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Companies in emerging markets are deepening their footprint globally, often by acquiring businesses or brands in new countries which have different cultures. Asia especially has emerged as a hotbed of actively expanding multinationals with HCL being joined by Cnooc, Godrej, Huawei and Tata among many others. Going global requires cross-border strategies and supply chains – but less straightforward is producing leaders able to manage global, cross-cultural businesses.
Ghosn’s ability to transcend the national management approaches of Renault and Nissan was fundamental in reviving the fortunes of both brands.
The future seems to belong to companies that can build an authentic cross-border leadership culture to match their multinational footprint, rather than businesses that may be global but retain their national culture. Ghosn’s ability to transcend the national management approaches of Renault and Nissan was fundamental in reviving the fortunes of both brands. Contrast this with the de-merging of Daimler and Chrysler; a global strategy to create the world’s third largest car maker that was undone by cultural leadership difficulties.
So how does cross-cultural leadership emerge? A diverse leadership team can only develop if it allows outsiders to break in and transform the dominant national culture. At Nissan, Ghosn was hired for this his ability to open up Japan’s insular management ranks. Many multinationals have made the conscious decision to dispense with expats and hire locally; Royal Dutch Shell is known for grooming top executives in emerging markets for leadership roles.
Immersing leaders in other cultures is another route. China’s Lenovo spreads its head office between Beijing, Paris and Raleigh, North Carolina ensuring leaders develop in a cross-cultural hot-house.
Identifying and removing barriers to cross-cultural management is equally important. Emerging market companies often have hierarchical and family driven cultures, something that the Chairman Ratan Tata of the Tata Group, for instance, has tried to shrug off by ensuring that a Tata family member did not succeed him as the top executive on his retirement. South Korean electronics giant LG took the radical step of recruiting eight foreigners to its executive board of ten in 2007-08 as part of a shake-up intended to globalise its leadership.
Sourcing and developing talent in the markets they operate is a more gradualist but necessary to approach to generate the necessary throughput of diverse executives in large organisations. French industrial, Schneider Electric, built an entire management hub in Hong Kong to internationalise the outlook of its senior executives. By contrast, German media group Bertelsmann flies high-performing employees from emerging markets to its CEO program back at headquarters.
But rather than stepping on the plane, might it be possible to develop cross-cultural leadership just by building a large business at home? Nayar believes that the multi-cultural nature of India itself gives Indian multinationals an advantage going overseas. Brazil and China are also frequently mentioned for their cultural diversity. Good news too, then for Switzerland, Luxembourg and Australia, now acknowledged as the world’s most multicultural nations.