An Internet developed connection brought Fred Kerr to Kuala Lumpur for the first time in his active business life. As he got off the Malaysia Airlines overnight flight from Los Angeles into the 21st century Kuala Lumpur International Airport, his first reaction was amazement. This was certainly the largest, most futuristic, most comfortable air terminal he had ever experienced. During the high-speed train journey enroute to his scheduled meeting in nearby Putrajaya, he compared his first impressions with those of someone arriving in LAX for the first time.

Texas based KerrTechnologies was following in the wake of Microsoft, Dell, Apple, Intel, and over 250 other US companies with manufacturing facilities in Malaysia seeking well educated, high work ethic labor at competitive rates.

Fred Kerr was no neophyte to international travel; some of his overseas deals worked, more of them didn’t. Sitting on the train as the Petronas Towers came into view, he realized that in all his globe trotting he really hadn’t had any education in the ways of world cultures. Why did they think and act the way they do? Here he was spending all this money on this trip, understanding his business perfectly but really knowing nothing about the way his business prospect may think and act. What were their expectations? How might they negotiate? What would be the best approach in selling his product? How would he manage a Malaysian operation? How would they interact with his team back in Texas? Fred was concerned and confused by his sudden insights as the taxi pulled up in front of his prospect’s address.

As the deal progressed he had to learn the hard way. Progress was difficult and confusing for both sides as they struggled to understand each other’s motivations. Protracted conversations and questions frustrated the ‘down-to-earth’ Kerr; Texan ‘straight-talk’ was abrasive to the sensitive Malays and it seemed impossible for Kerr to get a contract nailed down which he could present to his Board in Texas.

The Fred Kerr experience is repeated every minute of every day throughout the world when deals are negotiated across cultural frontiers. “That’s the last time I try to do business in Mexico”; “Those Chinese don’t understand the meaning of a contract”; “You can never pin the British down to a straight answer”; “All Americans think about is profit”; “Are the Europeans always on holiday?” Stereotyping? Maybe it sounds like it, but here lies a great germ of truth. We are all players in our own group cultural act. This is what we’ve grown up with; it’s our make-up, our belief system. The result is that we tend to believe our way is the only way – the ‘right way’.

If Fred Kerr believed that his way was the only way and his Malay counterpart felt the same, their road to the future was certain to become rocky. Sure navigation across the ocean of any business deal takes care and skill; but one across cultural divides can sink without trace unless both sides understand each other’s motives and expectations, both deeply culture based.

So how does the active entrepreneur begin? Caution, it’s not to take the first flight and try to wing it. The world of global business is a grave yard of failed deals due mainly to thinking that negotiating halfway round the planet is like working on a deal across town. It is about knowledge – understanding not only why they think and act the way they do, but even more important – why we do.

Basically the world’s population of 6 billion is divided into three main culture groups. Yes there are hundreds, if not a thousand, sub-culture groups, but for our globe trotting executive it is important to understand the key differences – not the anthropological minutia.

Data Based Culture Group

Living mainly in North America, Australia, New Zealand, UK, Scandinavia, Switzerland, northern Italy, Austria, Baltic states and northern Europe, this group is dominated by timetables and schedules, priorities and correct procedures. They tend to be brief on the telephone and job-oriented. Planning ahead and doing one thing at a time is a strong feature of the sector which believes that good organization and cleanliness are co-existent. Dependent on facts and figures this culture sector gleans their information from reference books, internet information and database records. Here there is a strong respect for government and officialdom, logic is the tool of debate, and emotions are held in strict control. Negotiation for this culture group is like a contact sport – it’s all about winning, but it can be win-win providing they get on with the deal. The tools for negotiation are data, technical competence and strength. The result is ‘bottom line’ and money is the criteria not status, protocol or national honor. Direct, pragmatic and blunt are often the characteristics of Data Based managers who are under pressure to produce results by specific deadlines. Time is their enemy and their yardstick – everything revolves around “Time”. Punctuality is an essential attribute as are dependability and work ethic. Most Data Based people are individualistic. They have been raised and educated like that and realize that they are ‘on their own’ in a society which rewards risk-takers and entrepreneurs. On the reverse side, however, they are somewhat introvert and inclined to exclude others rather than include them. With a history over the last 300 years of economic expansion, inventiveness and global domination, the Data Based group has developed characteristics of high self esteem and power which is reflected in the cultural behavior. With a population of approximately 600 million, this culture group is by far the smallest.

Relationship Based Culture Group

With a population count of approximately 3.3 billion this is by far the largest culture group, and the fastest growing. Spread throughout the world they are fast intermingling with the other two groups but they are primarily located in Central and Latin America, Mediterranean lands, Africa, the Middle East, India and southeast Asia. This people-oriented, gregarious emotional group love to include you in their ever widening relationships. Extrovert and loquacious, always trying to do half-a-dozen things at once, they think nothing of changing plans, pulling strings and including relations in the deal. For them everything is interrelated and has a part to play. They convey information verbally; hate memos and written material because it’s all about interacting with people. Family takes priority in everything and that includes relations other culture groups wouldn’t recognize as relations. Time is irrelevant in the big-picture so ‘unpunctuality’ is commonplace – there are more important things such as a family crisis or a friend in trouble. They don’t trust government or bureaucracy yet operate within a well defined class system where hierarchy is important. Deference towards older or senior people is well evident in meetings and Relationship Group executives will oblige the senior person on their side, give him the priority seating and display great politeness. In the negotiation process there will be lengthy time, maybe a number of meetings devoted to establishing relationships before getting down to business. Flattery and praise are all part of the preliminaries. Discussion about seeming irrelevancies will go on for a long time and it’s all part of establishing the foundations of trust and getting to know you. Conversation is an art in which the Relationship Based Group are masters and the interlocutor is expected to give as much in return. In their conversation, feelings are more important than facts. Politics merge with family matters, business and world affairs in an eloquent delivery designed to demonstrate education, knowledge and understanding of complex issues. This artistic, creative and cultured people have developed their dislike of authority and government after many centuries of domination, dictatorship and intervention by foreign powers.

Group Based Culture Group

For the most part the Group Based Culture group lives in Asia, Japan, China, Taiwan, Vietnam, Cambodia, Singapore and Malaysia. With the diaspora of Chinese people throughout other Pacific Rim areas, this group is constantly expanding its territory. This group thinks and acts as collective units. Constantly reacting they take their family unit (including ancestors and descendants), work colleagues and friends into consideration with every major action and decision. Individualism is taboo. Generally introvert, patient and quite, they are the world’s best listeners. Utterly considerate, thoughtful and well mannered, they go to any length to avoid confrontation. They are punctual not primarily because they want to keep good time but because they are considerate of the other person’s time, and, if they are late, then there is an obligation established. No one is equal in this culture. Respect for rulers, fathers, elder brothers, husbands and senior colleagues is inbuilt in the Confucian belief system as are education, hard work, moderation, humility, calmness and a virtuous manner. This group is culturally joined at the hip to their family, community and work group in a system of collectivism which was established many centuries before communism. This tends to prohibit them from social and geographic mobility, but the best known feature of the group is ‘loss of face’. Huge responsibilities towards one’s reputation with immediate and extended family, friends, neighbors and work colleagues involves constant care in protecting other’s face, the loss of which may never be wiped clean in a lifetime. This important cultural characteristic has to be scrupulously maintained in business, in negotiations and in management. For centuries the desire to protect themselves from outside influence encouraged introversion and isolation, so there is a tendency to mistrust other cultures. This culture group which is now interacting heavily with the world is about 2.1 billion.

Time difference

The concept and understanding of time is a major factor of difference and dispute between primary global cultures, often to the point that it is a deal breaker. Let’s look, for instance, at the difference between Data Based and Relationship Based people. The exactitude of time, its significance with money, its orderliness and the ability to schedule according to time is near and dear to the Data Based person. To the Relationship Based individual, however, it’s pointless and irrelevant to put time before the relationship or the consequential business to be done. “Why worry about being a few minutes late when it’s our plans for business which are on the table”. The Data Based executive thinks “if this guy is always late - he can’t be trusted”. The Relationship Based guy thinks the executive is more worried about his schedule than doing business with him. Here’s a deal heading for the graveyard.

The American concept of time has little understanding or appreciation elsewhere in the world. Here the present is broken down into hourly rates, time not spent making revenue is “wasted”, the near future is planned by filling revenue time slots and the past is over and done with. Other Data Based people understand this linear thinking because running the trains on time is a German passion and time measurement is the Swiss preoccupation; but it’s a million miles from the way most Relationship and Group Based people think.

Latin Americans, Italians, Spaniards and Arabs see time as a malleable thing, something that is flexible and manageable. It should not get in the way of human issues. Why cut off an interesting conversation just for the sake of time? Chinese likewise see the value of liberal use of time to develop trust and common intent and they often criticize Americans for leaving the discussions too early. “Hey, there was nothing left to talk about!” Asians see time as a revolving phenomenon where opportunity returns when we are wiser, whereas the Data Based see it as lost, never to return.

Like Fred Kerr, wrestling with his challenges in Kuala Lumpur, business people all over the world struggle to find common ground across cultural frontiers, for, without basic understanding of why we all think and act the way we do, it can be an uphill journey all the way.

Michael Hick is Director of Global Business Initiatives based in Houston, Texas, training executives throughout the world in global business skills, how to negotiate, sell and manage business across cultural frontiers. He can be reached at . His website is michaelhick.com

©Michael Hick 2006