The first time Ken Kovach traveled to Russia, the country was still under communist rule. The Moscow airport was stark, dingy and dark. Armed guards were everywhere.
Today, the airport is bright and busy with travelers, retail stores and restaurants.
“They have caught on to some of the trappings we have in the U.S. marketplace,” says Kovach, executive director of Cleveland’s International Community Council, which promotes awareness and understanding of international communities’ cultural resources.
But when it comes to making a deal, it’s done the Russian way. “Their concept of time is a lot different from ours,” he says. “You make an appointment and people might show up an hour late, perhaps the next day.”
Kovach suspects the tardiness is a leftover problem from Russia’s communist days, when businesses were under no incentive to meet schedules or deadlines because everything was controlled by the government. Nevertheless, Kovach sees it getting better as younger entrepreneurs are quickly learning about the importance of planning and deadlines at business schools.
Kovach helps U.S. companies with strategic plans and organizational development issues in foreign countries. He provides the same services for foreign companies that do business in the United States. When dealing with persistent punctuality problems, Kovach suggests reiterating the importance of the meeting to the person or holding the meeting at his or her place of business. That way, you are in control of when the meeting starts.
“When you go to another country and make decisions based on how we operate businesses in the United States, you’ll be more likely to make bad decisions,” observes Kovach. Though many nations are adapting more Western business traits, “there are still many cultural differences,” he adds.
The growing global economy requires company owners to develop cultural competency to do business overseas and successfully compete in the global marketplace. Increasingly, U.S. small businesses and entrepreneurs are playing a key role in global trade. Small companies exported a record $375 billion in 2006, or more than $1 billion a day, according to the U.S. Small Business Administration. The export growth was three times as fast as the overall national economy.
“The single greatest cause of difficulties in global business transactions is not the lack of technical expertise, hard work or good intentions. It is the lack of people skills for relating successfully with counterparts from other countries and cultures,” argues international business consultant Ernest Gundling in his book “Working Globe Smart: 12 People Skills for Doing Business Across Borders.” “The number of people involved with global business has increased dramatically over the past decade, and now, with the advent of virtual teams, global people skills are becoming almost a daily necessity in many professions.”
Developing cultural competency is a continuous process for businesses, says Kovach. Companies must integrate all of their knowledge and understanding of a nation’s culture to develop specific business practices that can help achieve strategic goals.
For example, doing business in India requires an understanding that Indians appreciate a family atmosphere at work and they commonly ask personal questions. They like to see the human side of the people they deal with.
In a country like India, observes Kovach, you need to carve out some orientation time to get to know the people. It’s the only way to learn about them and adapt to their way of conducting business while visiting the country.
“Cultural competency is really about developing relationships, because you’re investing time in understanding the cultural differences of people from other nations,” says Kovach. “You need to be able to step into another person’s culture and learn about who they are without making judgments.”
To start learning about foreign cultures, look for resources in your own community. The International Community Council, the Cleveland Council on World Affairs, colleges and universities, chambers of commerce, trade or professional organizations, foreign consulates and other international business groups are good places to start your international business journey.
The Beachwood Chamber of Commerce has been particularly successful in establishing close ties with the business community in Israel. In the past three years, 20 international companies have established North American headquarters in Beachwood through the work of the chamber’s business development center. The center was established by the chamber, the city of Beachwood and Cleveland State University.
The companies that have opened shop in Beachwood work in the industries of biomedicine, technology, aerospace, automotives, homeland security and advanced energy. Although many of the companies come from Israel, others hail from China, France and Japan.
“A large part of our success is a result of all of our cultural connections with Israel — its language, its religion and its culture,” observes Vincent Adamus, CEO of the Beachwood Chamber of Commerce. “Over the years, we’ve had a lot of Beachwood residents who travel to Israel to visit relatives, friends and to conduct business. This has been a pretty strong infrastructure that has allowed us to recruit entrepreneurs from Israel and to get Israeli companies to co-locate here.”
Adamus says businesses that want to expand overseas should first focus on one country because understanding its culture and business practices are time consuming and expensive. “It’s almost like starting a new business again where your cash inflow doesn’t cover your expenses,” he says.
The Beachwood Chamber began focusing its business development opportunities in Israel four years ago after it had attracted three Israeli firms to open offices in Beachwood. In 2004, Beachwood sent a delegation to the country to seek out more firms interested in establishing ties in the United States. Although Beachwood continues to grow its ties with the business community in Israel, Adamus says the chamber also wants to focus on China and Europe.
Simply networking with people who have lived in foreign countries also can help businesses get a deeper understanding about a country’s cultural dimensions, including those that you won’t find in books.
“Through the ICC and other groups, you can get to know many people in Northeast Ohio who were born and raised in other nations,” Kovach says. “These people are great resources to talk to because they can give you more insights about that nation’s culture.”
The best way to get to know a country’s culture is to go there. People tend to believe that deep down we are all the same, Kovach says, but culture makes all of us different.
“People in Moscow see themselves differently than people who live in Uzbekistan even though that country used to be part of Russia for many years,” says Kovach. “There are different nuances, different feels and different world views that you need to respect if you want to create a successful business overseas.”