This is a story, or perhaps, more correctly, a cautionary tale, about a very successful expatriate and the highly respected, much-envied western company for which he worked. It is a story that made me think again about how we define success in our lives, and, in particular, how we define success in the global marketplace and success on an expatriate assignment.
The Company: The company is one of the very first to enter the Japanese market after World War II. It holds key patents on several important technologies, and invests decades establishing partnerships with Japan’s leading firms. It prides itself on hiring and promoting Japan’s best and brightest.
By the 1990s, it is the envy of other foreign-capitalized companies in Japan: it has a dominant market presence in its niche industries; long-established, trustworthy partnerships with major local players; and a stellar reputation for consistency, reliability and innovation. The president of the company is Japanese, and its management team is a strong and diverse mix of local and international executives who respect one another and leverage their expertise.
The Japan operation is a huge profit center, as well as the home of research and development breakthroughs leveraged by the company globally. They have strong cross-cultural programs in place for their staff worldwide, as well as for transferees and their receiving organizations.
The Expat: Our expat is intelligent, ambitious, and very capable. He has worked for the company for over 30 years, and is known as an excellent turn-around manager who had saved several manufacturing plants and regional operations, turning their losses into profits. Originally educated as an engineer, he is logical and methodical, and very good with numbers, graphs, and trends. Our expat is married with grown children and grandchildren, speaks a bit of French in addition to his native English, is well-travelled, but has never before lived overseas. This will be his last assignment prior to retirement.
The Situation: The global company, and most particularly home office, is experiencing economic hardship. A few expensive ventures have failed, and it is time to tighten belts, cut back, and save money across the board. Though the Japan operation is one of the most profitable worldwide, it is part of the overall organization and must join in company-wide budget cuts.
The expat is sent to Japan as the new CEO, and is told to cut millions from the annual budget. It is the first time in over a decade that the CEO of the Japan operation is a foreigner. The expat and his wife relocate to Tokyo, and quickly integrate into the local expat social scene. They love their new life in this amazing metropolis.
The Backlash: Local and existing expatriate management “cry foul.” They say it is a short-sighted decision to slash budgets in Japan when the operation is functioning smoothly and keeping others afloat. They say they are being punished for errors they did not cause, in which they were not involved. They warn that budget cuts will have long-lasting negative effects in the Japanese marketplace.
The new CEO explains that change always has its naysayers; people need to “get onboard or get off the ship.” “Tough times call for tough decisions.” “It’s a new day, a new world, a new economy.”
The cross-cultural consultant and existing management explain that the culture is different here, that the new CEO doesn’t yet understand Japan. Drastic changes have long-lasting effects that can’t be undone, can’t be apologized for. They urge him to send this message strongly to the home office, to push the decision back up. They say it’s his duty to make the home office aware of the repercussions of their top-down decision. They tell him that following instructions will mean the death of the Japan operation.
But the CEO has been down this road before. No one likes belt-tightening. No one likes budget cuts. He knows how to turn an operation around. He’s done it before. He doesn’t need people to “like” him. He knows they will respect him once they see the results he achieves. This is an once-in-a-lifetime opportunity, an incredible capstone to his career.
The Outcome: The expat succeeds, in stellar fashion. He fires people. He closes divisions of the company. He retires long-standing partnerships with important local players. He does exactly what he has been charged to do. And he furthers his career: after his two-year assignment he receives a huge bonus. He departs Japan to begin his retirement, riding the accolades of his success.
Home office is proud of their decision to send him; only an expat could have made these kinds of difficult decisions, taken these drastic measures. A local executive wouldn’t have been able to cut such long-standing local partnerships, couldn’t have bit the bullet to fire staff who had worked their whole careers building the company. It was a perfect decision. Money saved. Bottom line improved.
The Longer Term Outcome: Fast forward to four years after the expat’s departure. The highly successful, highly profitable business in Japan, with the enviable stellar reputation, closes down. Plants close. R&D facilities close. Offices throughout the country close.
Leading companies in the industry are no longer interested in partnering; once burned twice shy. After decades of trust building, smart business and shared success, how can they rely on a company that unilaterally decides to throw it all away to improve bottom-line at some far away home office? Why should they do business with a company that so clearly prioritizes home office needs over international success?
The company’s best and brightest have been hired by the competition. They are sour about their previous employer’s lack of loyalty and its short-sightedness. The company is no longer able to attract talented new hires. Who wants to work for a company that focuses on home office success, punishing those who succeed worldwide?
And today? The Japan operation, such an envied and respected company for over sixty years, is no longer. It was “over-milked,” bled dry. Not financially, but culturally, emotionally, trust-depleted.
So, how would you gauge success in this situation? Knowing what you know now, was the CEO successful? At the time everyone thought so. He achieved the immediate goal. What do you think would have happened had he done things differently? Is there a way the expat could have been successful in his goal and maintained trust? Does this mean that every leader needs special tools when completing an overseas assignment? What can we learn from this?
Please ponder those questions while you read the key takeaways from my point of view.
- As expats, we must learn to distinguish between what we know and what we have to learn. We must ask for help. We must be willing to listen. We need to pause and make sure we understand the cultural context in which we are working.
- We must ensure that while we use our strengths, we also use “fresh eyes” to see what’s new and different this time. Not every problem can be approached in the same way it was successfully resolved the last time around, in a different country, with different people.
- We must be able to discern when to jump at an opportunity, and when to push a decision back up the chain of command. No person is an island. Even a CEO is part of the interconnected web of relationships, responsibilities, and decisions that make up an organization.
- As home office executives, we must be able to weigh our priorities, consciously and purposefully. We must think long-term, even when the short-term is jumping up and down in front of us. It is our job to anticipate the multiple impacts of a decision, and shape the process to benefit the organization.
- We must be able to hear the truth, from all perspectives, and separate the facts from the complaining. We need to set aside what we want to hear, what we are used to hearing, and be open not only to what is said, but the context and manner in which it is expressed. A cultural informant may help in “translating” the meaning of the message.
- As local management, we must learn to discern when we are accurately predicting the future and when we are just resisting change. These are usually questions to explore through dialogue and open-minded discovery. This can be a challenging process, depending on the cultural norms of local management.
- As a global team, we must have the tools to enable us to share, hear, and weigh information in order to make the best decisions, for both the short- and long-term. And it is important to remember that the choice and presentation of information is, to some extent culturally influenced. Without a process to truly understand shared information, team members essentially operate in the dark.
- A multinational company, it is wise to employ tools like Cultural Detective to help prepare and guide executives on international assignments. Culturally Effective companies recognize the need, and have found Cultural Detective and a trained facilitator can help prevent stories like this from becoming commonplace Cultural Defectives.
Linked to the My Global Life Link-Up at SmallPlanetStudio.com
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Dianne – this is an excellent example of the complexity of working in a multinational environment. For anyone who maneuvers in this context – it is very wise to let the 8 lessons she mentions here sink in. Intercultural competence is NOT just the responsibility of the expat sent away from his or her home country. It is an essential mindset for the ENTIRE organization – in order to avoid expensive mistakes like this one. Your case study here is just one of countless examples of how we lose out in business when culture is not taken into consideration.
So glad to know this resonated with you, Sundae, and that you are “fighting the same fight,” so to speak. When intercultural competence is reduced to interpersonal skills it is most unfortunate. There must also be intra-personal and organizational competence. This latter is so often lost, but is crucial!
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Great case study, Dianne. It’s so true that in the short-term it may seem that there’s been success but definitely not in the long-term. But how often is the lack of success attributed to a lack of intercultural competence? I agree with Sundae – intercultural competence is a responsibility of everyone in the organization, not just the expat!
Thanks for participating in the #MyGlobalLife Link-Up!
That is most definitely the point of the post, Cate; everyONE and the organization as a whole (in the sense of instituting policies, procedures, systems and structures that support it) are responsible for intercultural competence. Diversity alone doesn’t bring innovation or creativity; it’s the effective management of that diversity, which requires intercultural competence. Thank you both for making this journey with us!