Competitive advantage
David Rees
Published: 01-NOV-01

The concept of "culture" is not built into many business strategies yet cultural fluency is key to success, argues DAVID REES

Consider these three scenarios: Your organisation has fundamentally changed its business strategy. For over 100 years the company has brewed beer but as profits declined over the last decade it engaged in a strategy of vertical integration. Finally, it has decided to divest itself of beer production altogether to focus on running hotels. What do you envisage as your company's greatest challenge for ensuring the new strategy is successful?

Secondly, as a former state utility, your UK power-generating company is finding it tough to compete with other players in the domestic market for electricity production. In response, the senior management team has approved a new strategy of international project development. Your commercial team has identified a tender invitation to build and operate a new power plant in North Africa. To share the risks of this venture you decide to bring in a partner for this project How will your company choose its partner?

Thirdly, aggressive competition in the African telecommunications market has led to consolidation through mergers and acquisitions. Your company, a major player in this marketplace, has decided to make a bid for a rival almost equal in size. A due diligence team is assessing the other organisation's assets. Who will be in the team and what will they be evaluating?

"Culture" is, of course, lurking some- where in the background as a significant influence on each of those scenarios. Whilst the specific organisations involved may be fictitious, the generic situations they represent are not. The scenarios are, in fact, very real and so are the points relating to "culture".

Look again at those questions:

  • Your greatest challenge at a time of business transformation?
  • Your partner selection method?
  • Your merger strategy?
In each of these cases, "culture" becomes a strategic issue.

An organisation's culture can, indeed, be a core competency. Structure, attitudes held, and people behaviours are defining characteristics of the corporation that become difficult for a competitor to imitate or copy.

Cultural diversity has to be seen as an opportunity to bring in new ideas, creative input and innovative thinking.

To pursue such a strategic advantage, the organisation must:

  • Define, position and understand its own culture;
  • Define, position and understand other corporate cultures; and
  • Define and measure the cultural gap between itself and its competitors.
However, leading change-oriented organisations will not stop there. They will be seeking frequent cultural change as a means of achieving further performance improvement.

Further advantage can be created at an operational level - working effectively with different cultures. We can consider, for example, cross-functional and multi- cultural teams, in both "intra" and "inter" organisational contexts. This focuses on team and individual relation- ships. Can people work harmoniously together to achieve results?

Achieving this ability to understand, measure, adapt and change is not an easy process, and the degree of difficulty has been vastly magnified as we move into a globalised business environment. We now have to take into account the added dimensions of international cultures.

I term these competencies "cultural fluency" and these can be applied at three levels:

  • Strategic cultural fluency for strategic decisions;
  • Team cultural fluency for work group performance;
  • Individual cultural fluency for personal effectiveness;
To acquire such competencies requires the organisation to recognise the value of cultural understanding. In all aspects of organisational life, culture has to be seen as a strategic issue. Cultural diversity has to be seen as an opportunity to bring in new ideas, creative input and innovative thinking. This opens up greater possibilities for differentiation - a strategy many competitors are desperate to achieve.

Yet for many organisations around the world this paradigm shift has been difficult to implement - especially in the international context. In Europe most companies are only slowly realising the benefits of developing themselves as culturally-fluent transnational organisations. Too often they have de-prioritised cultural understanding and awareness, usually dismissing these as unimportant topics. How wrong they are.

Those organisations brave enough to take culture seriously and implement appropriate organisational, management and training strategies are likely to end up long-term winners.

David Rees is Director of Cultural Fluency Training and Development Ltd, email [email protected], website

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