Do you want your organization to succeed in international markets in innovative and economically sustainable ways?
As international business trainers we spend much of our time helping our learners understand different cultures including their own culture and work effectively across cultures. Cultural awareness is crucial for building trust across cultures – a critical ingredient of success in international business.
However, research and experience show that to succeed in international business we also need to excel in other key skills such as analytical thinking or ability to explain complex issues to others in simple ways, in-depth product and market knowledge as well as an engagement oriented attitude.
Great examples can be found in the world of entrepreneurs. Small and medium size enterprises (SMEs) often are the locomotives of economies creating jobs and bringing innovation. According to OECD data and country specific statistics SMEs account for two-thirds of employment; high growth SMEs contribute significantly to job creation, and they contribute significantly to exports and innovation. Due to advances in technology, transportation and established global markets today’s SMEs have the opportunity to instantly grow internationally. Let’s remember how famous global brands like Apple, Facebook, Twitter, Starbucks and Chobani Yogurt are the products of incredible entrepreneurial hard work as are non-U.S. born international brands like Alibaba of China, Tata of India and Ülker of Turkey although the latter two are traditional firms which started making significant international advances more in recent years through corporate entrepreneurial efforts and have leaders from the families who started the businesses. These firms surely had a great understanding of cultures around the world as they grew exponentially but their business savvy, their ability to engage different kinds of talent, ideas and resources as well as simply their commitment to making things work in new market conditions were and are remarkable.
According to Thunderbird School of Global Management and their extensive research the employees of smaller firms have higher levels of what they have defined as the Global Mindset® than larger firms. Considering the recent challenges of multinational corporations in international markets and their human resource needs this is important to know as your organization tries to succeed in international markets.
The Global Mindset® is a set of individual attributes that help influence individuals, groups, organizations, and systems that are unlike the leader’s, and a reliable and valid way of assessing a leader’s readiness to work internationally or assume global roles. The Global Mindset® concept has three components: the intellectual capital which is the individual’s capacity to understand how business works on a global level (e.g. a good grasp of how the industry operates worldwide, how global consumers behave, how competitors target their needs and habits, and how strategic risk varies by geography); the psychological capital which is the individual’s receptiveness to new ideas and experiences as well as his/her self-assurance in unfamiliar circumstances (e.g. passion for diversity, thirst for adventure, self-assurance); the social capital which is the individual’s ability to build trusting relationships with people of different backgrounds and mentalities (e.g. intercultural empathy, interpersonal impact, diplomacy). Global Mindset® levels can be assessed with an instrument called the Global Mindset® Inventory (GMI) which was validated in 62 countries. High Global Mindset® levels were co-related with strong thought, results, people and personal leadership indicators.
Thunderbird research found that respondents in organizations that hire less than 100 employees had higher Global Mindset® levels than respondents in organizations that hire over 100 employees. The research indicated that as organizations grow larger, organizational culture may begin to dominate and restrict exposure and learning from outside cultural forces.
A promising finding for larger organizations was that an individual’s quest for adventure can be higher for people working in larger organizations. Considering the healthiness of entrepreneurship for economies and organizations it is critical for large organizations to understand how to nurture entrepreneurship within the organization. Even if the organizational culture is strong, if large firms like established multinational corporations (MNCs) manage to hire employees with high quest for adventure and value this attribute the likelihood exists that these employees will still increase their Global Mindset® levels, contribute to the success of their firms in unique ways and raise the overall Global Mindset® levels of the firm for accelerated success.
International businesses often and fortunately focus on the need of cultural competence to succeed in international business. This is understandable as we know that culture can eat strategy for breakfast and cultural competence is in the heart of the Global Mindset® especially with its Social Capital component. However, cultural competence gains continuity through curiosity and a passion for diversity while demonstrating self-assurance. All these combined may still not be sufficient if professionals don’t take the time to engage critical business analysis, knowledge, strategy and tactics to their market entry approaches. Hence, international businesses need to incorporate the Global Mindset® as a foundational leadership development concept and track the ROI of their professional development investments with regards to how these contribute to higher Global Mindset® levels correlated with success in business – a critical step forward on the path to evaluating ROI based on real business outcomes and to succeeding with confidence and finesse in international business.
Resource: the GMI Technical Report