Cultural Intelligence: Asia’s Secret Weapon for International Business

I came across this article and completely share the author’s view. It is also one of the key points which I am discussing in my upcoming book.  U.S. companies seeking to do meaningful business overseas, must compel their executives to immerse themselves in the understanding of the culture and learning language of their target markets. It is not a simple or quick process, yet it is fundamental to long-term success in the international business arena.  The companies also must be flexible and willing to expand the resources needed to adopt their product, or services offerings to reflect the cultural nuances of their markets. Hope you enjoy the article.

by David Livermore, PhD, Global Edge, April 20, 2011 – 1:09:38 PM EST

When speaking with U.S. business leaders about global leadership and cultural intelligence, I’m often asked, “Is anyone talking to people in China and India about their need for this? After all, shouldn’t this be a two-way street?”

It’s all I can do not to burst out laughing. The question is a fair one. Cultural adaptability should be a two-way street.  I’m just struck by the irony of the question. My inbox is flooded daily with requests from businesses in India, China, and Singapore who want cultural intelligence assessment and training to increase their effectiveness in international business. Yet many U.S. companies are still skeptical about the ROI from so-called “soft skills” like cultural intelligence.

Cultural intelligence or CQ, is the capability to function effectively in a variety of cultural contexts—including national, ethnic, organizational, and generational cultures. You’ve heard about IQ and EQ. CQ stems from this same body of research. CQ is a set of capabilities and skills proven to give you a competitive advantage in our ever-shrinking world. Research across dozens of countries over the last ten years has proven that individuals and companies with higher levels of CQ are more successful in cross-border markets than those with lower levels of CQ.

I often make the “business case for cultural intelligence” when speaking at international gatherings. Inevitably, some of the Asian participants in these settings express their confusion about why something this obvious even needs to be stated. One Chinese executive recently asked me, “Do you actually have to convince people that there’s a business case to be made for this? Isn’t it patently obvious?”

Yet Doug Barry at the U.S. Department of Commerce tells me it’s still an uphill climb to get many businesses to seize the opportunities available through things like the National Export Initiative, which calls for doubling U.S exports over the next five years. We’ve been working together over the last year to help U.S. businesses see what many Asian companies have discovered—that emerging markets are as much an opportunity as a threat and with increased cultural intelligence, we can better tap those opportunities.

The research on CQ reveals four capabilities that consistently emerge among individuals who are culturally intelligent:

1. CQ Drive: They possess a high level of interest, drive and motivation to adapt cross-culturally.

2. CQ Knowledge: They have a strong understanding about how cultures are similar and different.

3. CQ Strategy: They are aware and able to plan in light of their cultural understanding.

4.  CQ Action: They know when to adapt and when not to adapt when relating and working cross-culturally.

A community of international scholars has developed an academically validated scale for measuring these four CQ capabilities. The CQ scale is the basis of a variety of CQ assessments offered by theCultural Intelligence Center. The CQ assessment consistently predicts cross-border effectiveness and is consequently being used widely by companies around the world.

U.S. companies have been trying for decades to capitalize on places like China and India. For many, the progress has been surprisingly slow. The typical approach has been to dump wares on these markets with little thought about how to tailor the products beyond changing the language on the packaging. In contrast, many Asian companies invest significant time improving their cultural intelligence in order to adapt their products and services to the twists and turns of the up and coming global customers.

Millions are expected to join the middle class in emerging markets this year. This doesn’t need to be threatening. When pursued with intentionality and cultural intelligence, it can present unprecedented opportunities for your business, wherever you go.
David Livermore, PhD (Michigan State University), is president and partner at the Cultural Intelligence Center in East Lansing, MI and has partnered with MSU’s International Business Center. He’s written several books on global leadership and cultural intelligence including Leading with Cultural Intelligence and his newest release, The Cultural Intelligence Difference.

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About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

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