The New Global Market: Panel discussion at Carslon School of Management

This is a quick update to the recent panel discussion I participated in at Carlson School of Management. Each of the participants had a unique point of view on The New Global Market, but there was also a lot in common among the four of us.

(L to R: Brett Schockley, David Farrar, James Thomas, Amit Gupta)

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Our moderator was Dileep Rao, Ph.D., Carlson School of Management: three-time Outstanding MBA Teacher of the Year; international entrepreneur and author of the book "Bootstrap to Billions."

In his opening remarks Dileep talked about some of the causes of the global economic crisis. Having started us at such a high level of analysis he went on to talk about individuals and how they can best succeed in an international market. Two of his best pieces of advice were "do your passion" and "jump on a trend". If you want to know what some of the trends were that he mentioned you'll have to buy his book!

Amit Gupta
Chairman, Amsum & Ash, Inc
• Co-founder and chairman of TAB India, a Jaipur-based quarrier, processor and marketer of granite, marble, slate and sandstone sold around the world.

Here is the one best piece of advice I took from Amit's talk: "Take a non-business business trip." Amit told us how he has built his business from a standing start to a major global player in the stone business. Whenever he entered a new market he has always invested in a non-business trip first for himself and his key sales people. Although you might think stone is stone, Amit talked about how every market he works in is different. His non--business business trips enable him and his team to understand how each market differs culturally in the way they do business in general, and in his industry in particular.

For example, we think our kitchen industry is pretty advanced in America. I was surprised to hear Amit talk about just how long people in Europe have been working and living with stone in their kitchens. While we think of marble bench tops as the latest things our European colleagues have had stone and marble countertops for hundreds of years. To work in that market you had better be sure you have an open mind and are prepared to see things differently.

Brett Schockley
Vice President of Emerging Products & Technology, Avaya
• Co-founder of Spanlink Communications
• Leads Avaya’s global professional services team for Contact Center and Unified Communications
• MBA, Carlson School of Management

Brett has seen and done amazing things in the IT industry. You might think his presentation would have been all about the technology but in fact one of the first things Brett said to our audience was "invest in relationships". Brett talked about how international business is a lot like local business: you have to add value and you have to be able to demonstrate how you can serve the customer.

Brett also talked ethics and principles. Although many markets vary in their views of what is right and proper, Brett emphasized principles of doing business that he held fast to regardless of the market he was in.

Brett's summary was that at the end of the day it's all about how you get on with your customers, your colleagues and your community.


James Thomas
Vice President of International Sales, Mate Precision Tooling in Anoka
• New sales channels in Mexico, Eastern Europe and Brazil
• Former President of Colder Products International
• MBA Thunderbird-Garvin School of International Management

Jim took a very pragmatic approach. He himself describes his business as putting holes in pieces of metal. He has built an extensive business around the world and a lot of it is based upon finding the right salespeople for the right market. Jim talked about putting effort into finding good salespeople and setting them up with the right tools. One of Jim's key points was that international business is not one market, it's 135 markets or more. You have to market globally, and sell locally. Perhaps not surprisingly, most of the lessons learned that Jim talked about were people lessons.

And then there was me...

Dr. David Farrar
International Business Consultant
• Former head of human resources in Southeast Asia and Global Organization Effectiveness Manager at Cargill.
• Speaker and consulting roles in Australia, Belgium, Germany, Malaysia, South Africa, Singapore, Switzerland, UK and U.S.

This was a really high-powered panel. Each of the previous presenters has built a significant global business and made a real contribution to the local and international business community. Most of my working life has been spent inside organizations. It is only in the last five years that I've worked for myself, built up my own business, and worked on my own behalf with clients here and overseas, although on a much smaller scale than my fellow panelists.

My perspective was a little different, but it had a lot in common with the others. I talked about having to keep an open mind to different ways of doing business, but making sure you stayed true to yourself and your principles. I mentioned some of the tools I have used with my clients, such as the Freedom Scale for understanding how much delegation you can afford to give your international partners, and the Loose/Tight analysis that can help you decide just what principles you need to hold on to and which practices you can afford to let go.

Afterward there were plenty of questions from an enthusiastic audience of sales and marketing professionals, MBA students and budding entrepreneurs. Here's my take on three points I think we all converged on In our answers:

• Be open to different cultural perspectives
• Provide value as seen from your customer's point of view
• Be trustworthy and principled
  

As we were leaving I noticed something that none of us had commented on, but each of us had taken for granted.

We all talked about getting out there, connecting in person, and building relationships face-to-face. Nothing beats a personal connection, and when you're doing business internationally it's so easy for things to go wrong, and so necessary to have a personal relationship. We all assumed you have to be able to build personal relationships with people. In a modern world full of video conferences, virtual meetings and...blogs...it's nice to think the personal touch is still all important.

Many thanks to Duane Roemmich of Mercuri International, and Roger Hokansen of Predictable Performance for arranging our event, Dileep Rao and the Carlson School of Management for hosting, (check out his book "Bootstrap To Billions"), the audience for their excellent and often challenging questions, and my fellow panelists for their fine contributions.

Competent, Reliable, OPEN and Principled

My speaking agent recently brought to me an opportunity to do a presentation for a well known manufacturer and installer of communications and IT solutions. It should have been a great chance to work with a leader in IT, and an industry I know and like from doing many other presentations and consulting projects. Unfortunately I had to tell her I wouldn’t work with this organization.

Some time ago I sat with the regional manager of the company to discuss a market research project he was starting up. He wanted to find out what his biggest clients were saying about his business, and he wanted to invite their local general managers in for a series of informal “focus groups”. I had been called in to discuss with him how to connect with the clients and get them engaged in the project.

Things were going well until we started to discuss the records we would keep. Our plan was to take notes, anonymize the feedback, and present it to the client in a grouped report with the major themes highlighted and recommendations for action. The client wanted the verbatim feedback. We pointed out that taping and transcribing would be time consuming, and besides, people often aren’t as candid when they know they are being recorded.

To our astonishment the regional manager said we didn’t have to tell them they were being recorded!

I think he had watched one too many episodes of “Law and Order” or something similar. He thought he could set up a room with a two-way mirror, watch and record the proceedings, and use the material as feedback for his staff…

I’ve written before on trust, and how important it is to maintaining any relationship. There are four key elements to trust. People who are trustworthy are:

• Capable: Can do what they say
• Reliable: Will do what they say
• Open: Will say what they do
• Principled: Will do what they should

When it comes to trust, like a crop, you reap what you sow.

Unfortunately, when it came to being trustworthy this regional manager badly failed the third criteria. He wasn’t open…he wouldn’t say what he was going to do. The most generous interpretation of what happens when people don’t say what they do is that they run the risk of being misunderstood, which doesn’t build trust. The least generous view of people who are closed, guarded or subtly misleading is that they won’t say what they do because you wouldn’t approve. Certainly there are times when we are less than open because we are preserving a confidentiality, or being sensitive to over communicating what others are not interested in. Generally though, it’s better to err on the side of being overly open rather than overly closed.

In this case I wouldn’t be a part of what I considered to be lying to those clients who came in to participate in the focus group. Sure, if we were being technical we could have set things up so that the clients would never know they were being recorded, and provided we never promised we weren’t going to record them…nevertheless, this sort of thing leaves a very bad impression with me. People should say what they do.

In my ethics classes with graduate students I often express this a different way: What would you be proud to see widely reported in the papers or on the internet? What would you be ashamed to see reported? I don’t think the regional manager would be proud to see his actions widely reported. I don’t think it would build a sense of community with his customers.

Life is too short to spend with people you’re not proud to spend time with. I’m glad I’m not pursuing this particular speaking opportunity.

Communicating Difficult News In Tough Times

"We’re going through tough times in our organization and I need to be able to communicate with our employees and stakeholders some of the difficult decisions and changes we are going to make. What’s the best practice in how this should be done?"

First, we know that nothing will get you very far unless you are a principled leader of your business. By that I mean that you have to be able to balance people issues and task issues, and get both done with integrity. Being too task focused during a change only means you end up coercing people, being too people focused means you end up as a cheerleader. Doing both with integrity is what counts.

Provided you have established yourself as a principled leader you can leverage your position to communicate difficult issues with integrity. Think of the communication as something locked away in a vault. Trust is the key you use to unlock the vault and begin the process of sharing the knowledge.

Here are five best practices supported by research and experience. You can think of them as the labels on your keyring, helping you unlock the vault:

1: Understand that people generally follow a predictable path when dealing with change and transitions. Whether the news is good or bad, (but especially if it’s bad), most people go through six responses we can describe as Denial, Anger, Self-Concern, (sometimes accompanied by anxiety, depression and bargaining), Search for Meaning and Options, Testing Alternatives and finally Ownership/Acceptance. Accept the likelihood of each response and prepare for it.

2: Understand what people need to hear at each stage. Tailor the communications to the needs of audience as they move through the typical reactions. At first, they need Awareness of the issues, delivered with dignity and respect. Once they have absorbed the first news, people generally need to have four other messages delivered that raise their Desire, Knowledge, Ability and Rewards during the change. For example, if you are delivering news of restructuring the beginning is to raise the awareness of the need to change, followed by information that starts to deal with people’s denial and anger by raising their desire for a better future.

3: Understand that different stakeholders have different needs. It’s likely that individuals in a business going through a staff reduction will probably need different information to raise their awareness of the need to change. It might depend on whether they are senior executives, employees or customers used to dealing with their favorite staff person. The worst organizations make blanket statements that are subject to misinterpretation. The best organizations carefully craft messages to address what is important for their different stakeholders.

4: Understand that people want to hear the news from their most direct contact. Sure, it’s important that the CEO is seen to be on board and leading the change. In fact it’s very important that they are a model for how people will be treated, (with dignity and respect), and a communicator of the vision of the better future. However, staff want to hear news from their direct supervisor; customers want to hear news from their customer service representative or account manager. It’s the people who are closest to them who will be able to discuss how the news affects them, and it’s these people they will turn to when they need help or resources in the future.

5: Understand that the best practice is to craft the complete plan before taking any action. One of the difficulties in communicating tough messages is that once you have made a decision you feel obliged to act as quickly as practical. Too often this can mean that the messages aren’t as well thought through as they should be and not as tailored as they should be. We’ve all had one of those emails that come down from on high telling us about some major change and leaving us with more questions than they answered. A good plan includes contingencies, and briefing notes that help prepare each person for the key talking points of their message. Good plans include different talking notes for different levels of people, and different audiences, as well as answers to questions that are likely to come up. The best plans include an outline of the entire process that can be adapted as circumstances develop.

Finally, remember that trust is the key. If you are delivering bad news, or even if it’s good news that is going to disrupt the regular order of things, people need to be able to trust that you will see them through the change. Getting things done with people happens more easily, more profitably and more quickly if there is trust. Trust is the essential ingredient: Trust that you are capable; Trust that you are reliable; Trust that you are open, and Trust that your motivations are good.

You can contact me or email me here if you would like more information on building a communication plan that keeps your employees and clients engaged...or click on COMMENTS below to leave a response for others to view.

What is the best book about doing business in China?

“Managing the Dragon” by Jack Perkowski! There are three things that make a business book stand out for me among all the many very ordinary books that are published each month. The author needs to know what they are talking about, They need to have something new to say, and they need to be able to write it in an interesting way that I can relate to.

Perkowski manages to do all three in a book about business that reads like a combination between a personal biography and a travel guide. Throughout the book three themes are continuously repeated, if not always explicitly: Connectedness in relationships, Trust, and Perseverance. I imagine that these three values would also be strong contributors to Perkowski's self-identity.

Perkowski knows what he’s writing about. He went to China in 1991 after a successful career on Wall Street, and founded a automotive parts company currently selling over US$500m and 30% of that outside China. His book outlines how he came to make the connections in China that enabled him to start and build his business, and the various challenges he has faced since.

He has a number of new things to say. For example, many people talk about the challenge of enforcing Intellectual Property Rights, (IPR), in China. Local laws do little to protect IPR, and writers often draw negative conclusions about the Chinese character and society as a result. Perkowski, on the other hand, has a purely economic take on the situation. He talks about the sort of products that are regularly knocked off, the kinds of buyers they have, and the distribution systems. His take is that all of these do much more to explain what happens in China than any judgemental comments about Chinese morality. His own business success shows how he has accommodated and succeeded in the Chinese market without compromising his principles. And the something new? Products with the most proprietary content and highest-technology value are probably the best products to take to China and the easiest to protect. (You’ll have to read the book).

Other counter-intuitive concepts in the book?

• You don’t need a local partner in China, and you might even be better off without one.
• You don’t need to learn Mandarin
• The real reason for the Chinese cost of manufacturing, (it’s not lower labor costs)

Not every one of Perkowski’s plans came out well. He discusses how he went through Plan A to begin his company, (it failed), Plan B, (which also failed), and he eventually settled on Plan C, (the success). The story of his three different strategies and how he learned from his mistakes is a lesson in persistence and humility many leaders can learn from. He describes his journey in China as a marathon.

There is a lot of discussion in the book about baijiu, the local alcoholic drink without which no business dinner seems complete. Many of the stories are funny and entertaining in their own right, and would stand up to inclusion in any collection of witty travel writing. Perkowski also uses them as a platform to talk about the importance of mutual respect, being willing to share, acting kindly toward others and having a sense of humility. All of the various dinners and social drinking sessions seemed to build supportive relationships that furthered the business without being focused on the business.

Finally Perkowski makes two points in his book that are interesting and easy for me to relate to. Firstly, he debunks the popular notion that China is different because it relies on Guanxi, which can best be described as “a network of influence and supportive social relationships”. A lot of foreigners emphasize the extent to which this is important in China, likening it to nepotism or cronyism. In fact, most successful people in any culture rely on networks of influence and social support. Managing The Dragon describes how China is the same, rather than focusing on how it is different. Perkowski uses his own career story to illustrate how important it is to be socially intelligent, and how he has benefited from the support of others.

The other concept emphasized in the book to which I readily relate is the importance of trust. If employee and customer engagement means contributing time, talent and resources to the organization it is impossible to imagine engaging people without trust. The importance of trust is a central theme throughout Managing The Dragon. The book looks at both the benefits of positive trust, and how difficult business is in the absence of trust.

Of all the business books on China I have read, this is one of the few that looks at how doing business in China is much the same as doing principled business anywhere else. No fancy tricks or “gee whiz” formulas. And at the end of the day, Perkowski sounds like a good guy to share baijiu with.

You can email me by clicking here, or leave a comment to share with others by clicking on "COMMENTS" below.

Postscript: After this review was written Jack Perkowski left Asimco. I'm not sure of the circumstances, and I'm not sure they are relevant. However, here's another review of Perkowski's views of doing business in China, this time from the China Law Blog at http://www.chinabusinesslawblog.com/2009/02/want-lasting-relationships-in-china.html Interestingly, the emphasis in the article is on one of the key themes in the book that I picked up on: the importance of trust.