Lately I’ve been engaged in a project where the theme of global leadership is very much to the fore, with a particular focus on the new and emergent set of competencies managers require to succeed in an increasingly connected environment. Teams are now comprised of multiple nationalities and frequently continue to reside in multiple locations, leveraging advancements in technology which facilitates their work as disparate teams. Tools such as Webex and Skype have transformed business practice, allowing real-time conferencing on a global scale in such seamless settings that individuals no longer feel the need to travel thousands of miles for personal encounters with staff or even customers. It’s possible – and even probable – that this stems from our increasing familiarity and comfort with mobile and web environments, at the very least to the extent that our natural inclination to require immediacy has receded to some extent.
For most companies, their competition is more global than ever before and their own organizational structures reflect this dynamic change. All of which leads to the question of how management can be prepared for such an environment. There is a long and historical track record in business and research relating to the ‘internationalization’ of managers in response to globalization. In particular, the work of Geert Hofstede from his experiences at IBM are a usual starting point for companies attempting to understand the need for cultural awareness amongst managers. Whilst there are many reasonable criticisms of his work there can be little doubt that the issues he exposed were real and had immediate implications for managers and companies in a global context. To take one example, Hofstede identified the challenge of managers from western cultures operating in environments where hierarchal structures are more definitive and where age and authority have greater implications – High Power Distance, to use his terminology. Even where cultural aspects can be said to be markedly different from the period when Hofstede prepared his research, most companies would attest to the embeddedness of many cultural norms and values. There are without doubt cultures which are more risk averse than others, a fact demonstrated capably by the strength of Asian banking during the recent financial crisis. How then does the manager prepare for working in this environment? More importantly, how does the company effectively train their managers without the usual costs and implications of international assignments which frequently fail under the duress of relocating families and personal lives?
The answer to this question drew me back to a piece of research conducted in 1998 and published in 2000 by Declan Doyle and F. William Brown. Their study was entitled “Using a business simulation to teach applied skills – the benefits and the challenges of using student teams from multiple countries” (available here) and it focussed largely on the benefits they found using simulations to teach specific business skills. Their research concluded that simulations were effective not only because they were an accurate representation of real-world environments and issues but also because the immersive nature of the task was highly engaging. However, probably the most interesting aspect to emerge from the study was the opportunity afforded to the participants to recognize and debate the intercultural approaches to business decision making which were, in many respects, unexpected and significantly different. In fact, this discovery was entirely unintended since it did not even feature in the primary or secondary objectives of the study.
In one example, the decision by US and Irish teams to close a poorly performing US plant and move production to Asia as a strategic cost-saving maneuver was met with horror by the French team who were more sensitive to the political and social implications of such a business decision. The ensuing debate then became one tinged with the need to consider ethical concepts such as Corporate Social Responsibility and the societal footprint of an organization. What is telling from this exchange is that the teams had to debate potentially seismic strategic decisions for the company based purely on cultural conditioning. The French model would seek to emphasise the importance of maintaining a presence on ‘home soil‘, even where it was potentially uneconomical to do so. Their argument would no doubt reference the potential damage to company reputation which would follow a decision which places profit above any other consideration. These are very real business issues and the complexity associated with their resolution is of increasing importance to all global organisations and businesses who do business globally.
This research demonstrates the diversity of the simulation experience and the unanticipated benefits that can ensue from their use. They offer a unique opportunity to place managers and business leaders (both current and future) in environments which recreate the complex cultural realities of the business world today. And in so doing, they have the capacity to improve both our understanding and our capacity to cope.
The Business Simulation Blog 