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The Cultural Risk Framework (CRFW) is a set of
guidelines for identifying the risk of moving people, products, and
processes across cultural borders. It is based on the analysis of
real world experiences faced by firms that moved out of their
"comfort zone" environments and confronted the reality of the hidden
borders of Europe. Originally the CRFW was used as an
organising tool to assist a series of task forces to systematically
think about what problems existed, what their origins were, and what
possible responses could be adopted.
The framework can be especially effective since it
offers a non-judgmental organising structure to encourage managers
to view their projects (whether an international marketing plan, new
product development, organisational restructuring, or new direct
foreign investments) from the cultural perspective of the target
environment. Therefore culture, whether it is national, regional,
or even organisational becomes one of several risk factors that must
be considered during the planning phase of a business project.
The Cultural Risk Framework was built upon the work
of
Edgar Schein, who was the leading guru of corporate culture
during the 1980s in the USA. Professor Schein, who teaches at the
Sloan Management School of MIT in Boston, argues that there are several
levels of culture and that as one proceeds into the deeper levels
they become more difficult to understand and document. The CRFW
adopts this perspective by suggesting that there are four levels in
a cultural which managers should examine as sources of risk. These
are:
Communication
What is being communicated in the management
discourse, advertisement, or product catalog? This is a very
simple but overlooked question. Sources of misunderstanding are
numerous but all can lead to the failure of the business
project. Included here are translations, images, style of
presentation, marketing campaigns and many other
communication-depended business processes. One of my favorite
examples is the mistranslation of an
old proverb, 'Out of sight - Out of mind', which is often used
to remind expatriates that they should stay in constant contact
with their headquarters to guard the potential for upward career
mobility. Evidently, a foreign manager uncertain what this
expression signified turned to one of the internet translation
services. He was quite confused when the service translated this
proverb as, 'Mindless Idiot'!
Habits and Preferences
All people develop habits and preferences over
the course of their lives. Sometimes these are conscious
decisions motivated by deep motivations but at other times they
are acquired unconsciously from family, friends, teachers, even
advertising. Many academic researchers, international managers,
and even casual tourists have remarked that things are often
done differently in other cultures. This is often simply
interesting and refreshing for tourists, an insight into the
basic social questions of the day for academics, and a constant
source of frustration for managers. In marketing for example
personal care, luxury, and food companies enjoy an association
with the French or Italian cultures since their good reputation
in these areas attract consumers from other countries. But the
habit of the two hour lunch, frequent holidays, and long drawn
out negotiations are often frowned upon by foreign managers.
What is important to note however is that a French or Italian
manager working in China, Australia, or the US will often adapt
(maybe with regret) to the local habits.
Deeply Held Values
Deeply held values go far beyond habits or
preferences. Once established in a person's life they rarely
change. They are often used to make sense of our environment
and act as a lens, through which we see and interpret the events
around us. Like the Indian legend about the five blind men and
the elephant - depending where the were in relation to the
elephant they found variously a wall, a spear, a snake, a tree,
or a rope - our values help us 'see' the world around us. If a
business process, product, or policy is interpreted as violating
the deeply held values, it is unlikely to be accepted. An
Italian manager once remarked that American firms in Italy often
enforce informal relationships among the personnel in their
firms. The use of formal pronouns (something that no longer
exists in English but can still be read in old books where
people spoke to each other as thou or thy) is forbidden. So
many of the Italians use the informal pronouns while at work but
then, as soon as the exit the office, return to using the formal
salutations and language that fit their relationships. Although
their behaviour changes in the office, their values in fact
remain the same. They call this being 'formally informal'. In
most cases, companies are not so lucky to even have a temporary
behaviour change - their foreign employees, customers, or
suppliers simply refuse to change at all.
Cultural Infrastructure
The cultural infrastructure of a country is
paradoxically both the most visible and invisible source of
cross-cultural risk companies face. A country's cultural
infrastructure includes many things like its educational system
(too focused on rote memorization in Japan, too authoritarian in
France, too lax in the United States, to repeat a few common
criticisms often made), its legal system (too haphazardness in
Russia, too divisive in the United States, too brutal in some
parts of the world, or too lax in others), its political system,
its communication and transportation systems, its social
services, and many other similar aspects inherently woven into
the fabric of a country. Siemens, the giant German electronics
company, marketed one their advance wireless telephones in the
United States but met with near failure because as one reviewer
wrote, 'they're nice to look at but way too complex and have
awful range'. What happened? This was the same phone that was
very popular in Germany. The president of Siemens in the US
explained American homes were often much larger then German
homes so the telephone's range is extremely important to
Americans and that Germans liked having many complicated
features while Americans preferred convenience. Property or
home size is part of the cultural infrastructure, while consumer
preference for convenience is more likely a habit. In this case
the Siemens product engineers were forced to do a quick redesign
of their product because cross-cultural risk came at them from
two sides. Oh and by the way, thinking back to communication
risk, what colour should indicate that the integrated answering
machine in the telephone is turn on? If you are thinking green,
you may want to read the instructions carefully because the
Siemens engineers chose red.
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