Business across cultures: a risk or an opportunity?

Zurich-based entrepreneur Thomas Huber makes furniture, which is manufactured in Asia according to his designs. He recently established an interesting contact with an Indonesian manufacturer and so decides to fly there to establish what he sees as a promising collaboration. At the company, he is welcomed by Wayan, the owner. Wayan proudly shows him the production facility and introduces him to all of the employees. He asks Thomas Huber how he is doing, and inquires about his family and his professional background.

Thomas Huber becomes impatient, he would like to conclude the matter. So during the tour, he starts to explain how he envisions the business relationship. Wayan nods but doesn’t reply. When Thomas Huber starts to talk about his requirements in terms of delivery times, Wayan says something to his deputy and leaves the group. The deputy informs Thomas Huber that Wayan had needed to urgently attend to something. Thomas Huber returns to Zurich disgruntled. He has not achieved anything.

What happened?

To understand this situation, it is important to consider the “basic mechanism” of culture, because culture has a major influence on everything we think and do.

Culture describes the learned and shared values, beliefs and norms of a group of people who interact with each other, expressed in characteristic patterns of behavior. We have all been socialized in a certain way. Our internalized values and norms unconsciously influence our perception, our way of behaving, thinking and communicating. Because of the diverging ways in which they are socialized, people from other cultures perceive the same situation differently. As long as we move within our own cultural circle, we know how the world works. But if we encounter someone who has been socialized differently, the usual approaches no longer work. In this overlapping situation lies potential for success.

As long as we move within our own cultural circle, we remain in our comfort zone. People from other cultures, on the other hand, perceive the exact same situation differently based on how they have been socialized and their behavior differs as a result. In order to be successful in such situations, we must start to actively deal with our own cultural reality and that of our business partner.

Due to his cultural background, it is normal for the Swiss Thomas Huber to address things directly in order to achieve a result. He comes from a task-oriented culture. He finds being shown around the production building for hours on end annoying and inefficient. Wayan, in contrast, comes from a relationship-oriented culture. Without a foundation of trust, business in rarely conducted. In addition to this, Wayan’s culture is hierarchical: status and privileges are key, people define themselves based on their hierarchical role in a company and in their family. In Thomas Huber’s cultural environment, however, all employees are treated as equals. The fact that Thomas Huber talked about his ideas in front of all the employees in the production building lacks respect from Wayan’s perspective and undermines his position. He loses face. This encounter thus marked the collision of two worlds.

Ignoring cultural differences has financial consequences

If you don't pay attention to the cultural background of your counterpart, you will miss promising business opportunities. This can lead to massive financial losses. For example, Russian, German and French engineers were working on a new type of cargo aircraft. The project failed because, among other things, too little attention was paid to cultural differences. The financial loss amounted to around 50 million euros. The same thing happened when, for example, a Swiss company, which until that time had operated in a team-oriented and rather democratic manner, was taken over by a large German corporation. This company was very hierarchical and introduced uniform processes at its new subsidiary. Decisions were now made top-down. This led to a sharp drop in sales at the once very profitable Swiss subsidiary.

It is human nature to first assume that the other person behaves similarly. But in a global environment, this approach can become an obstacle. Even the digitalized world does not change this fact. Digitalization may well bring new possibilities for communication, but the context is often lost through these channels. This makes it even more important to deal with the cultural aspects of interaction. One must therefore work consciously and actively with different cultures. This is not something that comes naturally, because the “foreign” challenges us in our own cultural identity.

What could Thomas Huber and Wayan have done to transform their promising opportunity into a successful business relationship?

• Taking the culture of a business partner into account means preparing in advance – e.g. with the help of good intercultural sources or intercultural experts.
• Check your own intercultural competence by doing an assessment to see where you stand in this respect.
• Better understand your own cultural reality, i.e. become more aware of your own values and see how these manifest themselves in a business environment.
• Do not assume your approaches are the same, and know that yours is only one of many. Diversity can be consciously used to find new, innovative solutions.
• And finally: know that you don't know. There are no certainties when working interculturally. It comes down to people.

Working effectively across cultures is not something that can be delegated. Even hints and tips, or “dos and don’ts” have little effect. Anyone who wants to use culture as a long-term resource to become more innovative and successful must develop their own intercultural competence. This means embarking on a long-term process that starts with you.