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Six reasons why businesses must foster a post-COVID global mindset
Even before the pandemic, cultivating a global mindset was challenging. With rising protectionism, remote working and decreased travel, the hurdles for executives have grown higher. But it is precisely these changes that mean understanding cross-cultural differences will become an even more important success factor in the future, results of an IMD survey show.
Any executive exposed to international markets knows navigating the socio-political differences and avoiding cross-cultural blunders is a challenge. To succeed, leaders must adopt a set of skills known as the “global mindset” – an ability to appreciate, and whenever possible, leverage differences across cultural contexts. This requires understanding the peculiar nuances of different countries, bridging differences, finding common ground, and encouraging participation and ideas from multicultural settings.
Having a global mindset is a key success factor when doing business internationally and an increasingly critical source of competitive advantage. It can even help your company navigate rising geopolitical tensions, and is vital in the era of remote work, with videoconferencing tearing down some barriers to cross-cultural collaboration.
While many organizations are keen to talk up their global credentials, surveys show that executing this can be hard. Nearly a decade ago McKinsey Quarterly published insightful results based on a survey of senior executives. While 76% of the respondents believed their organizations needed to develop global-leadership capabilities, only 7% thought they were actually doing so effectively.
The COVID-19 pandemic has further complicated the task of cultivating a global mindset, with virtual meetings increasing the likelihood of miscommunication and reduced travel meaning there are fewer opportunities for face-to-face cultural exchange and information sharing.
So how difficult is to really embrace a global mindset? And what role has the pandemic played?
To gauge how business leaders believe they are operating in global environments, IMD surveyed more than 200 senior executives from around the world in two separate surveys in 2013 and 2021. The results show that having a global mindset has become even more important, but often harder to achieve, with senior managers finding it more difficult to lead multicultural teams and hire from the global talent pool than they did eight years ago.
Research Box
Over 200 senior executives from around the world took part in two global mindset surveys which were conducted during the Orchestrating Winning Performance open program at IMD Business School. The first survey took place in June 2013; the second survey in June 2021.*
Both surveys contained the exact same questions to easily compare responses. The only difference was that the survey conducted in 2021 contained a few additional questions on the specific impact of COVID-19 on what it means for executives to have a global mindset and its changing role for organizational success.
Respondents to both surveys came from a variety of world leading companies active in different sectors. Participants in the 2013 survey included senior executives from companies such as Total, SBB, Sony, Ferrero, Kessler, Daimler, and Danske Bank. Participants in the 2021 survey included senior executives at firms such as Google, Philip Morris, Honda, Lego, Samsung, Nestlé, Mars, and Procter&Gamble.
*Although we had no respondents that took part in both surveys, the participants’ profiles were similar, thus allowing us to compare results and appreciate how several aspects associated with global mindset have changed over the course of the last 8 years.
Here are the six key findings:
Growing awareness of the benefits and challenges of having a global mindset
One key finding that emerged when analyzing the results of both surveys is that more executives were aware of the trade-offs of having a global mindset. Some 35% of respondents were strongly convinced they were better able than their peers to understand the trade-offs between local adaptation and global standardization compared to 19% in 2013. Executives in the 2021 survey were also more confident about their ability to share best practices quickly and efficiently across borders, while nearly half of respondents agreed that their company was faster at developing and rolling out new products in foreign markets, up from 37% in 2013.
Global mindset has been and will be a crucial element for business growth and for creativity- Executive at an international financial services company
To go local, think global
Against this backdrop, several respondents, nonetheless, pointed to a growing domestic focus as one of the macro trends to materialize post-COVID-19 with rising protectionism and supply chain bottlenecks prompting many firms to shift to production closer to home. Around a third of respondents in the 2021 survey believed COVID-19 would usher in a greater emphasis on domestic markets, while a similar number expected there to be more local adaption in the aftermath of the pandemic. Consequently, businesses will be forced to adapt their products and services to the nuances of individual countries. Having talent that can understand cross-cultural differences and design product features, campaigns and processes for multiple markets will become an increasingly critical success factor.
Global mindset is imperative. Large contracts have been lost due to lack of global insight.- Executive at an international engineering services company
Think beyond the four walls of your home office
The COVID-19 crisis has upturned working practices with many of the world’s largest corporations allowing staff to work remotely. Some two-thirds of respondents said working from home policies have made having a global mindset more important for leaders of multicultural teams, with 28% believing it was as important as before, and only 9% concluding that such policies made having a global mindset less important.
Moreover, around half of those surveyed said working virtually in multinational teams has made having a global mindset more important to achieve a competitive advantage, compared to just 6% who believe it is less important than before.
As pointed out by one of the executives surveyed, the lockdown and the travel restrictions have made the appreciation of cultural distance even more salient than before. At the same time, Zoom or Microsoft Teams have proved a worthy substitute for many physical meetings, enabling employees to work with people in different locations and from different cultures without the need for travel. As we grow accustomed to working increasingly in virtual teams, having a global mindset becomes increasingly vital.
A global mindset creates openness and awareness to diversity in culture, products, markets and political landscapes. This positions one to be more likely to see opportunities instead of barriers in global trade.- Executive at an international food company
Managing multicultural teams in times of travel restrictions
When comparing the results of 2013 and 2021, executives on average found that leading multicultural teams has become easier, but a surprising number of executives said it had become more challenging. In addition, when asked whether executives think that cultural differences will become more or less challenging to handle post COVID-19, a greater share of respondents believed it would become harder. One reason for this is remote working and reduced travel which can potentially lead to a greater conflict and misunderstanding that is best bridged through face-to-face exchanges. This competency needs to be acquired and practiced over time and more localness might make it harder to achieve.
A global mindset is more of a need after the COVID-19 pandemic- Executive at an international automotive company
Hire managers who can bridge cultural differences
Between 2013 and 2021, executives became increasingly aware of the possibilities of bridging cultural differences by building international networks and balancing different cultural dimensions and sensitivities. Global managers don’t accept it when someone says, ”You can’t do that in Italy or Spain because of unions,’ or ‘You can’t do that in Japan because of the Ministry of Finance.’ They sort through the debris of cultural excuses and find opportunities to bridge.” Typically along with this bridging comes the intercultural competency of (1) Self Management: the capacity to cope with adversity; adapt and change in positive ways while retaining a stable self identity; caring for oneself in a mentally and emotionally healthy way, (2) Relationship Management: having an attentive disposition to build & maintain positive relationships with others who are different; an awareness of one’s impact on others and (3) Perception Management: the processes by which new situations and events are perceived and judged; the ability to deal with ambiguous situations. Therefore, managers that can build networks across cultures and develop an intercultural competency to deal with conflicts are best suited to lead diverse teams as this competency allows a bridging of cultures.
I do believe there's a correlation between global mindset and competitive advantage in multinational companies. Leaders should be trained and exposed in cultural management.- Executive at an international energy company
Focus on cultivating the global talent pool
One positive outcome from the last eight years, is that a greater share of executives believe it is possible for talent of every nationality to rise to the top of the career ladder. Yet companies are still struggling to draw from a worldwide talent pool with some executives in 2021 arguing this was harder to do than in 2013. Given the survey findings point to a greater emphasis on localization due to the pandemic, it might become even harder to grow the global talent pool, especially as declining mobility means people aren’t getting the international experience needed to advance their careers. Short-term assignments could provide one solution to this. But firms must ensure their staff are getting sufficient exposure to the cross-cultural exchange needed to build cultural competencies, so that they can keep drawing from a talent pool that is able to bridge differences.
Core values such as respect, innovation, cooperation, diversity, and quality should be emphasized no matter which country or culture we come from. This helps to steer the company towards the goals in this digital and global environment.- Executive at an international fashion company
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