in Go the winner is the one who gains relative advantage through a patient and protracted campaign by showing a high degree of strategic flexibility.”
China will play an increasingly important role on the global stage, which will present both challenges and opportunities.
To face them in a more effective manner, Westerners cannot assume China will act in the way they would; not being able to see China’s perspective will prevent them having a more sophisticated grasp of the context of this new global competition.
As a final point, Diego said that we need to look beyond the current tensions and issues and understand that China has a very long-term view. “They play the long game, while we have lost the ability to think beyond the short term. From a strategic point of view, both the US and the EU need to rediscover the ability to think in the long term and shape a new grand strategy for the 21st century.”