Inside Asia

Global Citizenship: The Leadership Advantage

By Thomas D. Zweifel, Ph.D.

Winston Churchill once famously remarked that leaders must stand above the crowds in order to see the big picture: “The nation will find it very hard to look up to the leaders who are keeping their ears to the ground.” Yet that dictum may not be true anymore. The world in which we operate has undergone several significant transformations since Churchill:

We live in a world that is democratizing.
With the latest wave of democracy, for the first time in history there are now more democracies than dictatorships. Perhaps the boldest experiment in democracy is happening in India, the world’s largest democracy. Historically, Panchayat (local village council) leaders used to be 98% elderly men. In 1993 the Indian government mandated that one-third of all Panchayat leaders must be women. Today, there are close to one million women in India elected to local leadership positions.

We live in a world of knowledge workers and free agents.
Renowned management thinker Peter Drucker has shown that business hierarchies are flattening. He speaks of knowledge workers who often know more than you. They – and with them your organization’s most important assets –leave the office every single night. How can you manage free and highly mobile agents who know more than you do?

We live in a world that is globalizing.
Did you know that by 2007, the number one Internet language will no longer be English but Chinese? Did you know that by 2010, 30-40% of top management teams will not be Westerners but Chinese, Indians, Brazilians and Indonesians –representing the largest emerging middle classes?

We live in a world of virtual teams and outsourcing.
The internet and the deregulation of telecoms have dramatically reduced the cost of long-distance communication. Because distance is no longer an obstacle, relationships once difficult to maintain are now commonplace. In Bangalore, India, virtual teams provide backshop operations for multinational corporations and Indian customer service reps are trained to speak in American accents with American customers. C.R. Suman has created an American identity as “Susan Sanders.” Her fictional biography is complete with her parents Bob and Ann, her brother Mark and a made-up business degree from the University of Illinois. She was trained by listening to sit-coms like “Friends” or “Ally McBeal,” and was quizzed by her trainer on American movies, sports and television programs.

We live in a world of high complexity.
No one person can know everything. No one person can control everything. Some people exploit this jungle – there is corporate and social corruption, and there is transnational terrorism.

“…effective leadership
must now include
cross-cultural savvy.”

These transformations have led to a crisis of leadership. The old Great Man style of leading has become a relic of a simpler time. If a great leader such as Winston Churchill were alive today, even he would have to adapt his leadership, and his fabled communication style, to accommodate these fundamental changes. What is leadership now? You recently read here that we each have our own definition of leadership. My definition, given the brave new world we live in, is that effective leadership today must include cross-cultural savvy. Expertise in collaborating with people from different cultures has become a crucial skill-set for leaders at all levels and in all sectors of society.

Leadership requires adopting a global perspective, synthesizing diverse viewpoints, and collaborating across a wide spectrum of cultures.

Like it or not, we are now all citizens of the world. As a global citizen, you must be able to
parachute into any culture and get the job done while respecting that culture’s pathways.
The terrorist attacks of September 11, 2001 made even the top brass of the US military recognize this. The US Military Academy at West Point called me right after 9/11 and said “Tom, we need you over here.” West Point knew that it had to train cadets not just as competent fighters, but also as competent diplomats.

If you lack global citizenship competencies, what happened to the “Got Milk?” campaign may happen to you too. Marketers wanted to launch the hugely successful campaign for the Hispanic market. But “Got Milk?” came out in Spanish as ”¿tienes leche?” (“Are you lactating?”). You may laugh at such communication mishaps; but they can have billion-dollar consequences. A global leader in packaged software has been battling an “image problem” in key Asian markets. When the company first launched their flagship product in mainland China, they hired Taiwanese programmers to alter and update their code. The company, apparently unaware of the strained relations between the two cultures, missed the subversive political phrases (such as “Take back the mainland” and “Communist bandits!”) that the
Taiwanese programmers surreptitiously inserted into the software. This diplomatic gaffe quickly became a strategic disaster resulting in the Chinese government actively supporting the introduction of a popular open source competitor. (When American executives showed up at a key meeting with Chinese leaders in jeans, that didn’t help either.) How could this happen? The managers in charge did not thoroughly understand the cultural differences of their target market; they did not try to see the world from their hosts’ perspective; and they missed key areas of cultural sensitivity.

How can you lead across cultures? Here is a selection of tips:
• Find the gate to the village if it is fenced in.
• Do not take the village by storm.
• Don’t take English for granted. Remember that English is rarely the first language of your international partners. Avoid American style sport metaphors (“slam dunk” or “step up to the plate” just don’t cut it).
• Remember that your advice is noise in their ears unless they want it.
• Follow up on promises and agreements. “I heard you say the package would be here by 3 p.m. and it is not. I am puzzled.” Do not accuse, but inquire until you are satisfied.
• Know that you will make mistakes; the question is how to recover. (Remember Nelson Mandela: “The greatest glory in living lies not in never falling, but in rising every time we fall.”)

About the author:

This article is based on Culture Clash: Managing the Global High-Performance Team (SelectBooks 2003, Global Leader Series) by Thomas D. Zweifel. Dr. Zweifel is CEO of Swiss Consulting Group, a New York City-based management- performance company committed to the 3Cs of global leadership: Coaching, Communication and Cross-cultural strategy – for breakthrough results. A dual citizen of the United States and Switzerland, Dr. Zweifel teaches leadership at Columbia University, in workshops and as a professional speaker for Fortune 500 executives. Dr Zweifel regularly conducts seminars and workshops for RIAP's Young Professionals Project

Why Japan Still Matters

Editor's Choice: A look at current academic articles on Australia and the Asia Pacific region

Mulgan, AG – ‘Why Japan Still Matters’, Asia Pacific Review (12:2) November 2005

Aurelia Mulgan addresses the increasingly prevalent opinion that China’s rise in East Asia is eclipsing Japan’s position as a power in world politics.

Her article contends that Japan is, and will continue to be, both a great power in East Asia, and an important player in world politics. While the world may be focusing its attention upon China and its rapid rise, Mulgan reminds us that Japan remains the pre-eminent power in East Asia, the United States’ most important partner in the Asia-Pacific, and that Japan is still an emerging rather than a diminishing power.

Her argument is based on several points of economic capacity and continued growth, military strength and capabilities, nuclear potential, and its favourable diplomatic position.

Mulgan thus concludes that instead of viewing Japan through the prism of China’s rise, we must draw attention to Japan’s continuing prominence as a regional and global player, as well as recognising that China’s rise indeed makes Japan more important as a regional balance.

Her article reminds us that there are many factors beyond economic growth figures one must take into account before relegating Japan to China’s shadow in East Asian politics.

Luke Easey

India isn't quite perfect but she has good opportunities for Australia

A financial services company I was working with a few years ago decided to move away from developing business in the Indian market and to concentrate on other parts of Asia. India had failed their ROTI test (Return on Time Invested). It would not be the first company that would feel it had been “burnt” by India. There have been some notable cases including Telstra and PBL. Even Rupert Murdoch was at one time threatened with arrest should he set foot in Delhi again as a result of contempt of court charges brought against him.

Melissa Butcher explores some of the challenges of doing business in India. Though this article was published a year ago in Australia's e-journal, Online Opinion, its content remain relevant.

Check out the article

Tradition, myth and the dilemma of Australian foreign policy

Editor's Choice: A look at current academic articles on Australia and the Asia Pacific region

Jones, DM & Benvenuti, A – ‘Tradition, myth and the dilemma of Australian foreign policy’, Australian Journal of International Affairs (60:1) March 2006

Australia has always had to deal with two distinct foreign policy traditions and the myths that sustain them. On the one hand, Australia is seen as a Western outpost, sharing a close relationship with the United States and viewing the region with some suspicion. On the other, Australia looks to engage the region and place emphasis on its geographical position and neighbours. While analysis of these positions is nothing new, Jones and Benvenuti argue that with the region becoming an ever more “interesting” place, these opposed traditions and myths are presenting Australia and its foreign policy with a clear security dilemma. The rise of China and the concerns it raises in the United States, as well as the absence of an invitation for the US to attend the East Asia Summit clearly indicates the divergence of foreign policy choices facing Australia. As Asia continues to abandon the unrest of post-World War II, it is a region of unforeseen interest and is forcing Australia to once again assess its position on foreign policy objectives.

Luke Easey

India's boom time

'The New India' is the cover story for Newsweek's magazine. Newsweek's international editor, Fareed Zakaria, writes: '...Fascinated by the new growth story, perhaps wary of Asia's Chinese superpower, searching to hedge some bets, the world has woken up to India's potential. But does it really know this complex, diverse country? Just as important, does India know what it wants of the world?'

Within six weeks, a parade of leaders, former leaders and monarchs have visited India. George W. Bush is currently in India. Two weeks earlier, Jacques Chirac was there, so was Bill Clinton. 'Two weeks before that it was Saudi Arabia's newly crowned monarch, King Abdullah. The week after Bush leaves, Australian Prime Minister John Howard arrives.' Prince Charles and Camilla Parker Bowles are not far behind.

Related articles worth reading:
1) What's behind India's success in the global knowledge economy?
2) Morgan Stanley's Ruchir Sharma argues that Indian leaders are enjoying the boom times but putting off more painful reforms
3) Outsourcing Silicon Valley
4) Amartya Sen of Harvard University, Nobel laureate in economics, argues that as India receives more attention, so must its practice of democracy.
5) Out with the revolution: It's time to get rich! - In Marxist ideology, the International Herald Tribune writes, capitalism is a necessary stopover along the inevitable journey to communism. But in a southern Indian state named Kerala, 'a lush state of mountain tea plantations and rivers colonnaded by coconut palms, it just might be the other way around.'

Bali Nine Diplomacy

The Australian Government is facing a diplomatic dilemma in the wake of two of its citizens, Andrew Chan and Myuran Sukumaran, recently being sentenced to death by firing squad (pending appeal) for their role in the attempted trafficking of heroine from Denpasar airport.

The ‘Bali Nine’ case has focused attention on the diplomatic relationship shared by Australia and Indonesia.

The cases of Chan and Sukumaran have come all too soon after another Australian, Van Nguyen, was hanged by Singaporean authorities for attempting to smuggle heroine. In that case, appeals from all levels, including Prime Minister Howard, to spare Nguyen’s life were dismissed as Singapore ruthlessly pursued its domestic drug policies.

The Australian government has made clear its opposition to the death penalty, being a signatory to the ‘Second Optional Protocol to the International Covenant on Civil and Political Rights’ and annually co-sponsoring a resolution of the UN Human Rights Commission calling for all nations to abolish the death penalty. It also views itself as a standard bearer for human rights in the region.

To maintain such a stance, Canberra should be seen to make some form of representation for its citizens. However, it is also important that it maintain good relations with its northern neighbour. Indo-Australian relations are probably at their strongest point for some time, and Australian does not want to spoil such an entente by appearing to meddle in the domestic affairs of neighbouring countries. It is a fine line to tread and Canberra will have to ensure it stays balanced.

The arrival two weeks ago of 43 West-Papuans on Australian shores provides another sticking point in the Indo-Australian relationship. The boat people have been classed as illegal immigrants and President Susilo Bambang Yudhoyono has requested they be promptly returned. However, the West-Papuans have claimed refugee status as the result of persecution and violence from Indonesian authorities, and Canberra is holding back from immediately responding to Jakarta’s request.

Australia currently occupies the space between a rock and a hard place as it struggles to continue to build relations in the region while maintaining its campaign for worldwide human rights. Canberra’s maneuvering will be closely watched as it attempts to play a delicate hand. Commentators will be eager to see whether Canberra can achieve both ends.

Author: Rhiannon MacNamara, Research Institute for Asia and the Pacific, University of Sydney

China's growth

Once again, much of the world's focus is on China's dramatic growth and its prospects for 2006. Chinese government statisticians have recently reported their economy to have grown at 9.9% during 2005, and many economists are suspecting it to have been stronger still.

Economic growth reports for 2003 and 2004 have both been initially declared at 9.5% only to be later revised upwards to 10% and 10.1% respectively. This has led to suspicions that Beijing is purposely reporting growth figures below 10% in order to stave off international pressure on its fixed currency policy. China's yuan has been pegged to the US dollar for just over a decade, and most corners agree it to be grossly undervalued, lending an export advantage in the world market. China reported in early January its trade surplus to have tripled in 2005 to $102 billion, and it total foreign trade topping $1.4 trillion. Such a figure has pushed China to number three in the world in foreign trade after the US and Germany, and ahead of Japan.

While the US complains about an undervalued yuan and its effects on the American export market, as well as there being concerns amongst Washington's reputed hawks about China's military modernisation, Australia has enjoyed a China-fed economic boom, particularly in its resource sector.

China is now Australia's second largest export partner, recently overtaking the United States, but remaining behind Japan. There is a definite prospect of an FTA being negotiated soon and Canberra is busy drafting an agreement for a lucrative uranium export deal. All of this points to a closer economic relationship being shared by the two countries. Australia's recently appointed ambassador to the US, Dennis Richardson, used his maiden speech appearance to suggest that America's attitude to China should change from one principally based upon competition and regional threat, to one of partnership and opportunity, just as Australia has done.

Due to these reasons, both Australian and world eyes will once again be focused on the growing dragon in 2006. Economists will eagerly wait to see if the 2005 growth figures will indeed be revised upwards, and whether the yuan's status will move beyond the 2.5% correction of June last year. If not, will Washington go so far as to label China a currency manipulator as it has threatened, and how will consequent Sino-American relations affect Australia's relationships with both countries, particularly in the case of a uranium trade deal being signed. On top of all of this is the anticipation of the Chinese economy's 2006 performance, as we wait to see whether it indeed breaks through the 10 percent growth range.

Author: Luke Easey, Research Institute for Asia and the Pacific, University of Sydney

Intercultural competency a key to global business success

Recent weeks have seen an enormous amount of public debate about Australian values and multiculturalism. Unfortunately much of the focus has neglected the opportunities, for society and for business, that come with diversity.

Recent research analysing the performance of diverse teams points to two general outcomes: poorer than average or better than average results. The difference lies in how that team is managed. Teams where there is a high level of intercultural competence are more effective working in a global or culturally diverse environment. Intercultural competencies include personal and organisational abilities such as being flexible, empathy, willingness to engage with difference, willingness to learn, an awareness of other cultural viewpoints, the ability to communicate with global English, and a high tolerance for ambiguity.

Diverse teams can initially take more time to build relationships and find strategies to accommodate differences. However, once new processes are established, these teams can be more effective than an homogenous one, utilising each member’s strengths more effectively. The time factor is often the one that causes most concern for managers in the Australian workplace, and when transnational managers do invest time in training it is often invested in the off-shore team. This is only half the solution, as Australian business methods can be as mysterious to someone from Asia or Europe, or even the United States, as their way of working is to us.

While the global corporate sector is generally time poor it is worth investing time in developing intercultural competencies, and there are companies taking the lead in adopting a range of strategies: building diversity management into key employee’s KPIs, for example; ongoing training for local and global teams; incorporating ‘soft skills’ such as the intercultural competencies noted above in the selection of international staff; or using a program of expatriation and inpatriation to familiarise off shore staff with the Australian office and vice versa.

These programs mitigate against the risk of ‘poorer than average’ outcomes from a diverse or global team, and encourage instead better than average performance, not to mention other value added outcomes such as more likelihood of higher staff retention, and cost savings (such as the cost of replacing expatriates or the cost of business failure through simple misunderstandings of workplace practices in another cultural context).

As the centre of global business shifts to the Asia region, and with Australia situated between what will be two of the world’s largest economies, China and India, there is no better time than now to begin thinking about how ready Australian business is for working with colleagues from different cultures. And these intercultural skills are not only useful in the global context, but vital for managing a culturally diverse workforce and client base back home.

Author: Melissa Butcher, Honorary Research Fellow, The Research Institute for Asia and the Pacific, University of Sydney. Visit Melissa’s website: Transnational Corporate Culture

Japanese businesses too slow to capitalise on the prosumer potential

On their website, Kusou Seikatsu (http://www.cuusoo.com) celebrates the debut of another innovation. This time they have invented a contractible heater that fits into the window rail to prevent the flow of cold air into a room. Not long after the new product was announced, it became the top seller at Rakuten.co.jp, one of the biggest on-line shopping portals in Japan.

Kusou Seikatsu is a pioneer Internet-based open community that attempts to commercialise product ideas from consumers. Ideas and concept designs for new products are collected from their members. The best designs are put to the vote and the winning design is sold to potential producers for mass production. In theory, the potential marketability of the winning design seems ensured because it is consumer driven and supported.

This so-called “consumer driven innovation” (CDI) is part of an increasingly popular concept called “prosumerism”. Popularised by futurologist, Alvin Toffler, in his book published in 1981, The Third Wave, he describes “prosumers” as a mix between producers and consumers. Toffler suggests that the distinction between producers and consumers is becoming blurred as production shifts away from “mass production” to “mass customisation”. Increasingly, consumers are participating directly in the conception, design, innovation and promotion of products and services.

Eric von Hippel, the author of Democratizing Innovation (MIT Press, 2005), illustrated the enormous potential of prosumerism. An experiment at 3M shows that annual sales of a product developed through CDI can be high as $146 million, eight-times larger than those average products developed in the traditional manner ($18 million). It also suggests that CDI often leads to an entirely new product line, while traditional product development tends to focus on incremental improvement of existing products.

Multinational giants are now cashing in on the prosumer potential. Through CDI, Procter & Gamble (P&G) have already successfully delivered a wide range of products, including a fabric softener with odour-eliminating technology. Nike has an interactive website, “Nike ID”, in which consumers can customise designs. Recently, some companies like General Electronics (GE) and BMW have even provided special designing software (toolkit), so that consumers can create more comprehensive designs.

Japanese producers have been following a similar trend. RICOH Elemex (a member of RICOH group, which is a major manufacturer of photocopiers and printers), a manufacturer of precision equipments, has been running CDI projects to develop designs interactively on an internet forum. Triumph Japan (a major brand of ladies’ underwear) undertook a similar project in 2001, and proved very successful.

Yet, prosumerism in Japan seems to be far from flourishing. Research conducted by InternetCom and InfoPlant have shown that Japanese consumers still have little opportunity to participate in CDI. Although nearly 80% of people expressed their wish to participate in CDI, only 2% of them were actually involved in CDI programs.

Lack of know-how seems to be a major reason why CDI is not widespread in Japan. Kazuko Katase, a senior researcher from Institute of Future Technology, suggests that many CDI projects fail to take advantage of the interactive nature of the internet (Nikkei Digital Core, on-line edition, July 13, 2005). Ms Katase complained that many companies lack the skills to organise and navigate participants’ feedback effectively.

Japanese companies understand the power of consumer feedback. According to the JMA Research Institute (JMAR), 57% of companies collect customer feedback via e-mail and websites, and 25% of them actively search the internet for their company and product’s reputations. The problem is that Japanese businesses do not know what to do with consumer feedback. The survey reveals that 83% of the companies have difficulties in comprehending the feedback, and 90% say that they cannot sufficiently address the solutions.

The problem seems to lie in how Japanese companies communicate with consumers. They are eager to listen, but fail to speak with their customers. Nomura Research Institute suggests that intensive communication and collaboration with consumers is vital for taking the full advantage of consumer feedback, but many companies fail to develop two-way communication. For CDI to succeed, Japanese producers must ensure that they actively communicate with customers and facilitate constructive discussion.

The interactive nature of the internet is, therefore, almost a prerequisite for successful CDI. However, digital divide may have been one of the barriers against prosumerism. A large proportion of consumers might not be participating in CDI simply because of the digital divide. Older people especially are likely to be left out, with the older age group (50 years old or more) accounting only for 15% of total net users.

The good news is that older people are increasingly becoming an important part of on-line communities. Results from InfoCom Research in July 2004 show that older age groups (50 years old or more) have now become the highest on-line spenders (approximately 150,000 Yen a year) among all age groups.

Fortunately, it seems that young and old alike, are all willing to participate in CDI once they are on-line. Surveys by Web Advertising Bureau (WAB) and the National Statistics Office show that usage patterns of the internet are similar across all age groups. Regardless of their age, net-users are equally eager to share opinions, information on sites such as message boards, chats, blogs etc. Japanese producers now can expect participants from a broader population.

The digital divide is now disappearing and potential participants to CDI are much more broad-based. Japanese businesses will need is communicate with these potential prosumers to capitalise on their enormous potential.

Author: Kozo Otsuka
© Research Institute for Asia and the Pacific, University of Sydney

Selling China: The Wal-Mart Effect

Forty years after one-million Red Guards were chanting slogans glorifying the peasants and workers, Background Briefing on ABC Radio National finds a new revolutionary zeal in China, and these days the hero is not Chairman Mao, but ‘The Customer’.

The worlds biggest retail company, Wal-Mart, is China’s fourth largest trading partner, and the result is one of the most dramatic economic shifts since the industrial revolution. Tariffs are again in the air. There is international unease about labour laws, fair trade or free trade and the power of economic supremacy.

The Radio National program investigates the Wal-Mart effect and China.

The program is available on podcast: Background Briefing
Other links:
Wake Up Wal Mart