The nature of a multinational company (MNC) is to invest capital in markets outside of the country in which it began its operations. Typically, this business activity is called foreign direct investment (FDI). For open economies to flourish, cross-border trade is essential.
Another critical factor for successful international business is ICE-Q – a combination of three essential, durable skills: subject matter expertise (IQ), cultural intelligence (CQ), and emotional intelligence (EQ).
Some might say that FDI is the lifeblood of a global economy. Without ICE-Q, though, this blood will freeze and block the arteries of international trade. Check out one of our recent webinars on the importance of ICE-Q here.
Four Countries Account for Half of US-bound Investments
The United States usually rank among the top of the list of FDI-receiving countries. According to most recent data, the lion’s share of U.S. inbound investment (FDIUS) comes from Europe, and roughly half of all FDI entering the U.S. originates in only four countries.
By the end of 2020, only a handful of nations provided the majority of the $4.6 trillion in cumulative direct investment in the United States. Japan is the single biggest overseas investor, accounting for nearly 15% of total cumulative foreign direct investment holdings. Canada and Germany each held 12% in that year (which is the most current data available).
Out of the top ten countries which are home to the MNCs with the biggest investment interests in the U.S. seven are in Europe.
How Well Are You Prepared to Deal with Global Partners?
This begs the question for anyone involved in international business: How familiar are you with the work styles and communication preferences of these different countries? How much money have you been leaving on the table by ignoring the cultural predisposition of business partners from these different parts of the world?
In this international context, smart business decisions depend on your ability to bridge cultural differences. Ideally, you know how to manage, inspire, lead, and communicate – with people who are like you or similar to you. In a global work world, however, you now also need to be just as efficient with co-workers, clients, customers, and vendors who are sometimes quite different from you.
What made you successful with “your people” could easily derail you when working in a diverse context. So how are you going to master yourself in an unfamiliar environment?
Culture Matters – Perhaps More than You Think
The term culture has arguably been one of the most over-buzzed words in business for years. Too often it appears that not everyone in the corporate world fully understands the very concept of culture in its many facets. As a matter of fact, culture influences everything we do:
- the way we talk and how we listen
- the way we act or react
- the way we obtain and share information
- the way we build and maintain relationships
- the way we collaborate and work in teams
- the way we build agreements and handle disagreements
- the way we make decisions
- the way we motivate and inspire direct reports
- the way we feel and how we see the world
When people from different cultures aren’t aligned, miscommunication and mismanagement easily turn into a costly outcome – no matter if it’s in business or when building relationships.
Whether you are expanding into new markets organically, acquiring business assets abroad, or continuing your international operations with a steady influx of new talent – you will need to bridge the culture gap. Bridging the culture gap is a requirement. Cultural differences aren’t simply a possibility in global business. They are an inevitable certainty.
What You Can Do to Get Culture
Addressing and overcoming the challenges of the culture gap requires a deeper understanding of the social norms, business practices, and customs of your foreign partners, If you and your team don’t get culture, culture will get you! It is only a matter of time. Cross-cultural challenges are very real. Without ICE-Q they will get your business.
Smart company leaders offer their employees (as well as themselves!) cultural coaching and training. Most successful organizations fully comprehend the value of preparing and continuously developing their employees for the various behavioral standards in a global workplace. After all, their success depends on how well team members are able to cross cultures. Positive results depend on how well and how swiftly leaders develop a deep understanding of their own culture and those cultures they interact with.
The graphic above shows a comparison of the cultural profiles of the United States with those of the top five countries investing in the U.S. economy. It is created using a tool we use with most of our consulting clients, the GlobSmart profile.
As you can easily see, the cultural profile of the FDI-receiving U.S. has little to no overlap with the profiles of the countries which are investing a total of $2.6 trillion.
GlobeSmart is an effective, statistically validated online cultural inventory to discover and compare preferred work styles across five dimensions of culture. It helps you identify your own work style preferences and how these compare with other cultures, countries, colleagues, and teams. The GlobeSmart Profile cultural intelligence software provides specific, dynamically generated advice on how to bridge differences and leverage similarities.
What Makes ICE-Q the Power Skills in Global Business?
Let’s break it down:
- IQ is what you know about the work you do. Your subject matter expertise. Your global experience. IQ is the scope of knowledge of which you are aware. It also includes the knowledge gaps of which you are aware. However, there is an IQ danger zone. In it are the things you don’t know and aren’t even aware you don’t know them. This is a trap – especially in business interactions with people from other cultures. The damage will already be done once you realize you committed a cultural blunder. An often expensive misstep because of a knowledge gap that was outside of your awareness.
- CQ is the capability to relate and work effectively and consistently across cultures for your business success. It consists of four parts: Drive, Knowledge, Strategy, and Action. More on that here.
- EQ is the ability to perceive, use, understand, and manage your emotions and those of your employees. This means you want to acquire the knowledge and skill set to identify people’s personalities and emotional frameworks. Personality does not equate to culture.
In the context of your global work reality this means that ICE-Q isn’t what some people call “soft skills.” Instead, ICE-Q is a set of power skills. It’s your ability to communicate, inspire, persuade, manage, and lead.
Expanding your team’s ICE-Q is like a protective shield against damaging cross-cultural business mistakes. It doesn’t turn itself on. It is up to you to install it and for you and your team to maintain and activate it.
Our team is here to assist you with that.
I get it – ICE-Q matters. So what are my next steps?
To learn more about our cultural consulting and talent development services, simply schedule a call with us or send an email to GetStarted@TheCultureMastery.com.
If your goal is to seriously work on your ability to engage and interact with business partners from different cultural backgrounds, to inspire and lead multicultural teams, and to reach your full global potential, we are here to assist you on that path. Take a look:
- Expatriate Culture Coaching
- Executive Global Leader Coaching
- Global Leader Group Coaching
- Culture-specific trainings and briefings (upon request)
To paraphrase management consultant Peter Drucker: Once we accept the reality that learning is a lifelong process of keeping abreast with the changes around us, the next step is to ask ourselves: “Which skills will help me to stay ahead of change or, at least, deal with change with more ease and grace?”
Here are two more reference points for those of you interested in cross-cultural coaching. One article from Christian’s blog and another one from Harvard Business Review, which he co-authored with Andy Molinsky.
If you are interested in learning more about cultural competence and foreign language skills, we invite you to sign up for our newsletter, The Culture Reflections. As a token of our appreciation you will receive a series of complimentary materials on cultural competence from us!
Go ahead and sign up here now and we will send you the download links to the COMPLIMENTARY materials via email.