Putting Your A Team into Asia

“While Asia has grown in importance for almost every Western company, many of them are lagging in the sense of having good enough management power in the region,” says Hellmut Schütte, Dean Emeritus of China European Business School.

“In general terms, if you take a larger company and you have, let’s say, 50 top leaders across the organisation, only five to 10 per cent of them would be in Asia.”

Criticaleye Thought Leader Hellmut says there are multiple reasons why Western multinationals should rethink their strategies for Asia. In his recent article, Organising for Asia, he highlights one major problem as the reluctance to let power move away from HQ.

“A strategy exists for development in Asia but there can be a sense that headquarters are constantly interfering and not ready to take risks [to] capitalise on high growth,” he adds.

Perceived risks in Asia – such as disruption, a changing regulatory environment and the volatility of commodity prices – often keeps many controls firmly within the US or European HQ. Mark Ling, Head of International Large Corporates for Santander Corporate & Commercial, comments: “That doesn’t necessarily help in an environment that is moving very fast; to take advantage of the opportunities you need more local decision making.

“There’s a bit of a paradox for boards, they see the growth but they also see the risk. It’s often hard to reach that balance.”

John Shelley, Chief Risk Officer at RBS Asia Pacific, who has been in Asia since 2006, says the company did not devolve enough power to Asia during its growth phase. “There was tension between the London HQ and the Asia hub. From Asia, it felt like more autonomy was devolved to the US [than to Asia],” he says.

Moving power 

In order to seize opportunities and navigate challenges, decision making in any market needs to be effective and timely. Michael Crompton, General Manager for Asia at Criticaleye, says: “You need to build a realistic strategy for each market and understand that you won’t win overnight. You must take steps to seize opportunities and those operating in Asia need to know they are a relevant part of the business, rather than just a footprint.”

Some companies are relocating their best leaders to key markets. Hellmut offers French company, Essilor, as an example. It’s President and CEO now heads the global prescription lens provider from Singapore.

This is similarly the case at Manulife. John Brisco, Senior Vice President, Chief Information Office and Chief Operations Officer for Manulife Asia, says: “We are moving global roles to Asia to ensure we have a suitable spread of talent across our geographical footprint.

“For example, our Global Head of Leadership Development has moved to Asia because, with the growing influence of Asia to our global business, it was vital we had this role based in the region.”

For big players with the appropriate resources, a new HQ could be the next step. For example, GlaxoSmithKline has had a significant presence in Asia since the 1970s and will open a new global HQ in Singapore next year. Abbas Hussain, President for Global Pharmaceuticals says this is a major development for power in the region.

“Our new headquarters for Asia will serve as one of three global control towers for GSK, alongside the UK and US,” he explains. “Decisions normally made at a global level will be taken in Asia, with Asian patients and consumers in mind. We are aiming to create both autonomy and accountability, improving the speed and quality of decision making.”

While leaders in Asia need to have spent time in the company’s other major markets − usually the West − it’s also critical that those from the West have global experience.

“The key for more management power is that the executives of the business should be considered as global managers, not just regional. That requires a programme of talent and leadership development that ensures you have a lot of mobility and horizontal career opportunities so that people are multi-skilled,” Mark comments.

“If certain powers lie with head office, they need to have that empathy with the local leadership. If you haven’t seen different markets and trends then the nuances could come as a surprise. You might follow a template that may not work in that environment. You need the best leaders at every part of the business.

John Brisco says: “I think Manulife has done a good job in articulating that we are a globally focused organisation and that we need management capability that can wake up in Toronto one day and go to Hong Kong the next and be just as effective and capable. If you can get that right then you’ve got the real makings of a truly global powerhouse.”

For Western multinationals to meet the needs of regional consumers, both local and global experience will be vital. While the development of local talent is perhaps a separate point from those made above, it’s hugely important for long-term growth and succession planning.

On the subject of local talent in Asia, Jingru Liu, Director for China Advisory Services at BDO, says: “If you have the right people on the ground then HQ should be listening. You need to treat each market in Asia differently and employ leaders who know the specific markets well – there are huge differences across the region.

“Businesses need to give local people the same respect – they know their market well. The Western world is sometimes under the illusion it’s always right; they need to respect and understand cultures more.”

Ultimately, whether a company is looking to expand into one particular market in Asia or strengthen its pan-Asian presence, careful consideration should be taken as to what the leadership and decision-making framework will be.

By Dawn Murden, Editor, Advisory 

What are your thoughts on Western multinationals’ strategies for Asia? If you have an opinion that you’d like to share, please email Dawn at: dawn@criticaleye.com

Read our write-up from the Criticaleye Asia Leadership Retreat, at which Hellmut Schütte and John Brisco were both speakers

Or find out more about our upcoming Global Conference Call: Understanding China’s Consumer Landscape

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How CEOs Set the Pace in Asia

Reimagining the customer experience is especially difficult for Asia’s CEOs and senior executives. It’s harder for them to justify a radical overhaul of product or service delivery because, unlike those in the more mature markets of Europe and North America, their organisation is likely to be growing rapidly.

But that’s not an excuse to shy away from change. China already has the world’s largest population of digital consumers, with over 550 million mobile internet users and an infrastructure that’s improving through the adoption of 3G and 4G networks. The rise of cloud computing, big data and the Internet of Things is also completely reshaping delivery models in numerous industries, from financial services to retail and healthcare.

At Criticaleye’s Asia Leadership Retreat 2015, held in association with Accenture, Cisco Systems and the China Europe International Business School (CEIBS), the focus was on how regional business leaders are adjusting their strategies to remain customer-focused in the face of new technology.

During the course of the two-day, Hong Kong-based Retreat, five themes emerged that executives need to bear in mind in order to succeed:

We’re entering the next era of digital 

Businesses will lose market share if they don’t provide customers with the latest digital services. Olof Schybergson, CEO and co-founder of design consultancy Fjord, which is part of Accenture Interactive, believes “we are now entering the third phase of digital – it will be as disruptive as mobile was and the web before that”.

A significant element of this new era will be the connectivity of devices, which is why Xiangli Chen, Vice-President & Chief Technology Officer of GE China, argues that success will rely on the ability to integrate information and the industrial internet. “Less than one per cent of the data generated by machines is actually used at present. As this changes, data will become a goldmine.

There’s no question that investment in digital is accelerating. During the first nine months of this year, organisations in the Asia Pacific region invested approximately $3.5 billion in financial technology, this compares to $880 million throughout the whole of 2014, according to a report by Accenture.

Calling design gurus, social hackers and mobile evangelists 

The onus is on organisations to be far more imaginative about recruitment at all levels. John Brisco, Senior Vice President, Chief Information Officer and Chief Operations Officer for Manulife Asia, says the financial services company has introduced new roles in order to disrupt the business’ status-quo, including “design gurus, social hackers and mobile evangelists”.

He said: “They have enthusiasm and are passionate about what they are trying to create; they don’t think within the traditional boundaries. The challenge is to deliver at pace – if you fail to do that, the type of talent you’re bringing in will walk.

It’s all part of a broader, strategic reappraisal of how services are delivered. “The way a life insurer and bank might traditionally go about a project would actually not allow us to win in the future,” said John. “How do we create a mindset that lets us change the speed at which we do things?”

This is not only applicable to those in financial services. Hera Siu, Managing Director of Greater China for education company Pearson, described how she brought in six new people to form her top team, each from a different industry. She explained how “they were tasked with transforming the business by introducing a new service model, and they had to do this while moving at a faster pace than the organisation was used to”.

From Shanghai to Silicon Valley, start-ups are changing the game 

Corporates are paying serious attention to start-ups. David Schillmoeller, Chief Customer Officer of Prudential Corporation Asia, said there is an emphasis on cross-functional collaboration and partnerships that stimulate innovation: “It’s helping with completely new ecosystem propositions – we have a great business model and we believe, by embracing disruption, we can make it better.”

John of Manulife Asia commented: “We are developing a number of different partnerships with a variety of firms. This includes boutique start-ups in Silicon Valley and Shanghai that have pieces of the ecosystem which, in the future, might just differentiate us. We might not do something straight away, but we are creating relationships.”

In Asia, China is the market that really matters

Although China’s GDP may have fallen to 7.2 per cent, it would be foolhardy to suggest its economic power is waning.

Hellmut Schütte, Dean Emeritus of CEIBS, noted that for most companies, China continues to make up over 50 per cent of revenue in the region: “When you look at your global portfolio as a multinational and then survey economic GDP growth over the next ten years, only two countries matter: China and the US. They are the only countries where there will be a significant amount of additional money to grow your business.”

China demands respect. Martin Cubbon, Finance and Corporate Development Director of the diversified conglomerate Swire Pacific, commented: “The first thing you need to acknowledge when you enter a new market, such as China, is the odds are always stacked against you… There is asymmetry of information as the locals will always know more than you.”

It’s important to coolly assess whether an organisation has the right culture for doing business and if the market dynamics are favourable. “In China, you need to be very cost competitive in whatever you do… because seemingly there is never an end to new capacity. No matter how good your product, if you can’t compete on cost you’ve no chance of making money,” Martin added.

There is a renewed emphasis on leadership 

Finding people with the right technical skills is only half of the battle for corporates in the region. Matthew Blagg, CEO of Criticaleye, noted: “There is no doubt that technology is changing the business landscape in Asia. However, I firmly believe that digital is an enabler and that an organisation’s ability to succeed absolutely depends on the leadership qualities of the CEO and their senior executive team.”

Hera of Pearson commented on how important it is to remember that “hiring a team doesn’t mean you have teamwork”. She explained that “you need each team member to work together and have a shared sense of purpose”. As a way of creating this dynamic, she brought in KPIs and a scorecard for the team she had hired, using both quantitative and qualitative information to find out if they were aligned.

For Ian Stone, Criticaleye Board Mentor and Non-executive Director of Chinese internet giant Tencent, it comes back to the CEO and their ability to build trust: “In my experience, the great leaders are able to demonstrate they really know the business to investors and stakeholders. They also respect the knowledge and expertise that’s within the company and, in turn, command respect back.”

By Marc Barber, Managing Editor, Criticaleye

Do you have a view on this subject? If you have an opinion you’d like to share, please email Marc at: marc@criticaleye.com

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Winning Strategies for Asia

Comm update_12 November1 The scale and pace at which markets across Asia are growing can leave you breathless. For both indigenous and foreign corporates, the pressure is on to move fast, whether it’s responding to urbanisation, creating new technology or simply meeting customer demand. It all presents a rigorous test for executive teams as they are expected to devise winning strategies in a complex, competitive landscape where talent is in short supply.

These were some of the key themes to emerge from the Criticaleye Asia Leadership Retreat, held in partnership with China Europe International Business School (CEIBS). Over the course of 24-hours, attendees gathered in Hong Kong to share ideas on innovation, sustainability, talent and what the rise of China’s private enterprises means for multi-national corporations (MNCs).

Hellmut Schütte, Vice-President and Dean of CEIBS, observed: “Perhaps the golden age in China is over for foreign MNCs. Everyone is here now, labour costs keep rising, and China’s own MNCs are making enormous progress.”

Aside from the emergence of international powerhouses like e-commerce conglomerate Alibaba and telecom equipment and smartphone maker Huawei, competition was described as particularly acute in China’s third and fourth tier cities, where an increasing number of home-grown private enterprises are capitalising on their local market knowledge. “China still presents significant opportunities for MNCs but it’s now a lot harder to realise,” said Stephen Mercer, Partner in Charge of Multinational Clients at KPMG.

“You have to understand what segment of the market you are dealing with as they can be so different. If you were operating in Europe, you wouldn’t replicate your market entry strategy for each country or market and China [is] the same. Unless you are clear about what you are trying to achieve in China, it will be very difficult to succeed.”

For those companies that do get it right, China’s $9.2 trillion economy provides plenty of openings and areas for growth. Hellmut said: “If China ‘only’ continues to grow its GDP by 7 per cent over the next ten years, it will still almost double the size of its economy. If you combine [Brazil, Russia, India and South Africa] … and the next ten emerging markets, all together they add up to the size of China’s economy today. This is very much in the mind of China’s Government when it deals with the outside world.”

The ability to bring new products to market rapidly was generally agreed to be a significant differentiator for successful businesses. George Yip, Professor of Management and Co-Director of the Centre on China Innovation at CEIBS, said: “Chinese companies have a deep understanding of the customer – [they take] a pragmatic, profitable and customer oriented approach to innovation… Western companies can be too slow because there are too many processes in place.”

Sujit Chatterjee, President & CEO of TATA Consultancy Services China, said that “innovation, as it was understood in the Western world, was for a long period about creating new markets, but, as we see in Asia, especially China, innovation is about capturing markets”.

Companies have to be capable of adjusting to the characteristics of a rapidly changing and geographically diverse country. “Each year, Western companies set-up more R&D centres in China than in any other country in the world, including the US,” George added. “Western companies have an appreciation for Chinese methods of innovation; they are eager to learn how to innovate faster.”

A long-term view

If businesses are to continue to take advantage of the consumer appetite for goods and services, attendees agreed that it needs to be done in a sustainable fashion. Peter Wong, President of Dow Chemical Greater China, said: “Sustainability is very much part of our strategy in terms of driving business growth. For example, in China we are looking at a few of the issues the Government is focusing on, such as food security and safety.

“If we bring our capabilities together, we believe that we’ll be able to find a solution that is going to help the Government tackle some of these challenges, like food spoilages.”

Setting the right strategy and implementing it is key. Peter Lacy, Managing Director of Strategy Practice & Sustainability Services for Asia Pac at Accenture, said: “Companies need to be aware of opportunities to improve their approach to sustainability… It needs to be integrated into organisational design so that support functions are created to incentivise people, so they want to make improvements. That’s as true here in Asia and China as it is elsewhere in the world.”

The challenge is to create alignment across the whole organisation. “At Dow in China, I’ve been trying to build a cross-collaboration model,” said Peter Wong. “It’s been about looking at what the issues are and seeing how people can jump beyond their own boundaries. Hopefully they’re thinking about how we can better collaborate, utilising the R&D lab to [address] the issues we have – if you don’t even understand your true capability, you can’t really develop an innovative mindset.”

Cecilia Ho, President of International Paper Asia, commented: “There actually has to be a change in mindset around sustainability; you’ve got to accept that if you do not operate sustainably you cannot operate at all. [If you understand that], then you’ll do it because it’s beneficial to the company as well as to the environment…

“You can do all the communication and internal marketing – and we certainly do – but the most important thing is that employees are convinced that you practice what you preach. So it needs to be driven by the senior leadership team.”

According to Peter Lacy, thinking sustainably can be a real driver for innovation:  “At the moment a lot of the focus in Singapore, India, China and Japan is on urbanisation and smart technologies and how they can be used to better manage energy and transport systems. There is a ‘digital revolution’ taking place, and we are really only just beginning to see the power of connected physical and digital infrastructure in areas like cloud computing, mobile tech [and the] Internet of Things (IoT).

“This is clearly a strong business imperative, but it’s also a sustainability benefit… Companies in China especially are using things like smart-metering and smart-grids to drive energy efficiency per unit of GDP.”

Matthew Smith, Global Head of Market Development for the Internet of Things at Cisco Systems, estimates that over the next ten years the connectivity of devices will create profits and cost savings of approximately $19 trillion. “People are not afraid to fail in China and that type of attitude is going to be really beneficial in this kind of economy,” he said.

The impact of the IoT will be felt in multiple sectors, from retail and healthcare to life insurance and, of course, energy. Matthew continues: “Texting went from zero to $300 billion in about six years. Thanks to WhatsApp and We Chat, it’s gone back to zero again – the point is a lot of new markets will emerge due to the Internet of Things.”

People first

If technology is unlocking new business models, and globalisation creates a more competitive environment, what kind of skills-mix is required to come out on top? Even for those companies that have a theoretical answer to this question, the reality of identifying and keeping the right people continues to be tough.

In the marketing industry, for instance, digital is having a seismic impact on the way customers behave and this requires a different set of skills. Chris Riquier, CEO for Asia Pacific at Taylor Nelson Sofres, said: “As marketers, we’re not investing sensibly and we’re not recognising the ROI today. We’re also ignoring new platforms, which means we don’t have the skills and expertise in the business.”

The quality of graduates, particularly in China, was also discussed. Hellmut questioned whether the country’s education system, with its emphasis on hierarchy and rote-learning, was preparing the younger generation for the dynamism and innovative thinking required for the modern workplace. “Ten years ago there were one million graduates, whereas today you have 7.5 million graduates and the number of universities and colleges has doubled during the same period,” he said.

“There has been tremendous growth but there is the problem of young people coming into the job market and being unable to find employment. At the same time, you have companies crying out for people. As companies must innovate in order to compete, it is not easy to find the talent you need when they come from this rules-based background.”

In order to overcome the shortfalls in talent, companies were encouraged to start looking regionally to bring in people of the right calibre. Michael Guo, Partner of Human Capital & Change Management Advisory for Greater China at EY, said: “Businesses are increasingly connected. Ten years ago the prime movers in Asia were China, India and Indonesia…

“Now … there are so many different countries where different solutions are required, and for that you need a diverse range of talent, especially for your senior leadership team.”

Global leadership

When discussing ‘Asia’, it’s important to remember the distinct national and cultural differences. Each country and region will present its own idiosyncrasies in terms of doing business, from how relationships are built, bureaucracy navigated and the regulatory environment understood. Nevertheless, the Retreat demonstrated there are questions being asked of senior leadership teams in Asia that will resonate internationally.

Andrew Minton, Executive Director at Criticaleye, said: “Whether leaders are confronting issues around sustainability, talent or digital transformation, they must be able to… see the bigger picture in order to shape their own strategy.

“That’s why, regardless of geography or culture and irrespective of industry or function, there is an overwhelming need for leaders to step out of the day-to-day if they’re to combat complexity successfully.”

Executives need to be prepared to reflect, collaborate and benchmark with others. Trying to establish strategic clairity in isolation is no longer an option.

I hope to see you soon

Matthew

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Winning & Retaining Talent in Asia

Comm update_15 Oct1

The biggest headache for many organisations operating across high-growth markets in Asia is caused by trying to find and keep hold of the best people. While there’s no failsafe plan to prevent quality employees moving on, there is a growing need to devise ways of building trust and loyalty that go beyond remuneration and financial incentives. After all, someone else will always be willing to pay more.

Marcus Downing, Associate Director at management consultancy Hay Group, highlights the scale of the problem: “There’s basically a talent shortage in many parts of Asia. Countries such as China and Vietnam have a massive amount of investment put into them but the human capital just isn’t there. You have the situation where, locally, people move jobs every [six to] 18 months and get a 92 per cent pay increase for moving…

“Companies in those regions are trying to hire the best of what’s available… they might fly in an ex-pat which is expensive and only a short-term solution; they might try and hire locally. But they are only getting what’s available, not necessarily the person that can do the job.”

Rose Colledge, CEO of employer marketing and talent management services company Work Group, says that “monetary rewards as well as career development are viewed as more important than other benefits, such as work/life balance and flexible working, particularly in China”.

Career development can certainly be used as a way to differentiate a business in a fiercely competitive labour market. Serge Colin, Group HR Director at construction supplier Lafarge Tarmac, comments: “If you want to bring in the best talent you need to expose them to senior level people during the recruitment process… introduce them to the top managers, so [it’s clear] they are being hired by the multinational.”

Howard Kerr, Chief Executive at standards and training provider BSI, says: “Good talent is often nervous about joining a foreign company that they’ve never heard of, so new entrants have to do an awful lot of upfront pre-selling and preparing the groundwork, explaining who they are, what the business prospects are, the style of the business and who their customers are… because it all comes down to a question of trust.”

According to Craig Wilkinson, Regional Managing Director for the Hong Kong-based LDC Asia, which is part of the UK mid-market private equity firm LDC, people and talent form “one of the toughest challenges” for companies entering the region. He explains: “A significant proportion of the workforce is mobile and prepared to move frequently for better terms – however, there is some caché associated with working for a foreign-owned business and we have found our portfolio companies… have been able to secure and retain good people.”

Facing the future

Cultural nuances need to be studied and understood. Brian Stevenson, Criticaleye Board Mentor and Non-executive Director of the Agricultural Bank of China, comments: “If you’re trying to head-off mistakes then you need to think about how senior executives going [there can] learn about the region, but also how they grow and develop a board that is culturally sensitive to how the region behaves and thinks, otherwise you won’t get the best out of it.”

Nick Allen, former VP of Strategy and Portfolio at oil and gas company Shell, says: “Status matters in Asia and a job title is a demonstration of this. I once lost a top talent in Singapore because he was moving from a President role in another company to a manager role in Shell. Financially it was a promotion but he wouldn’t take it because of the title… people would find out what his real ‘title’ was and he’d lose face.”

All too often, assumptions are made which prove misguided. Mei Wong, Affiliate Partner for Asia at executive search firm Warren Partners, provides the example of western companies giving senior roles to people who are returning back home to China after jobs abroad. There can be disproportionate expectations, says Mei, about their knowledge and ability as it’s easy to become out of touch with a “constantly changing and complex new China”, and such individuals may also have only held “relatively junior positions abroad but are given full responsibility to run the China operations”.

Conversely, dropping in people from HQ won’t provide a long-term answer either. Howard Thomas, Criticaleye Thought Leader and Dean of Lee Kong Chian School of Business in Singapore, comments: “Unfortunately, many foreign firms get into the practice of bringing ex-pats to fill key jobs in Asia as part of their global talent development programmes. As a result, local talent often jokes that they have a new boss every three years – year one is training the new boss, year two is helping them do something unique, and year three is packing them up to go home.”

Roger McDowell, Chairman of engineering company Avingtrans, says that, after six years in China, “the obvious answer to the ‘hiring’ question is not to hire senior people, but to build our own”. He explains: “We hire people with potential then give them challenges and the room to [develop]. To retain talent we keep our business growing faster than our people are able to grow… that stretches and excites their imagination and ambition. The business environment needs to be fun, exciting and [should show the] potential ahead.

“We rarely bring people in at a senior level – as an example, for our Aerospace business Sigma, our first employee recruited in 2005 is now [General Manager] of our facility employing 150 people… [We let people] prove themselves before they are promoted.”

Getting that degree of trust in people can take years to build and time is a luxury that the majority of companies invariably feel they don’t have. Poor hires will be made but if it becomes apparent that this has happened, the general rule is to act swiftly. “We see lots of companies who make recruitment mistakes and don’t do anything about it,” says Roger. “In Asia, if you make a mistake, don’t be proud: change things quickly and move on.”

Howard Thomas says: “Companies need to really understand the local customs and practices and consider how hiring is not only about obtaining talent, but also about building the right relationships for the success of the business.”

I hope to see you soon.

Matthew

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Criticaleye Launches New Asia-Pacific Offering for Members

These are exciting times at Criticaleye as we announce the establishment of our new subsidiary, Criticaleye (Asia) Ltd, headquartered in Hong Kong.

asia-pac1-webSince its launch in 2003, Criticaleye has established itself as Europe’s pre-eminent boardroom Community, providing integrated layers of support across industries, business functions and geographical locations to resolve issues through peer-to-peer debate and discussion. But, as the needs of our Members have grown in the more globalised world of business, it’s clear that now is the right time to provide a truly international service by extending our presence to the Asia-Pacific region.

The success of Criticaleye lies in our ability to support our Members across the world in challenges core to their roles and ambitions – both areas in which they will typically need to engage with others to access peers’ insights, support and advice.

For more information, please contact us.

Learning to Lead in Asia

For those executives who are embarking on a senior leadership role in Asia, it’s time to pay closer attention to culture, relationships and personal networks. Without addressing those elements, a person may easily and unnecessarily become cast adrift and feel disempowered in a highly confusing environment.

Mark Wilson, Managing Director of BoTian and Chairman of BoCheng, two of AB Sugar’s businesses in North China, explains: “Having lived and worked [here] for five years, I’ve certainly had to adapt my leadership style. In China, western norms and logic don’t apply and you must be flexible at all times even when you think an agreement has been reached.”

Brian Stevenson, Non-executive Director of the Agricultural Bank of China, says: “Be flexible in your judgments, especially early-on in your learning experience. The western ways often don’t work in Asia and adaptations to your established management style will be required.”

There’s no way of rushing the process of adaptation. Chris Merry, CEO of professional services firm RSM Tenon, who worked in Shanghai for three years, says: “The key thing is just not to get frustrated by the differences but be very patient to see how those differences work out and see how you can work within the culture rather than against it.”

It’s a case of possessing the self-discipline to understand that process and execution will not necessarily be what you’re used to. Gary Kildare, Vice President of HR, Americas, Europe & Asia Pacific for IBM, adds: “It comes down to getting an understanding of how people think; being sensitive to the way people are and the backgrounds they have.”

Without that awareness, you’re pretty much setting yourself up to fail. David Harding, Deputy Chairman at Magnum Berhad, Malaysia’s largest fixed odds lottery, recalls his surprise at the business motives in his adopted country: “Disposing of core assets proved the hardest task, mainly because there was status associated in ownership. Pride or saving face are as important, and maybe even more important, than financial remuneration, in securing engagement and focus from people.

“The collective is far more important than the individual, and performance management, including the confrontation of underperformance, needs a collective rather than individual focus here.”

Assuming that ‘you know best’ can have calamitous results. Mark says: “Newly arriving expats mustn’t fall into cultural stereotyping; China is a huge country made up of many different ethnic groups and regions, each with its own characteristics and business styles. Think of China more like the EU: one common trade block made up of many different countries, each with their own languages, dialects, customs and ways of doing business so you need to adapt your approach and strategies accordingly.

“Likewise, differences between the generations are pronounced due to the pace of economic and social change during the last 60 years. Senior managers often don’t understand their juniors’ expectations and vice versa; this can make expats good mediators.”

Where many organisation fall short is by trying to impose the group strategy in such a dogmatic fashion that individuals on the ground aren’t given enough autonomy to bridge that cultural divide at a local level. Gary says: “Successful businesses are the ones that are going to work effectively at integrating across borders,” he maintains. “There’s a kind of natural conflict that exists out there; the conflict of a country’s culture and traditions versus corporate success, as these things are not always in perfect harmony.”

Ian Durant, Chairman of investment and development concern Capital & Counties Properties, explains: “Business is personal. The role of family and the role of the corporation is something different in Asian cultures, so there’s often a reluctance by individuals you’re working with to acknowledge publicly they don’t know an answer or to give you any push-back on something they don’t agree with. You might think you’ve briefed everybody and they’ve all said ‘yes, we understand,’ and that they’re happy with the objective but you might go away and find they’re not at all happy but didn’t want to admit it in public.

“You need to be patient and receptive to body language and other signs. After a while you begin to read the signs and you talk to people one-on-one and you get them to play back to you what it is they’re committing to.”

It’s something that comes from having proper experience of working and living abroad. Matt Crosby, Associate Director at management consultancy Hay Group, says: “It is dangerous to assume that the high performers in the mature markets are going to be high performers in the emerging markets… in the West you often have quite mature business processes that provide a degree of infrastructure, support and logic that you don’t have in the fast growth businesses typical of the Far East.

“Your best people will cope, but unless these individuals are used to moving around, they may not have developed the more latent abilities around being able to cope with different environments, such as being more culturally sensitive, working with a bit less information and being comfortable making decisions based less on process and data and more on what they feel is right and that they think will work.”

Top of the class

In terms of desired leadership skills, those who know how to manage fast growth and the challenges this presents are in high demand. Howard Thomas, a Criticaleye Thought Leader and Dean of Lee Kong Chian School of Business in Singapore, says: “If I had to pick skills and competencies that are emphasised here, it would be growth and the questions around entrepreneurship and innovation, and the need for a complete understanding of the different laws and regulations… There is also the need to build talent in markets where there is a clear shortage and then the appropriate use of strategic human capital.

“Beyond that, there is also the fact of understanding the role of government in the growth of Asian economies. Certainly, in China and Singapore and in a number of other countries, the government has a very strong role.”

Bob Garratt, a Criticaleye Associate and one of the founders of the China-EEC Management Programme in Beijing in 1983 (the first Chinese MBA programme), observes that there still exists a huge amount of naivety among business people when it comes to understanding the role of the government as a lever for getting things done.

According to Bob, discussing different leadership styles is by-and-large an irrelevance. “You can’t even start there, it just doesn’t work,” he comments. “You have to begin by understanding that the Communist Party of China, despite all the rhetoric, is still in total charge. Most business people don’t see this; don’t understand how it works and don’t realise what occurs.”

It’s here where building the right kind of relationships can be the dividing line between success or failure. Nandani Lynton, Adjunct Professor of Management at the China Europe International Business School in Shanghai, says: “When westerners move to Asia, they’re not at all used to how the personal network is the core of business relationships as opposed to being something that is just an additional nice-to-have.”

For me, as CEO of Criticaleye, it’s clear that unless senior executives understand this there is a danger that they can become isolated from both their support network and local market, which is why you need to harness contacts and make new ones to further your appreciation and grasp of local culture and remain grounded to western governance and leadership standards (sadly, playing rounds of golf won’t be enough).

Nandani continues: “It’s about how you decide who you need in your network and how you go about building those relationships, because you have to build them before you need something… It’s also about understanding that, especially in China but in much of Asia too, everything is political.

“Something that looks to you like a pure business decision probably isn’t; your customer knows they’re making a political statement by choosing you as opposed to your competitor. The way that you phrase a marketing campaign may need to use particular buzzwords that are in line with the government at the moment. Things like that that we simply don’t think about in Europe.”

It can take years to digest this and some evidently never do. Brian says: “The ‘region’ is a complex mix of cultures, religions and history. It is in no way a whole, even less so than Europe for example. There is no economic, political or social cohesion [between different countries] in place or planned so it should not be treated in any uniform way. Looking at Asia from afar it is surprising how many people forget this.”

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon.

Matthew

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