Walk into the headquarters (A Ping An Insurance Co. and look up and you’ll see a bust of Confucius-not at all surprising in this Chinese company. But look again. Facing Confucius across the lobby is none other than a statue of Sir Isaac Newton. In fact, paintings of great Eastern and Western thinkers serve as a backdrop all the way down the entry hall to where Confucius and Newton peacefully co-exist.
Ping An, one of the largest private insurance companies in China, blends the best of Chinese and Western traditions-and not just in artwork. “Confucius says people should love each other, obey the rules and respect each other. Yet, in modern society, we must advocate change and innovation. By blending the past with the present and integrating foreign experience into the Chinese environment, we’ve created a highly competitive enterprise,” says the company’s CEO, Ma Mingzhe, or Peter Ma, as he’s known outside China.
Ma understands that in the new global economy, competitive advantage will go to those who capture the best thinking and best practices from around the world. That’s what global literacy is – seeing, thinking, acting and mobilizing in culturally mindful ways, at home and abroad.
During the past two years, I interviewed the CEOs of more than 75 companies in 28 countries, exploring the critical competencies needed to succeed in our global economy. I also conducted a survey, with international consulting firm Watson Wyatt Worldwide, of more than 1000 .senior executives around the world to determine how cultural factors influence leadership styles and abilities.
Two lessons emerged from my conversations at companies as diverse as Japan’s Canon, Sweden’s Ericsson, Taiwan’s Acer Computers, the U.K.’s British Telecommunications and U.S.-based Coca-Cola. First, there are leadership universals that every executive and manager must practice -these are the new global literacies. The second defied conventional wisdom-in the new, borderless economy, culture doesn’t matter less, it . matters more. Only leaders and organizations that understand and age differences in national culture will succeed in the coming decades.
Rapid globalization is driving the need for globally literate leaders. Today, competition comes from all corners. Not only does the United States compete with Taiwan and Switzerland for jobs and customers, but businesses in Chicago also compete locally with companies from Canada and Sweden.
Businesses in various countries are infiltrating one another’s territories as never before. For example, European firms own large portions of the American publishing industry, while the U.S. owns much of the Brazilian banking system. Japan holds a large portion of the world’s automobile market, while Scandinavian companies provide a majority of the world’s mobile telephones. India produces the world’s tractors; France is the largest producer of glass; Chile is the leading supplier of copper; and China produces many of the world’s apples.
But, as Doug Ivester, the outgoing CEO of Coca-Cola, discovered after the 1999 “Coke scare” in Belgium and France, it’s easy to be fooled by the new transparency of borders. In his words, “As economic borders come down, cultural barriers go up, presenting new challenges and opportunities in business.”
What is happening is that all this turbulence and confusion makes us nervous and defensive. Our sensitivities are heightened as competitors and collaborators emerge from unlikely places. At times, we respond by pulling in, becoming more ethnocentric and nationalistic, creating a backlash to globalization.
This backlash can be severe, even violent, as the recent protests at the World Trade Organization meeting in Seattle and the World Economic Forum gathering in Davos made painfully clear. The seeming dissolution of national borders often triggers the “immune system,” moving countries and people into self-protection mode, resulting in increased nationalistic fervor, higher import barriers, hostility to foreign control and ownership, clashes among countries and multinationals, and a resentment of foreign culture.
It is no wonder then that our survey of CEOs showed that placing a high value on multicultural experience is one of the two best predictors of success in the global marketplace for companies (investing in leadership development is theother). George Fisher, newly retired CEO of Kodak in the U.S., told me multicultural experience is crucial because “you must capture the hearts and minds of all your employees, but you must do it differently around the world.”
The Many Ingredients of a Globally Literate Leader
Globally literate leaders possess four distinct competencies: personal literacy (understanding and valuing yourself), social literacy (engaging and challenging others), business literacy (focusing and mobilizing your organization) and cultural literacy (valuing and leveraging cultural differences). Interrelated and interdependent, each of the four literacies forms the foundation for the next. For example, by understanding and valuing yourself, you are able to fully engage and challenge people, enabling you to focus and mobilize your organization, ultimately leveraging culture as a tool for competitive advantage.
How each of these literacies gets expressed varies based on the culture in which you live, work and conduct business. Each major region around the world excels in a different literacy area. The Asians, for example, teach us about personal literacy through their ability to understand paradox and amibiguity. The Latin Americans teach us about social literacy by modeling how to build relationships in a chaotic environment. From the North Americans we learn business literacy by watching them build change-ready, technologically-savvy, high performance organizations in a results-oriented culture. From the Europeans, we learn cultural literacy based on their history of working and living cross-culturally for hundreds of years.
Understanding and valuing yourself is the first step on the road to global literacy. Lee Kun-Hee, chairman of Samsung Electronics in South Korea, is one example of a leader who understands that self-awareness is fundamental for business success. During a speech in Frankfurt, Lee told the audience that change begins with him. To effect change within groups, he said, “we must initiate change within ourselves.” He believes, “you need to know yourself well, your habits, strengths, and shortcomings. Questioning yourself thoroughly is the beginning of change.”
Personally literate leaders know where they excel, where they have shortcomings, and what their blind spots are. They question assumptions and ask for feedback from others. Theirs is an aggressive insight because it is proactive-they constantly seek opportunities to test themselves and learn from their successes and failures. Constant self-examination allows them to shed old baggage and reinvent themselves.
Why, how and where the leaders seek self-awareness reflect their cultural roots. North Americans, for example, seek self-knowledge primarily from external sources-hence billions of dollars spent on personal therapy, religious affiliation, and self-help books and tapes in the United States. Eastern leaders more frequently look inward for awareness and meaning through yoga and meditation. People in individualistic societies such as Great Britain and Australia approach self-knowledge as a personal act of courage and discovery, while people in collectivist societies such as Korea and Taiwan see the development of oneself as inextricably intertwined with the community.
Socially literate leaders unleash the power of collective intelligence. They assemble extraordinary people, focus them on meaningful work, connect their wisdom and motivate them to do great things. They build strong teams (and break down and rebuild them) faster than ever.
Guillermo Luksic, CEO of The Luksic Group in Chile, a huge conglomerate with more than 60 companies and 26,000 employees, told me of valuing the human side of business. “Good leaders don’t act alone. They build teams of talented managers, each with a distinct point of view. I don’t believe in the term ‘personal leadership.’ That’s why we hire people who work well on teams, stress group participation and know how to seek team input.”
In an environment where speed to market is critical, Hiroshi Okuda, president of Toyota Motor Corporation in Japan, believes that you need to be an “urgent listener.” He said, “The faster I make decisions, the faster Toyota can move forward. I have to make quick decisions and anticipate what might happen in the future. To do that, I have to listen to people.” While the Japanese are good at both listening to their past (revering their long heritage) and listening to the present (copying what they see around them), Hiroshi Okuda is also good at listening for the future (hearing what people want and anticipating their needs in local markets around the world).
This kind of literacy is about focusing and mobilizing your organization. Unrelenting change forces companies to be fast and flexible as they navigate through chaos to create value for customers. By creating environments that bring out the best in people and by teaching them how the business works, business-literate leaders build cultures of learning and innovation. Liberating leaders at all levels is their secret to success.
Ted Kunkel, president and CEO of Foster’s Brewing Group in Australia, understands that business literacy is his company’s primary asset. “The real asset value of Foster’s,” Kunkel told me, “is the knowledge of the people. They simply must understand the business inside and out. That’s our only competitive advantage.” He added that “when you actually think of the knowledge base inside an organization, it’s just impossible for the top 20 people to know what’s down there. You’ve got to believe that unleashing knowledge at all levels is crucial for the success of the business. And you need leadership skills to make that happen.”
Manuel V. Pangilinan, managing director of Hong Kong-based First Pacific Co., agrees. “If my local manager just follows the dictates of somebody from the head office, it doesn’t work,” he says. “You don’t develop our managers to be future CEOs that way. If they don’t take responsibility, they don’t know what real bullets feel like or how to make life-and-death decisions.” Instead, Pangilinan helps his managers think, urges them to make up their own minds, and expects them to take responsibility for their decisions.
Cultural literacy is knowing about and leveraging cultural differences. While all business is global, all markets are local. Our globalized, multicultural world requires leaders with a keen understanding of national cultures. By learning from other countries, culturally literate leaders build cultural bridges, enabling them to leverage culture as a tool for competitive advantage.
Helen Alexander, managing director of The Economist Group, talks about the need for true cultural literacy: “I don’t think books that teach you how to say hello in Japanese and what not to do when a Japanese person takes you out to dinner are particularly relevant – that’s superficial sensitivity.” Instead, she looks for “highly educated and flexible, open-minded people who can work across borders, who can be international and local at the same time, and who are naturally culturally sensitive; we want people who can think beyond cultural differences.”
Leo Van Wijk, president and CEO of KLM Royal Dutch Airlines, says an understanding of your own culture is crucial to the process of understanding others. “Cultural awareness starts not just in bridging culture. It starts by respecting the others person’s opinion, by being open to others’ ideas and trying to see how they blend with your own beliefs. It’s imperative that you start with your own beliefs and build them. If you don’t have beliefs, how do you judge whether you like an idea or not?”
Our Scarcest Resource
Over and over again the CEOs I met with stressed that globally literate leadership will be crucial for attaining and sustaining competitive advantage in the coming years. As Alfred Zeien, retired CEO of The Gillette Co., warns “our scarcest resource is globally literate leaders.”
Zeien is right. Many organizations don’t recognize the need for global literacy among their senior executives. U.S. companies are especially susceptible to this fallacy. In other cases, organizations understand that they need globally literate leaders to succeed, but the demand for them far outstrips the availability.
The solution to this dilemma is clear. CEOs must demand global literacy of themselves and their companies. They must develop a new set of attitudes, behaviors and competencies and encourage people at all levels of business be more personally aware,
socially skilled, economically enlightened and culturally wise. As leaders, they must understand their national strengths and be aware of their national flaws, preserving what is best in their country while learning from others around the world. And, by having more people at more levels of the organization develop these literacies companies create leadership competence around the world-and increase the odds for 21st century success.
Are you ready for the challenge?