Moderator: Anthony Hill
June 16, 2010
9:42 am CT
Coordinator: Thank you for standing by. At this time, all participants are in a listen-only mode. During the question-and-answer session please press star, 1 on your touchtone phone. Please record your name clearly when prompted.
Today’s conference is being recorded. If you have any objections at this time you may disconnect. And now I would like to turn the call over to your host Mr. Anthony Hill. Mr. Hill, you may begin, sir.
Anthony Hill: Thank you. Thank you very much. Good afternoon everyone. Thank you for joining us for our next Webinar in the series for the Basic Guide to Exporting. This one is a special Webinar. It’s on improving your cultural intelligence. As the operator said my name is Anthony Hill. I’m an International Trade Specialist with the Trade Information Center. The Trade Information Center is part of the US Commercial Service at the Department of Commerce.
I’d like to welcome you all - all of the US Commercial Service Clients and other Webinar participants in the US - throughout the US that are joining us. If you - I want to make one note, which is that if you sign up for two or more of these events you will receive a complimentary copy of the Basic Guide to Exporting.
Our speaker today will be Dr. David Livermore. Dr. Livermore is the Executive Director of the Global Learning Center in Grand Rapids, Michigan. Dr. Livermore is a visiting Research Fellow at Nanyang Technological University in Singapore and a Senior Research Consultant with the Cultural Intelligence Center in East Lansing Michigan. Dr. Livermore has done training and consulting with leaders in 75 countries across the Americas, Africa, Asia, Australia, and Europe.
Dr. Livermore will be available at the end of the presentation today to answer your questions. At the end during the Q&A session, the operator will put you in a queue to have your line taken off mute to ask your question. And also, contact information will be provided at the end if you have additional questions after the event.
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Now without further delay, I want to turn the (title) over to Dr. Livermore.
David Livermore: Thank you, Anthony, and thank you to all of you for joining me for a few minutes today to talk about this fascinating domain of cultural intelligence. And in particular, to think about how it connects with some of the international opportunities that exist for US businesses.
Most anyone I talk to these days is pretty excited about the national export initiative and the opportunities this can create for US businesses around the world, and I don’t imagine that you need me to review all those for you. But, just a couple points to get started as a way of framing how cultural intelligence relates to this.
Some recent studies found that last year 70 million joined the middle class in developing nations around the world. And as you well know, many of these are individuals who were working in service centers outsourced to India, or manufacturing plants outsourced to China. And what I find interesting is we can either sit back and bemoan all the job losses that have resulted from this reality, or we can do as many American businesses are doing and tap the purchasing power and opportunity that exists among this growing middle class internationally.
In fact, we’re told that conservatively 1 billion people are expected to join the middle class in the next decade, which perhaps helps explain why GE is predicting 60% of its growth in the coming decade will come from the developing world, even though only 20% of their growth came from the developing world over the last decade.
But, global business is not just where you do business, it’s about how you do business and that’s what I really want to talk to you about today. How do you expand into international markets with cultural intelligence, which is an evidence based approach to international business. And let me first say what this is not. It’s not just another way to talk about cultural sensitivity and global awareness. Surely we know that those are important emphases for any of us in business, even if we never leave our own borders.
But quite honestly, I’m not sure that most of the business people I interact really need one more lecture on not being ugly Americans and on the need to be flexible, even through certainly, those re ongoing important realities for us. The question that I am interested in exploring with you today is one that’s really driven our work on cultural intelligence, and it’s this one. What’s the difference between individuals and businesses that succeed in today’s globalized multicultural world and those that fail?
I would imagine as soon as I ask that question, you immediately think of some of your own experiences of things you've seen personally or in the lives of colleagues or partners that have done well or not done well. And so the question is perhaps this.
Why is it that some entrepreneurs sell their product in 15 different countries and others can’t seem to move their product beyond the land of red, white, and blue? Or, why do you have companies like Coke that have successfully sold more products in Japan, a tea loving population with one-third of the population of the US? And, there’s other companies that still think their best markets are just those that lie within our own borders.
And, why is it that you have some individuals in your business that seem to be able to navigate the many varied interpersonal, legal, and economic differences from one culture to the next, and others seem to be oblivious. And in many regards, this is often - seem to be just kind of an intuitive skill set that people have, and to some degree I would agree with that, and perhaps we can interact about some of that in the Q&A time. Because there are all kinds of things that contribute to one’s success or failure in international ventures.
But, through our research over the last ten years across 30 different countries around the world, there is a group of us who have found that an individual and company’s ability to be successful in a variety of cultural context can largely be pinned upon this one primary factor that we call cultural intelligence, or your cultural intelligence quotient.
And so in the few minutes that we have together on today’s Webinar, there’s three things that I want to cover. What is cultural intelligence and why does it matter? Secondly, how is cultural intelligence measured? That is to say, can you really take something so subjective and make it a more concrete empirical measurement? And then thirdly, what is the relevance of this material to international trade and exporting?
So, let me being with this first one, by seeking to explain what is CQ and why does it matter? First of all a definition. Cultural intelligence quotient can simply be defined as the capability to function effectively across various cultural context, and we’ve researched and applied that as broad to different national cultures, ethnic cultures, but we also look at it in terms of various organizational or professional cultures, or even generational cultures or sexual orientations, religious ideologies.
And so much of our work certainly applies to diversity initiatives in the workplace. But given the nature of our conversation today in doing this together with the Department of Commerce, my interest is in specifically talking about cultural intelligence as it relates to one nation versus another and how we do business there.
And you see the bullet underneath that definition saying that it’s one of the multiple intelligences. So, our choice of the term intelligence is more than just a cutesy way of describing cultural competence. Our work is actually related to some of the other work that would be familiar to you in the intelligence research. So for many years those of us in business have been hearing lots about the idea of emotional intelligence.
And sometimes, I feel like the emotional intelligence research simply put data around something that many of us had been experiencing in the workplace for a number of years. That is to say many of us in the workplace were saying to universities, like the ones of which I’m part, “Hey, quit sending us MBAs with 4.0 GPAs telling us that they’re ready for business, and yet we end up finding out that they fail miserably because they can’t interact effectively with our colleagues or with prospective clients.
And so, we heard much about emotional intelligence and with good reason. The importance of having one who’s self aware and others aware, particularly as it relates to their emotional capabilities. What cultural intelligence does is pick up right where that leaves off. Because, a great deal of performing with emotional intelligence requires that you can pick up on social cues that are going on in a cross-cultural interaction.
And, it may well be that what silence means in one conversation in a familiar cultural context, that is perhaps confusion or boredom, or something like that, in another cultural context silence might actually mean that they’re being very respectful and that they’re trying to demonstrate honor for what’s being communicated. And so what cultural intelligence does is say how do you use some of those same soft skills in a different cultural environment that you just intuitively use in your own same cultural environment? So, that’s what we mean by cultural intelligence quotient.
One other thing to say by way of definition is as I’ve already mentioned, and CQ applies to any cultural context. And so what I find - part of what stops small and mid-sized businesses from jumping into international ventures is just the sheer overwhelming thought of learning about all the trade policies and legal parameters to ensure you don’t put yourself at risk.
And then add to that the challenge of learning different cultures and how to effectively do market research, and promotion, and production, and distribution, and sticking to what’s tried and true versus connecting with the local context. And then you add to that language barriers, religious barriers, corruption, transparency; it’s easy to be overwhelmed by just the sheer enormity of differences that exist in all the different cultures available to us.
And I certainly don’t want to sugar coat this, but some of the very real realities and issues that we found in the way that businesses and individuals effectively deal with this can be largely pinned upon this more macro overall capability of cultural intelligence.
What I mean to say is for sure if you’re going to start doing a lot of business in China or Brazil, of course it bodes well for you to learn some of the intricacies of China and Brazil. But for the most part what we emphasize in cultural intelligence research is to say there’s a core set of capabilities that won’t allow you to be an expert at every culture where you go, but at least will allow you to jump in and do business effectively, think about some of the legal and economic components of whatever cultural context you’re finding yourself in so that you can develop marketing and negotiation strategies in light of this framework.
You can hire and promote better in setting up manufacturing policy and distribution networks that retain your corporate standards while also adapting to local variables. And so the point of this is rather than thinking that you have to master all the information about every culture where you want to work, CQ is this overall capability and skill set that can be developed and applied quite broadly.
So, that gives you just a quick overview of what I mean by the idea of cultural intelligence. This is certainly not a concept that’s just unique to me. There’s been dozens of academics and business professionals who have been working on this for a number of years from around the world, and perhaps we’ll talk a bit more about that later on.
So, that’s in a nutshell what cultural intelligence is. Without getting too academic on you, let me just share briefly how it is that we actually measure cultural intelligence. How do we make something as subjective as being adaptable and effective in lots of different cultural context something that can be more empirically measured? And there are four capabilities that you see described for you on the PowerPoint slide that really capture how we go about assessing and measuring cultural intelligence, both in overall businesses and then specifically in individuals.
We have an actual assessment, a diagnostic tool that I might mention somewhat to a bit later that actually is the mechanical way that we do this. But let me just give you a brief introduction to what each of these four capabilities has to with (it), because I think most of us will readily identify with what it’s getting at from just your own business experience and that.
Number 1, CQ drive. What we’re trying to get at here is the individual’s level of interest, motivation, and confidence that they can actually get involved in international business. And, this is one of the most overlapped aspects when it comes to international success. Case-in-point, when we think about things like the National Export Initiative. For many businesses, the primary thing that they’re interested in thinking about is not so much teach me all the customs and norms of a different culture, but can I make more money here? Or, am I going to get sued or find myself in a very difficult ethical dilemma in some place that I want to go?
And so what we’re trying to get at here is asking what’s the motivation in the first place, and how do we actually get at that? Because what we’ve found is a number of companies often jump right into training people and teaching them about cultural differences without really telling them in the first place how this actually connects with them being successful in their work.
So perhaps an individual is being placed overseas on an expat assignment. I find that those individuals are usually far more concerned about the living conditions, where their kids are going to go to school, how they’re going to get around than they are on learning all the intricacies of how culture effects the way business is done.
So after they get there, they tend to be far more motivated to learn about those things. So many times companies will spend a lot of money on going through training on cross-cultural awareness and that. If they haven’t addressed the motivation issue, it might be money that’s not well spent. Or perhaps we send someone overseas to sell our product, or to launch a franchise, or to find a new distributor somewhere.
Again, we’re often more concerned about finding a good system for distribution or accountability that will work well rather than thinking about the importance of going out for dinner and having some of the social conversations with people. But, it might in point be that those social conversations actually have far more to do with landing a good contract than some of the actual official business meetings. And so, the reason I mention that again here is if we understand that it helps motivate us to think about what we’re doing in the first place.
And so the first thing that we’re interested in both assessing and then developing with individuals wanting to do international business is what’s their drive? What’s their motivation for doing this in the first place?
The second piece gets to what we more often think about in cross-cultural training, and that’s knowledge. But again, true to the model that I’ve already described you, we don’t spend a whole lot of time talking about all the specifics of every different culture that we could possibly go to, because again, that just becomes overwhelming. But rather to talk about an overall understanding of ways that most cultures tend to differ.
And so, here we do draw from a lot of the helpful work that’s been done by people like (Trumpanairs), and (Hoffsteed), and (Schwartz), and many others who will talk about the difference in power orientations. Who’s in charge, who’s in control, and how important is it to respect that when you’re negotiating a deal. The difference in terms of how trust is developed, or how a time orientation is approached. So, that’s what we’re getting at with CQ knowledge.
And again, our emphasis here is not so much learning all the norms and customs about various cultures, because most of the business people I meet simply don’t have time to keep up with all that. And furthermore, some of the greatest potential of the National Export Initiative exists in places like Saudi Arabia, Southeast Asia, Brazil where we hardly have a monocultural group of people that can be figured out that we should send them through a bunch of complex workshops and books on, but rather can they adapt on the fly?
Maybe just a quick illustration on this. I had a friend call me up a couple months ago who is another American business person, and he said, “Okay Dave, my company wants to send me to Dubai. I’ve never been to the UAE. Tell me what I need to know about the culture there.” And I said, “Well. Okay my friend. The first thing you need to understand is 80% of the expat community in Dubai are people from - or I’m sorry, 80% of the working community in Dubai are people who are expats, who are from a variety of different cultures around the world.”
So, what culture should he learn? I mean surely, he should understand a few things about Arabian culture and the way that that may influence things there, but when he sits down in his first meeting, he may be sitting with a German, and Aussie, a Korean, a Chinese, a Saudi, and on and on it goes. And clearly, he can’t suddenly pull out is lonely planet guide for all those different countries at that point.
So once again, forgive me if I am underscoring this too much, but the point being more in developing an overall cultural understanding of how culture impacts the way business is done, we’ve found that to be the capability that actually translates more into the success that people have in earning profits as they go about doing their work.
Just briefly, the other two capabilities. Not only do we look at drive and knowledge, the third one is strategy. This is the degree to which the individual is aware of what occurs in a cross-cultural situation and their ability to plan accordingly. So maybe you have someone who’s very motivated, who’s just naturally curious about different cultures, or maybe they’re very motivated and believe that there’s great market potential in another culture, so they might have high CQ drive. Maybe they actually have all kinds of understanding in terms of cultural understanding CQ knowledge.
But, the third one really becomes the linchpin as to whether or not it’s going to be successful for you or not. Can you actually develop a strategy that allows you to retain your core values of your business, but also adapt to the local customs and flavors that are there. And so what we’re getting at with Number 3 is do I have the ability to translate my understanding and motivation into something that will actually be a good plan?
This is some of the most challenging process that we face, because it’s one thing to know what to do when a corporation requires a lengthy document. But what do you do in a place where the legal document doesn’t necessarily mean a whole lot and a hand shake or the conversation over tea and rice is actually where the real negotiating is done? And so, the strategy is the ability to deal with corporate expectations back home while also dealing with some of the local expectations that exist in a place where we go.
So under CQ strategy, we’re both assessing and helping companies develop an awareness of what’s being said and what’s not being said, and then to use that information to develop effective negotiation strategies, marketing plans, HR policies, et cetera.
And then finally, rubber meets the road CQ action is can an individual actually get results for you? Or, can you personally get results? This is having the ability to know when should you flex your plan? When should you flex your policies, your marketing strategy, and when frankly should you not do that because it will no longer be true to who you are and what you’re trying to sell there? And so, can you actually execute? Can you adapt your behavior in a way that’s authentic and remains true to your business core values, but also do so in a way that’s respectful and as importantly, helpful in to actually making money and bringing about opportunity for your business there?
So, that’s how we measure whether or not someone has CQ. There’s been rigorous research. I won’t take you through all the academic empirical findings today, but there’s been more than 60 academic journals that have reported on the research that says this is actually a valid way of finding a proven way for people to have results.
There’s a couple other slides that I want to draw your attention to though as it relates to how we measure CQ, because as I interact with business people, frankly they’re not as concerned about all the academic findings about how we assess CQ in individuals. The bottom line question becomes, “Okay. If I actually prioritize cultural intelligence for myself or for other individuals, what’s the return on investment?” I mean after all, that is why we’re in business, to seek to make products that are helpful to people and help the bottom line, and produce well for shareholders, for a public company.
And, I’m not going to walk through all the things that are on this return on investment slide, but I just point your attention to it to suggest we have studies that have been done on all these different areas to say there are tangible returns on investment, bottom-line kinds of ways that companies and individuals that have higher levels of CQ have found actual dividends being paid to them in all these different areas.
And so while I won’t go into all those right now, I do want to draw your attention to a few of the key areas of return on investment shown to you on this next slide, and I’ll talk about these a bit more specifically and concretely. So once again, what we’re saying is for companies that we saw that were led by leaders with higher levels of CQ, these were places where we saw a significant difference in what was going on for them in terms of return on investment. We’re going to give you some specifics as it relates to these three things that you see there on that slide.
First of all is profitability. Let me talk about one study we did related to this. There were 100 multinational companies that we worked with that did an 18 month project with us where we assessed the CQ of individuals and the firms as a whole at the front end of those 18 months. Did so again at the back end of those 18 months. And then, we also looked at their P&L sheets with their permission at the beginning of the 18 months and the end of it.
And from the 100 companies that were a part of this research project for 18 months, we found 18 months later, 92% of them found that they had increased revenues. In fact, some of them had almost 100% increased revenues. And of all of the 92% that saw increased revenues, all of them attributed cultural intelligence as a significant contributor to what happened for them.
Now, I will be the first to say by no means it’s the only thing that they did right for those 18 months, enhanced their cultural intelligence. Obviously in order to perform well and have increased profitability, it requires much more than cultural intelligence. So, I’m not interested in being a one trick pony who just sells you on the silver bullet -- to mix metaphors -- of cultural intelligence to say this is the end-all.
But, it’s an important piece to have in your toolbox for thinking about export initiatives to say that the companies self-reported that cultural intelligence played a very significant role for them in seeing increased return on investment in the kinds of things that happened for them when they enhanced their cultural intelligence. And as it might be of interest to you, of these 100 companies that we studied, they included all kinds of industries. So we had manufacturing, we had pharmaceuticals. We had energy companies, financial services, hospitality organizations, service companies.
And, we found that some of the largest companies involved in this study were particularly using cultural intelligence with their top leaders to deal with their bourgeoning operations across Europe, Africa, Asia, Australia, the Americas, and the Middle East. And, they found that cultural intelligence was helping them have an increased level of local ownership across their widespread global force.
They found that there was enhanced customer service and client relationship as a result of the increased attention on cultural intelligence. And for many of them, they found that it led to them having an altered marketing strategy, which also led to increased revenue for them.
So, all of these are some various ways that profitability was correlated for them in the whole idea of when they enhanced cultural intelligence doing it. So as we noted earlier, with 70 million new people entering the so-called middle class every year, there’s all kinds of revenue potential that exists in these emerging markets. And, the companies with the highest level of CQ seems to be doing the best at tapping into this middle class that’s related to that.
So, that’s all under the subset of profitability. Much more needs to be understood there. We’ve also looked at some of the individual salary levels of individuals with higher levels of CQ, just as the emotional intelligence research has done. But, much more needs to be understood there.
The second return on investment that seemed to be some of the most noteworthy findings on it was improved management. And so, we found that increased CQ led to people managing with a higher degree of effectiveness. So as you know well, managing a diverse and dispersed team requires a whole new skill set that requires an understanding of what kind of feedback you’re getting from people, especially if a lot of your management is done through Internet, Web, through conference calls like this one.
And what we found was managers with higher levels of CQ correlated with the 360 kinds of feedback that they were getting from the people that they managed. And, managers with higher levels of CQ made better business decisions. Their risk calculations were more accurate. They better understood the needs and trends of the market and they better knew how to motivate personnel who were coming from a variety of different cultures.
One study that we looked at looked at a CEO’s level of confidence and how that connected with their CQ, and we found that a low CQ often correlated with an exaggerated sense of self-confidence, which led to investment distortion, venture failure, and all kinds of other things. So again, the point being that there’s a very tangible outcome for people of when they enhance their CQ they see it play it out in the way that people are managed.
And then, the last one that I’ll mention to you is the way that CQ helps companies attract and retain top talent. With the job market beginning to rebound in many places around the world, attracting and retaining talent is once again an area for concern for many organizations that are really trying to tap the international workplace as well as market.
Perhaps you saw just last week the article that was in Newsweek that was reporting the increased competition for management talent that happens particularly in places like China and India. There is a absence of people that are ready to do that. And so because of that, there’s a high level of competition going after the people who are top talent.
And so, this is probably the area where practically we do the most work with companies, where they’re incorporating cultural intelligence development and assessment into some of their accelerated management programs for young, high capacity emerging leaders who really have a desire to be engaged in international business, in companies who are really investing in helping them develop and assess that for the work that they do.
In particular, we find that the younger generation is looking for employers that value corporate social responsibilities and priorities that lead to helping them behave with cultural intelligence. One study that we did found that 78% of leaders 40 years of age and under actually said they would accept 10% less pay to work at a company that prioritized corporate social responsibility and cultural intelligence than a company that didn’t emphasize those things.
Now admittedly, if they were offered two jobs with that kind of salary difference in front of them, only time would tell whether or not that would actually be a true difference. But the point comes that they would actually - they demonstrate that they would - that this was a priority to them that was more important than just the actual income that they would make.
So much more needs to be looked at in terms of the return of investment for cultural intelligence, but clearly the initial findings are very promising for how cultural intelligence translates into bottom-line growth. And as globalization continues, this is likely to increase the importance of a capability like cultural intelligence.
Finally - okay, so what do we do with all this? So, I’m kind of landing on some next steps for individuals who are interested in thinking about this, and then would love to have some time where we have dialog together to field some of your questions related to this. One thing that we need to do as it relates to this is four steps to increasing the overall personal cultural intelligence.
The four capabilities that I walked you through have actually been found as also four steps to thinking about how increase CQ. One way for us to think about that is not only how do we assess people through this, but it’s to say in some ways this can be a cyclical process by which we help people walk it through. So, on the first end is CQ drive asking the question what’s someone’s motivation for this assignment? So, we’ve already walked through these four, but we’re trying to say when you come alongside someone, this is actually a way to help them develop it as well.
So, if you’re trying to talk to a colleague about how you get involved in international business, again before just talking to talk to them about all legal and trade policies, or cultural differences and understanding, the first thing would be for us to ask them, “What’s your motivation? Why is this important to us as a company?”
Again, the second one I don’t need to repeat for you what we mean by CQ knowledge, but then just to help them say, “Okay. What’s some of the understanding in need in order to be successful with this?” Thirdly, “What’s my plan to do this?” And fourthly, “How should I adapt?”
And so, we work with a number of companies in terms of saying these four steps are not only four that we assess, but they can actually be a four step process that we use to think about how we approach training and assessment.
It can be a four step process that we use on the fly. We’re going to meet with a potential customer who comes from a different country quickly, on the fly, in the car, on the train on the way there. What’s our motivation? What’s the understanding we need? What’s our plan? How should we adapt? Or it may be a more macro strategy, that before we jump into a major initiative, helps us to think through how we do that. So that’s just a revisit. This four - these four capabilities are saying there can be four steps for responding to CQ.
Then, you'll see some of the other ones that are related here. Some of them are rather obvious, but assessment and education. So, what are ways to actually assess and educate in the way of doing this. I think one of the first ways to assess ourselves and others in cultural intelligence just tends to be to better understand what the four capabilities are talking about.
So because some of this is fairly subjective, as you better understand what we’re talking about with CQ drive, CQ knowledge, CQ strategy, and CQ action, you can begin to ask in yourself, “Hey, yes. What is my motivation? What’s my general understanding? What’s my ability to develop a strategy and how do I engage in that?” When you’re interviewing someone or when you’re interacting with people through conversation, you can begin to pick up on that.
But, we do have some more tangible ways to assess that as well. If you were to visit the Web site, I’ll give this to you again later on one of the slides, but www.culturalq.com. You'll see there are a variety of assessments that are available to actually walk people through assessing their CQ. Both self-assessments that are available for a small fee and then 360 assessments that are available for people.
Some of the universities we work with are actually getting involved in assessing people in workplaces through some interesting visual tracking software too, where they’ll watch international business incidents and get a picture into how people would solve those. So without getting to technical about it, I’m just trying to demonstrate there are lots of different ways to assess this in people to help quantify something that’s been fairly objective, and then to develop education that gets at that.
So instead of just having a one-size-fits-all approach to how you educate yourself or others on this, to say, “Maybe you’re drive is fine so you don’t need to be motivated. But instead, what are some of the specific educational needs that you have for CQ knowledge?” Or, perhaps it’s vice versa.
The third one I just mentioned. Increasing their individuals who are getting certified in the cultural intelligence research area. That allows them to actually go in and work with other companies on assessing and develop that. So, that’s another piece to bear in mind. Or, simply having people in your company if you’re a bit larger company that can actually work with helping other people enhance their cultural intelligence.
The third one - fourth one -- excuse me -- team development. Let it be no surprise that as you culturally diversify your own team, guess what. That allows you to better perform with cultural intelligence when you get into international export initiatives. So, we have a great deal of research that has said more ethnically diverse businesses and teams are obviously one -- or it seems obvious to me -- are obviously businesses who then do better internationally because they benefit from the input of those people.
Of course, that presumes that you tap into the different ethnic perspectives that are represented there. So, team development is an important piece in saying how do we learn from the differences that exist on our team and use that, rather than seeing it as just a way to deal with diversity issues in the workplace, but also to tap into some of the opportunity internationally.
And finally, strategic use of CQ throughout the business. What I mean by that is many times we think about international export as a topic that’s entirely separate from diversity training.
And what we’re finding is when we use this macro framework, whether it’s cultural intelligence or perhaps you have a different approach that works better for you. But when there’s a single model that kind of captures the way that you deal with cultural difference, it really starts to make it something that’s more than just the flavor of the month, but really starts to drive the way that you do business.
And so when your HR people, and your sales people, and your marketing people, and your accounting department are all kind of thinking through this similar language of “What’s our team motivation? Why is this an important value to us?” As well as the other three capabilities that are done through CQ, we find that that tends to be a way that really begins to help us see greater return on investment for how we actually go into doing it.
Just on a personal note, one of the reasons that I am so committed to doing quite a bit of interacting and teaching with people and writing about cultural intelligence is unlike what is believed about many aspects of our personality, CQ is believed to be malleable. That is anybody can lean to develop it. It certainly requires some level of self-interest on their own part to actually get engaged in it, but any leader or any person in a business who wants to gain a greater degree of cultural intelligence can become more culturally intelligent.
So sometimes people will feel like they’re at a huge disservice because they didn’t get to grow up like our younger generation has today in a much more globalized context, or perhaps they’ve come from a very mono-cultural context, or perhaps they like me are a white male who’s saying, “Oh. You know, I’m the worst person to actually think about this. Well certainly, we may have some limitations that go with those things, but CQ can be learned by anyone.
And so through some of these things that I’ve talked through in the last several minutes together, it’s believed and it’s found through research that anybody can actually enhance their cultural intelligence, increase their opportunities to benefit from things like the National Export Initiative, and best of all make the world a better place by the way that they interact with people.
And so, that would be one of the key things that makes cultural intelligence a bit different from some of the other approaches to international business or to cultural competence. We’re interested both in how do we respect people, interact with our fellow human beings with dignity and honor, but at the same time how do we still do business, and do it in a way that attends to bottom line and behave in adaptable ways?
So, we do want to look within and look at some of the concerns about ethnocentrism and some of the ways that may impede our opportunities to interact with people respectfully and for the sake of business. But - so also, we want to do this in a way that actually helps us behave in a way that will bring about results in terms of the bottom line for what we’re trying to accomplish through our business.
So, that is the gist of what I wanted to give you in a nutshell, at least as a working understanding of what CQ is, some of the ways that we measure it, and some of the ways it has implications upon international ventures and expanding into that. I must confess that my preferred way of communicating is not having a one-way conversation, like Webinars often have us do at least at the front end. I’m much more interested in dialog and interaction.
And so for sure, want to spend the remainder of the time that we have together fielding some of the questions that you have. And then, would invite interaction after the fact through Web site, email, social networking sites, other ways to continue the interaction from things that you’re learning, critiques that you might have, and questions that you have as you in the real world work place think about what it looks like for you to expand internationally.
So Anthony, let me turn it back over to you as we seek to field some questions related to this.
Anthony Hill: Great. Thank you. Thank you very much, Dr. Livermore. That’s very interesting and a very relevant topic for this audience. As we try to increase exports in the United States, it’s so important for us all to learn about cultural intelligence.
Now, if anyone wants to ask a question, the operator will moderate this. And in order to do that, you'll have to press star, 1 if you want to ask a question. Operator?
Coordinator: Thank you, Mr. Hill. And at this time - if you would like to ask an audio question at this time, please press star, 1 on your touchtone phone. Please record your name clearly when prompted. To withdraw your question, please press star, 2.
Once again if you would like to ask an audio question at this time, please press star, 1 on your touchtone phone. Please record your name clearly when prompted.
One moment as I retrieve the first question.
And, our first question comes from Mr. (Hector Maldanado). Mr. (Maldanado), your line is open sir.
(Hector Maldanado): Dr. Livermore, thank you very much for the very interesting presentation. You had mentioned a study for 100 companies and their practices for their expatriates. I was wondering if that study is published anywhere?
David Livermore: It’s not yet been published. Thank you for your question, (Hector). It’s not yet been published in an academic journal. We did have a Forbes piece published earlier this year that reported on that finding, and we’re in the midst of having the fuller - the findings of that study be published. So, we’re getting there. We just wrapped up the final part of that project the first - the very end of last year.
(Hector Maldanado): All right. Thank you. And, if I could ask a follow-on question?
David Livermore: Of course.
(Hector Maldanado): Particularly as it refers to multinational companies that may have a multitude of expatriates deployed across the globe, do you have any data about not only that 18 month period and what happens in terms of the P&L, but more so in terms of the big investment that a multinational incurs when in sense an employee on an expatriate assignment? And, what happens long-term to that employee, in terms of you know, career progression and how the company utilize this - that employee’s - let’s say increased perspective or increased experience on the international setting?
David Livermore: Great question. I’m going to try and hold myself back from opening the dike from the dam, because I could go on for the rest of our time just on this one because there are so many layers of importance to what you’re asking.
First of all, I certainly don’t claim to be the one behind it, but there are reams of research on the whole idea of sending expats overseas and success and failure. And like anything of course, as I’m sure you know well, you can find lots of examples of both aspects where it’s worked really well, other’s where it hasn’t.
And what I have found interesting - I don’t know if you've run into this (Hector), but some companies have wrongfully assumed - let’s see. We need to send an expat to China. Let’s just find a US born Chinese and presume they’ll be the best person for that assignment, because at least they’ve got a leg up on the cross-cultural understanding.
And, it could be. I’m certainly not going to say that that puts them behind the case, but many times without a more rigorous assessment and development, it may not be that the color of one’s skin or their ethnic background actually makes them the best person whatsoever. So, most of our research has been more oriented towards saying let’s get beyond some of the superficial things that are there.
Because to jump to another piece of your question that’s there, what happens long-term with these individuals - if all else is equal, we’ve found that when somebody has had expat experience or has worked in travel broadly overseas, if all else is equal, we would certainly expect that that would enhance their cultural intelligence over the long haul.
However, perhaps some of you have experienced as I sometimes have - sometimes the worst individuals I’ve encountered are somebody who have spent so many years overseas, because they were insulated in an expat community and actually have a very myopic view of the world but think that they know it all, and then perpetuate that notion to perhaps more green people as it relates to doing it.
Coming back more to the crux of your question. I would say most of the research literature that I respect that’s coming out on this topic today is moving much away from the high-levels of expenditures of uprooting people from here to do - or from any country to do long-term expat assignments, and are looking for local talent to hire and put in place. Because, they obviously already understand the culture and instead are looking at more itinerate approaches of using people from here to inculcate the local - the business specific values.
Or, perhaps to do a reverse version of it. To bring someone say from Saudi Arabia and put them in-house in a US company here for a year to help them take on the values, but then expect that they’re going to have a far better idea of how to live those values out when they get back to their local context.
So, those are just a few observations and impressions. But, I think it’s going to continue to be interesting, because you’re right. The sheer cost alone is easily in millions of dollars to put a US person overseas for even a one to two year assignment when you calculate all that goes into that. So, there’s a lot of reasons why companies need to look very carefully about whether or not that’s the best way for them to go.
(Hector Maldanado): No, thank you for your answer. And, what I had observed obviously a small sample is that many companies do not provide any type of cultural awareness training on expatriate employees. And then secondly, I’ve also started hearing through friends in the industry that a lot of companies are cutting back or altogether canceling expatriate assignments.
David Livermore: I hear the same thing. And what I would say to your first point is in a positive realm, the companies that I see doing it well, that is training and preparing their people, actually are not so focused on pre-departure training, because I think I had mentioned early on in our presentation today I find a lot of expats are going, “Yes. Right now, I’m just trying to figure out where I’m going to send my kids to school, or how my spouse is going to find meaning when they get there,” kind of thing.
But three months into being there, or six months in are suddenly going, “Oh, wow. I really, really wish I had paid more attention during that cultural training that was offered.” So, we’re finding that the companies that are doing it well are not necessarily front loading a bunch of training, but are looking for ways to provide - whether it’s through e-learning seminars or site specific training three months and six months in, where they now have - it kind of gets back to that CQ drive piece. Individuals with a whole different level of motivation to pay attention to it.
Coordinator: And, our next question comes from Mr. (Doug Berry). Mr. (Berry), your line is open.
(Doug Berry): Thank you very much, David. That was really fascinating. And, I just wanted to share with you one little personal experience, and then also ask a question.
David Livermore: Great. Thanks, (Doug).
(Doug Berry): And, it is regarding a long time relationship with Japan. And recently, the head of this organization came to town and asked specifically to meet with me, and I did and we had a very nice dinner. And, he made all of these very interesting proposals which would involve traveling there and doing some work for his organization.
And then when I followed up a few weeks afterwards I got a completely different feeling from him, and it was, “Oh, I’m going to have to talk to my colleagues here, and we have to discuss. It’s not on the work plan for this year. Maybe the following year.”
And, my first reaction was you know, a little bit of anger. It was like, “Well, you’re the boss. Just go ahead and make the commitment.” And, I don’t have time to sit around for a year waiting for this thing to happen. And you know, “How come you were so interested in the night that we met, and now suddenly it’s gone cold?”
And of course you know, I realized that this is sort of the Japanese consensus making, and he will have to go back and he’ll have to talk to people and they’ll have to have multiple meetings before they can finally come to a conclusion. But even though I knew these things, I almost blundered by saying things and writing him emails that I would’ve regretted later.
And, I just wonder you know how does one go about reflecting on their own cultural ways of doing things? And so that one can you know, be more reflective of how they interact with other people so they can be more effective in these kinds of dealings?
David Livermore: Excellent question, (Doug). And, I know from our previous interactions that you certainly have your own extensive share of experiences living abroad and working internationally. And, I think that in part is what caused you to not respond the way that you did.
I meant that as a positive. For you to respond as you did - hesitated rather than sending the email. And obviously, you’re well aware that (Doug) because of your own work, but just as a reminder to all of us -- and I have to continue to remind myself as much as I swim in this literature -- that the Japanese colleague with whom you were sitting, in some regards from an Asian collectivist mindset, the only right answer when you were having dinner together was yes, because yes to many in that culture is to say, “I don’t want to do anything to let you down right now. I want to save face.”
And of course in my very American way, I’d say, “Well, you’re going to let me down more if you change the story a week from now,” but that’s because I’m coming at it from my American bias. But as you've noted well, clearly that’s probably not his place to even make that decision.
At the risk of just patronizing you (Doug), I think case in point of what needs to happen is what you did. You hesitated before you responded. One of the things - a very simple phrase that I continually remind myself of when I’m interacting cross-culturally in traveling is notice, don’t respond, and eventually I have to respond.
But many, many times, I want to fire off that email of frustration. But to purposely draft it and let it sit in my inbox, perhaps I’d be well suited to even do that with my similar cultural background colleagues if I’m upset by something. But particularly when it’s a different culture, to perhaps sit on it. Leave it in the draft box. Come back to it tomorrow and think now, is there something deeper that’s going beyond here?
So in one way - I’m really talking around this question here. I guess what I would like to say to all of you is in one way I’ve tried to present a fairly accessible approach to how we use cultural intelligence to apply to the kinds of situations like (Doug) has recounted.
On the other hand, I would be doing a (disservice) if I were to suggest to any of us that, “Oh, it’s just as simple as walk through these four steps and you'll be good to go.” It is often times years and years of us making mistakes, blunders, and then stepping back and going, “Oh. Now I know what was going on in that situation.”
And frankly, I’m okay with that. I don’t think any of us are going to do it flawlessly. But, the very fact that you stepped back and ask the question I think is a key part that’s related to that.
Coordinator: And, our next question comes from Mr. (Todd Cornell). Mr. (Cornell), your line is open, sir.
(Todd Cornell): Hi. Thank you very much Mr. Livermore. I appreciate your cultural intelligence and sharing it with everybody.
I just wanted to make a couple of comments. I spent 20 years in China, and so I kind of have an understanding for what you were talking about as far as hiring somebody who would be a local - a ABC if you will. Somebody who was born and raised in America and who’s Chinese. You would stop and think, “Yes. This is the obvious person.” Well then go with this as that bridge to China and interacting with China.
But, it actually goes in another direction when you stop and think about - with China, you've got Hong Kongese. You’ve got Taiwanese. You've got people from Singapore. And we here don’t stop and think about the different variations within that. You take somebody from the US who’s from Taiwan or even was educated in the US to China, and you’re probably going to create more problems than if you took somebody over there who didn’t speak a word of Chinese.
And another thing too, is it’s about hiring somebody over there. I’ve hired a lot of Chinese locally and trained them. The one thing that you have to really be careful of is making sure that they understand the corporate mentality and the corporate ideas of the US company that they’re working for. And, that’s the one thing that I had to do a lot of training for, was to make sure that they understood clearly what our company mission is and what our company values and ideas are. And, that may not always set well with their own culture. And so training them and educating in that I found to be very important.
So, I think everything you’re bringing out here is just really wonderful, and that I really appreciate what you’re saying as far as finding that core ability to be able to interact with many different cultures, like you were talking about for Saudi Arabia, or I think it was Dubai. And, that is so important. And, that’s something that I think is - it’s a sense. It’s a - it’s being able to read people and it’s being able to see things in a way going beyond your own self.
And one thing that I find that is so important in being able to understand other cultures, and I think that’s understanding the languages.
David Livermore: Yes.
(Todd Cornell): And, I think language is so important in understanding other cultures.
David Livermore: Absolutely. It’s - just a couple quick comments, (Todd). Thank you for that. And, I would wholeheartedly agree with your point in terms of the multiple directions the Chinese thing can go. And point of fact, have heard from numerous Chinese CEOs who have actually said it’s a bigger stumbling block for me to get over working with a Houston born Chinese or a Singaporean, or a London than it is to deal with a 100% Swede person who doesn’t think they know China at all.
And, I certainly don’t want oversimplify and say that that’s always the case. But, the point being that yes again, there’s so much more to it as it relates to that.
And the other comment I want to make that your point reminded me of is you talked about how you have dealt over 20-some years there in China of teaching your own culture values is cultural intelligence is a two way street. That’s one of the things that we often talk about.
It’s not just - granted, we - the onus is on us for all of the reasons that ugly American has often fit us in learning to be the ones who seek to understand and respect other cultures. But so also for other cultures to understand who we really are beyond perhaps their perceptions of who we are, and then also as it relates to who are companies are.
(Todd Cornell): Thank you.
David Livermore: Thank you, (Todd).
Coordinator: And at this time there are no other questions in the queue.
Anthony Hill: Dr. Livermore, this is Anthony Hill. I have a quick question. Hopefully it’s quick. I was wondering how has the cultural intelligence of the US in general changed over time? And do you have information on that?
David Livermore: Yes. We very purposely have not aggregated our results and data specific to geographical regions because we don’t want to start to perpetuate some parts of the world are more culturally intelligent than others.
So from a pure empirical note. I’m going to say that what I’m about to say is not really evidence-based. It’s more just my intuitive impression. I do think regardless of where people fall politically, that over the last couple of years there has been a more welcoming sense of who we are as Americans. That may be well founded or it may not be, but just the perception of - okay, there’s being language that’s used from the current Administration about being global citizens and part of the larger conversation of the world.
So, I am finding that there’s a greater receptivity again that we haven’t seen for awhile. But there’s a lot for us to compensate for that, because what I’m finding among many individuals that I interact with who are trying to tap into emerging economies -- from Americans -- are saying many time they’re put at the back of the line. That someone who’s say in Vietnam from China, or somebody who’s trying to get a Vietnam firm to work with them from the Middle East are put at the front of the line.
And, the assumption is there’s a disadvantage from the US. So, we may have to overcompensate our sense of cultural intelligence to again be given a listening ear to what we’re trying to do.
Anthony Hill: Thank you.
Coordinator: And, we did have a question join late. Would you like to take the question at this time?
Anthony Hill: Yes.
Coordinator: And, it comes from (Hector Maldanado). Mr. (Maldanado), your line is open, sir.
(Hector Maldanado): Dr. Livermore, one last question that comes to mind with the recent experience that Toyota has had here in the United States with the safety crisis. It seems like - I’m just wondering if you have any comments in the light of cultural - the cultural awareness of a Japanese multinational handling a crisis in the United States.
David Livermore: Yes. I think there are - thanks for another great question. I think there are so many variables going on, so I certainly don’t want to reduce the whole thing to cultural intelligence. And, I would defer to many other business experts who have talked about - you know, did they take their eye off the ball in the midst of success?
But, I think there is a cultural layer to what’s going on here, where our value as a US public is so highly oriented toward wanting our leaders to be transparent, that you saw the frustration of that and you’re seeing it again with BP. Where there are many other cultures that would say, “Oh. You’re disrespecting the whole idea of leadership to do your dirty laundry in public.”
So, there’s much more going on to it than that, but I do think the ability to respond to critique and criticism in a saving face culture as compared to our culture that’s much more about you know, tell me my bottom-line value, admit that you were wrong kind of thing that was coming into play there.
Coordinator: And at this time, there are no other questions in the queue.
Anthony Hill: Well, thank you very much everyone. It’s really been an enlightening hour, and very interesting information Dr. Livermore. We really appreciate your time and all of the great insights that you've provided today.
David Livermore: Thank you so much. Privileged to be a part of this today.
Anthony Hill: Everyone, thank you very much and you know hopefully, this has helped you improve your cultural intelligence. Thank you.
Coordinator: Thank you. And at this time, you call has concluded. You may disconnect at this time.
Once again, your call has concluded. You may disconnect at this time. Thank you and have a great day.
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