Articles

Global Mindset 2.0: Cultural Awareness No Longer Enough

HCLI Research

Published 1 February 2016

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Evan Kuo is the Country Director for a large Taiwanese tech firm’s new development office in Bangalore, India. The Bangalore site has been running for merely a year but Kuo has already hired more than one hundred engineers, with ambitious expansion plans for the year ahead. The company is relatively small compared with their main competitors and much of its new staff left well-established Western multinationals to join because of the firm’s nimble, “start-up” reputation. But only one year into the new venture and the first question Kuo asks his Bangalore HR head when he walks in the door is, “Alwyn, tell me honestly, do we have a retention risk?” Alwyn looks uncomfortable. Kuo has learned enough from working in India to take this as a yes.

“We thought we were coming into India to get some cheap outsourcing support, but none of the people we have hired are willing to do low-level work. In fact, they compete with our Singapore developers. From week one, they have been asking for more complex work, putting forward a million ideas on how to improve our process and pushing HQ to provide a vision for their career paths. Taiwan is used to telling engineers what to do and having them execute, engineers do this for years before anyone starts talking about promotions or innovation. No one knows how to handle our new Bangalore team. We see that they are really talented, but we don’t yet know how to make it work.”

Asian Leaders Face Increasing Complexity

Kuo’s challenges exemplify the new complexities that most companies and leaders within the region are beginning to face. Meta-trends of demographic shifts, population growth and global economic power shifts have rapidly redefined Asia-Pacific as the world’s economic growth engine for the next century. As the economic centre of gravity pivots toward Asia, and organisations, both local and global, seek to capitalise on the growth opportunities across the region’s diverse markets, Asian leaders are finding themselves in need of very new leadership skills to navigate very new dynamics.

In this new environment, basic cultural awareness is critical but no longer enough. Asian leaders now need to work across multiple layers of complexity no longer captured by cultural dimensions or neat geographical boxes.

New Hierarchies

Old hierarchies are shifting. Western multinationals are quickly realising their growth trajectory is primarily driven out of a region in which few, if any, of their current executive team have experienced. In this vertiginous state, MNCs are working harder than ever to find and fast-track the development of Asian leaders and ensure voices from the region can start influencing organisational strategy in the markets that will determine the organisations’ futures.

Leadership is no longer a matter of building awareness of how to work with a Western boss or within a European corporate culture while executing at the local level. Asian leaders today have a seat at the global decision-making table and need to stand toe-to-toe with a highly diverse set of global stakeholders from multiple functions, business units, job levels and cultural backgrounds and influence them without any direct position power. Asian leaders who have built a high level of cross-cultural competency in reporting to Western executives are now finding those competencies inadequate for the task of leading those same Western executives or managing a diverse cross-regional virtual team.

The rise of China and India has encouraged organisations to move their regional headquarters from mature hubs like Singapore and Hong Kong to growing hubs like Shanghai and Hyderabad. Suddenly an experienced Singaporean professional is no longer reporting to a German functional director and leading a team of local Singaporeans; the functional headquarters has moved to Shenzhen, he is reporting into a new boss from Guangzhou and is managing a project team based in Manila, Hanoi and Chennai.

Such power shifts are felt acutely on the individual leadership level, with leaders from the region needing to renegotiate their place in the pecking order and either learn to build leadership credibility with counterparts from the region’s mature markets or understand performance expectations from the region’s recently emerged markets.

Increased Intra-Asia Interaction

In addition to shifting regional hierarchies, the rise of new markets in Asia-Pacific has brought with it new opportunities for economic cooperation across the region, further propelled by recent governmental initiatives such as China’s “One Belt, One Road” policy and the ASEAN Economic Community. No longer the world’s factory or back office, Asia’s key customers are increasingly Asian and growth opportunities now stem from domestic and regional markets. The region’s local-grown companies are also quickly filling up the Global Fortune 500 list and looking to expand to capture domestic, regional and global market shares.

Surprisingly, many Asian leaders find themselves unprepared to work across the diverse markets in their own backyards. Leaders experienced in working with the East Asian Tiger Economies are now faced with motivating and retaining key talent in Myanmar, building a new client base in Malaysia or setting up a new research & development centre in Bangalore, as in the case of the Taiwanese tech firm.

Fast Growth vs. Mature Markets

Asian leaders working for both global and Asia-headquartered organisations are increasingly required to bridge the competing and divergent demands of fast-growth and mature markets. Corporate policies designed to work in highly regulated mature market environments with slow growth are often the cause for missed opportunities in fast-growth economies. Asian leaders must work within both fast and mature market realities across both the region and the globe, balancing the differing business needs and talent pools within.

Adding to this complexity, Asian leaders working in the region’s economic powerhouses of China and India also need to navigate the multiple market realities within their own national borders. For many industries, Shanghai is considered a premier market, highly saturated and with only a 3% potential growth rate, while Tier 2 and 3 cities like Wuhan or Foshan have 10% growth projections, yet are not open to premier products. Leaders working in these markets must develop multi-pronged market strategies and overcome significant talent development and mobility challenges in order to capitalise on new growth opportunities in Tier 2 and 3 cities, while maintaining market share and retaining talent in Tier 1 metropolises.

Global Mindset 2.0

In the case of the Taiwanese tech firm, its Hsinchu-based executives face multiple layers of complex dynamics, of which national culture is only one.  Awareness of Indian culture is an important first step, but the firm’s leaders, like all leaders across Asia, must upgrade themselves to “Global Mindset 2.0”.

Specifically, it is critical for HQ to understand that Bangalore is a Tier 1 Indian city with one of the hottest tech talent markets in the world. Talent competition is high and turnover rates even higher. In this environment, local engineers build their CV’s through showing complex work and rapid growth. The company’s Indian engineers also have multiple cultural influences, having cut their teeth at American companies with flat corporate cultures, visionary leadership styles and flexible working hours. Hsinchu’s attempt to implement their traditional leadership approach fails to take these layers of complexity into account and risks failure in this key market.

Stepping up to Global Mindset 2.0 means leaders must widen the breadth of their cultural awareness across unfamiliar markets, employees and customers. But they cannot stop there. They must proactively seek to understand the multiple economic realities, regulatory environments and talent drivers in the diverse markets in which they operate, as well as navigate the rapidly shifting hierarchies resulting from Asia’s increased economic prowess. Global Mindset 2.0 is about leading with a heightened level of agility across and beyond Asia’s new economic and cultural borders.