The cost of un­der­stand­ing Global Lead­er­ship

Norway-Asia Business Review - - Contents - By Eric Baker

What is lead­er­ship and how im­por­tant is it? Most peo­ple in business of­ten take lead­er­ship for granted. It’s some­thing the boss does, but they don’t know if it is im­por­tant. But Jan Ketil Ar­nulf, an as­so­ciate pro­fes­sor at BI Nor­we­gian Business School who is teach­ing in its China pro­gramme, tried to dis­til lead­er­ship be­cause he saw so many dif­fer­ences be­tween lead­er­ship styles in China and Europe. His find­ings were a rev­e­la­tion, and he started with et­y­mol­ogy. Lead­er­ship did not ex­ist as a word un­til 1850. Mo­ti­va­tion came about then too, but lead­er­ship orig­i­nated in a US share­hold­ing company’s pub­li­ca­tion. For quite a long time after that, there was still no word for it in French, Ital­ian, Span­ish or Man­darin. With the rise of Amer­i­can com­pa­nies, they used words such as au­thor­ity, power, mo­ti­va­tion and man­age­ment to cre­ate a con­cept of lead­er­ship. But if a leader is just an au­thor­ity fig­ure, how much does that per­son re­ally mat­ter to a company? The re­searchers Lieber­son and O’Con­nor un­der­took a 20-year study on whether a change in the chief ex­ec­u­tive changed the value of the company. They found over a three-year pe­riod, lead­er­ship ac­counts for 32% of the value cre­ation of a company. Their work helped carve out a new def­i­ni­tion for lead­er­ship as non-rou­tine han­dling of sit­u­a­tions. Why does all this mat­ter? Be­cause as more com­pa­nies start to branch out abroad, con­no­ta­tions of lead­er­ship in var­i­ous coun­tries are go­ing to af­fect how suc­cess­ful the com­pa­nies are. Or as Mr Ar­nulf puts it, “Are you go­ing to have Ger­man qual­ity at Chi­nese prices or Chi­nese qual­ity at Ger­man prices?”

Lead­er­ship did not ex­ist as a word un­til 1850. Mo­ti­va­tion came about then too, but lead­er­ship orig­i­nated in a US share­hold­ing company’s pub­li­ca­tion.

Com­pa­nies are bound to stum­ble if they think they can trans­plant a leader from one coun­try of­fice to another, said Mr Ar­nulf, for a num­ber of rea­sons. “The main prob­lem is that hu­mans are all eth­no­cen­tric, which means we judge other cul­tures solely by the val­ues of our own cul­ture,” he said. “This leaves us blind to the prob­lems we might have op­er­at­ing in another coun­try. “Another hur­dle is that knowl­edge typ­i­cally needs to be cre­ated in a new mar­ket by hand be­cause it trans­ports poorly, mean­ing a trans­lated e-mail in­struc­tion is un­likely to have the in­tended con­se­quence. In ad­di­tion, lead­ers typ­i­cally don’t re­ceive enough cross- cul­tural train­ing be­fore they go to work in another coun­try, which can ex­ac­er­bate mis­un­der­stand­ings. And fi­nally, lead­ers in new coun­tries need to learn how to go out and make new re­la­tion­ships and reach out to deal with po­ten­tial prob­lems, be­cause they can’t as­sume the em­ploy­ees will come to them.” Of course the ex­am­ples of business faux pas due to cul­tural dif­fer­ences are legend, but Mr Ar­nulf prefers the case of the man who goes into two shops, one run by a Ger­man and the other by a Chi­nese pro­ducer. He says he wants 30 well-built prod­ucts in six months. “To the Ger­man, this guy is not a cus­tomer,” said Mr Ar­nulf. “The Ger­man tells him, ‘We pro­duce qual­ity prod­ucts here and you want a lot of prod­ucts quickly, so you are not in­ter­ested in qual­ity.’ But to the Chi­nese, the cus­tomer is god. He ac­cepts the or­der even though he knows he can’t do the job well. The Chi­nese man says, ‘Come in, have a cup of tea.’ “Th­ese dif­fer­ences ex­tend to how th­ese cul­tures deal with business prob­lems. The Western style is more open to talk­ing and de­bate. The Ger­man and English lan­guages are very pre­cise; our words al­low us to be more pre­cise be­cause the truth is in the words. But my ex­pe­ri­ence learn­ing Man­darin has taught me that this lan­guage has stripped away much of the cog­ni­tive struc­ture. In China, the truth is not in the lan­guage, it is in the re­la­tion­ship be­tween the leader and the worker.” In Mr Ar­nulf’s stud­ies of the dif­fer­ences be­tween lead­er­ship styles in Norway and China, he came up with sev­eral char­ac­ter­is­tics to ex­plain the wide gap in pro­duc­tiv­ity be­tween the two na­tions. Norway has high pro­duc­tiv­ity, some 102% of the US’s level, while China has 17% of the US stan­dard. Mr Ar­nulf cites a low power dis­tance and flat hi­er­ar­chies in Nor­we­gian so­ci­ety as key to this chasm be­cause work­ers in Norway feel com­fort­able bring­ing prob­lems to their su­pe­ri­ors and even ques­tion­ing their bosses at times. Nor­we­gian so­ci­ety also has high lev­els of trust and em­pow­er­ment, mean­ing lower-level work­ers are trusted to con­trib­ute and par­tic­i­pate so there are less bot­tle­necks in com­pa­nies. He traces th­ese Scan­di­na­vian lead­er­ship traits to the coun­try’s an­ces­tors, as Nor­we­gians tended to be more ed­u­cated than the mar­itime re­gions in South­ern Europe. Nor­we­gians were also able to fig­ure out how to trans­port more ton­nage on ships than sev­eral of their Euro­pean neigh­bours, said Mr Ar­nulf. Most of Norway’s im­ports and ex­ports are with coun­tries that it finds easy to deal with be­cause of sim­i­lar lan­guages and un­der­stand­ing, he said, such as Europe and the US. The lone ex­cep­tions are China and South Korea, while trade with Asia over­all is in­creas­ing. Mr Ar­nulf wants to em­pha­sise to business lead­ers that if in­di­vid­ual lead­er­ship ca­pa­bil­i­ties con­trib­ute 32% of the vari­a­tion in company per­for­mance, this is a huge chunk and should not be taken for granted, es­pe­cially when mea­sured on a global scale. In­deed, lead­er­ship in a for­eign mar­ket can make the dif­fer­ence be­tween whether your business suc­ceeds or fails, he said.

Photo TNCC

Asst. Prof. Dr. Jan Ketil Ar­nulf ad­dresses the Norway-Asia Business Sum­mit 2014.

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