Business.view

In search of high CQ

A trendy management idea for the age of globalisation

IN THE Oscar-nominated satire on modern business life, “Up In The Air”, an earnest young executive at an outplacement firm horrifies her older colleagues by introducing them to the word “glocal”. This combination of global and local, she explains, means that the firm can now fire people (and offer them superficial advice on what to do next) using a standardised script, delivering the message through an internet link so there is no longer any need to fly long distances to deliver the bad news face-to-face.

Hollywood did not invent the word, which has been around since the 1980s. It was coined in Germany, then popularised around the world by various sociologists in the 1990s—though it has also been traced to a Japanese management concept, dochakuka, meaning global localisation. “Glocals” has also become a popular term to describe expat workers who move home often as their job takes them around the world.

As usual when Hollywood portrays the world of business, it gets it wrong

But as is so often the case when Hollywood tries to portray the world of business, it gets the concept wrong. In “Up In The Air”, glocal is used to embody unthinking, top-down standardisation, neglecting the human interaction and understanding that are needed to be effective at the local level. In all its uses up until Hollywood distorted it, the word glocal had been used to direct firms away from a crude one-size-fits-all (or “the world is flat”) version of globalisation to one which takes seriously the need to comprehend and adapt to local differences.

A new book, “Leading with Cultural Intelligence”, by David Livermore, a management guru, explains why modern multinational organisations need to be glocal in the original sense, and why they must understand that “There’s really no such thing as a uniform global culture”. This message, he says, applies not just to marketing but to recruiting and managing teams of workers in different parts of the world.

Drawing on academic research and his consulting experience, Mr Livermore argues that managing effectively across multiple cultures is one of the toughest tasks facing multinational companies, not least American ones that are increasingly relying on emerging economies for their workers and future sales growth. According to a survey of senior executives from 68 countries quoted in the book, around 90% see “cross-cultural leadership” as the biggest management challenge of this century.

Up to 40% of managers sent on foreign assignments end them early

Different studies have found that 16-40% of all managers sent on foreign assignments end them early. The cost to employers of each early return has been estimated at between $250,000 and $1.25m, when moving expenses, downtime and other factors are taken into account. In almost every case, the reason things do not work out is cultural problems rather than job skills.

Mr Livermore sums up his solution to this problem with a new piece of management jargon, “cultural intelligence”, and a new measure, CQ, the cultural-intelligence quotient. He says it is about far more than knowing how long to look at someone’s business card or where to point your feet in different countries. He defines it as the “capability to function effectively across national, ethnic and organisational cultures”.

Mr Livermore believes firms need to make a priority of developing cultural intelligence, in the same way that some of the best have already embraced the idea that their managers needed “emotional intelligence” as measured by their emotional-intelligence quotient, “EQ”. Indeed one could question whether there is much difference between CQ and EQ: perhaps CQ is, essentially, an adaptation of EQ to apply to the specific problems raised by corporate globalisation.

Intelligent questions

Almost a century after William Stern, a German psychologist, proposed that people can be graded according to an impartial measure of “intelligence”, a debate still rages on whether such tests are reliable and whether people can do much to improve their IQ. The idea that emotional wisdom and cultural savvy can be consistently and impartially measured, or that people can be taught to improve them, is even more open to question.

Mr Livermore argues that his book is more academically rigorous than the rapidly growing library of books on managing cultural differences. It must be said, though, that some of the advice he offers seems rather obvious: for example, that it would help executives' cultural understanding if they took holidays abroad, learned a foreign language, watched films about other societies, and so on. Of more general application is the list of five factors the book says are key to understanding a country’s national culture: they include the importance that is given to punctuality, and attitudes toward uncertainty.

Many firms' attempts to train their staff to understand cultural issues fail

The author admits, however, that many firms’ attempts to train staff to understand cultural issues fail, because they do not go beyond vague and overarching homilies about respecting diversity. To overcome this, he says they must create structures to identify and deal with specific cultural problems the company faces. When recruiting for jobs that involve working abroad or with people from other cultures, they should try to identify candidates who already have high CQ. And they should incorporate CQ into their training and pay schemes.

These issues are being grappled with by most big multinationals, and increasingly by smaller firms which are tapping foreign markets through the internet. Mr Livermore’s approach is one of several being tried by different firms. Yum! Brands, for example, the owner of KFC and Pizza Hut, has used a model called ABR (achieving breakthrough results) developed by John O’Keeffe, another management guru, in an effort both to unify and localise its corporate culture.

Even the Obama administration is starting to realise that to achieve the president’s goal of doubling the value of its exports within five years, American business people need to improve their understanding of other cultures quickly. The Department of Commerce has hired Mr Livermore’s Global Learning Centre to develop CQ training programmes. As Mr Livermore puts it, many small and medium-sized businesses are trying to boost their exports, but “are doomed to fail” unless they improve their cultural intelligence. Currently, he says, “most are focusing heavily upon legal trade policies and neglecting the overall need to think through negotiation, marketing, distribution and so on in the light of cultural dynamics.”

That the government is now taking seriously the need for American firms to improve their cultural understanding is a sign of progress. Maybe the next time a Hollywood film uses the word “glocal”, it will get its meaning right.