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Culture Eats Strategy for breakfast

Hannah Barkoff, Market Specialist DACH

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“Culture Eats Strategy for breakfast”** (Drucker in Witzman 2016)

An insight-led approach to bridging cultural boundaries across business practices between Ireland and Germany.

In essence, there are three elements that need to be designed together and be aligned to create true organisational transformation: strategy, capabilities and culture Rick (Rick,T 2014). Culture here can be seen as internal company culture and managing external cultural difference and its impact on own business success.

Hofstede (Hofstede insights, 2021), in-line with Rick (Rick.T,2014) emphasises the importance of awareness around cultural differences and how these play a major role in success or failure of internationalisation of a company.

For exporting business, understanding the cultural difference that exist in business etiquette across borders can make or break success.

Research by Hofstede has since the late 1900’s been identifying key global cultural differences across business and people and has conceptualised frameworks to aid internationally operating businesses in mitigating the negative effects of lack of cultural awareness. This led to the development of a key framework and six different cultural dimensions which aid operations in understanding cultural differences in business practices across cultures (Hofstede 2021). Hofstede’s “Culture Compass” is a tool that has been conceptualised to look at these six key cultural differences in business environments, and give insight into what cultural adaptions can aid companies in succeeding in international markets. Focussing in on doing business in the German market, figure one outlines cultural differences between Irish and German mind-sets in Hofstede’s’ six dimensions. Blue depicts the German scoring, purple the Irish. Hofstede’s theory based on these six cultural differentiators, visualises clearly where Irish culture and German culture differs, where they are similar and what elements need particular attention.

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As can be seen, half of the cultural dimensions between Germany and Ireland score similarly (marked green). The three elements with more varied scoring, highlight where cultural differences occur (marked orange).

Utilising Hofstede’s in-depth and ongoing insights work, what conclusions can be drawn in order to understand how to best mitigate business risks by missing cultural nuances when operating in the German market?

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Aspect 1: Uncertainty avoidance: “The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these” (Hofstede Insights, 2021)

The dimension “uncertainty avoidance” has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen?  (Hofstede Insights, 2021)

In German business culture, in line with German philosophical heritage, there is a strong preference for deductive rather than inductive approaches, be it in thinking, presenting or planning. A systematic overview, based on details, planning, expertise and proof has to be given in order to proceed and for a project or proposition to have credibility. (Hofstede Insights, 2021)

What does this mean?

When doing business in Germany, well-structured, detailed and expertise-led presentations and meetings are vital for success. First impressions can determine future outcomes with unprepared and more casual attitudes possibly making long-term partnerships more difficult.  Certainty, clarity and fact-based, expertise-led meetings and presentations are keys to success. Evidence and fact-based proof-points for claims made are vital.

 

Aspect 2. “Future orientation or “long-term thinking” describes “the degree to which individuals in organizations or societies engage in future-oriented behaviours such as planning, investing in the future, and delaying individual or collective gratification” (Hofstede Insights, 2021)

 

Higher levels of “future orientation” as seen here in German business culture with a score of 83, indicate a society that prefer systematic approaches and, in-line with aspect one of avoiding uncertainty, favour long term planning. Cultures low in future orientation as visible in the Irish orientation at an indicator of 24, are more opportunistic and are more likely to have shorter term visions over long-term systematic plans.

What does this mean?

An important conclusion taken from the cultural differences in long-term orientation is that when doing business in Germany, planning phases, building relationships and ultimate successes have long lead-times. Planning often happens +years in advance. Short term action and ad-hoc decision are less likely to be fruitful in a German business context and may come across as being unprepared.

 

Aspect 3. “Indulgence” in Hofstede’s model refers to the extent to which people try to control their desires and impulses(Hofstede Insights, 2021)

Relatively low scores on this scale is seen as an “indulgent” society while high scoring countries are described as “restrained”. Ireland’s higher score of 65 shows a more general willingness to realise impulses and desires with regard to enjoying life, having fun and having an optimistic outlook.

With a lower score of 40, German culture is more restrained in nature. Less importance is put on leisure time, sharing personal experience, making an immediate positive impression and there is a more pessimistic or critical outlook.

What does this mean?

“Michael has been in Frankfurt for about a week and is really missing his home office in Chicago. Everyone in Germany seems to be so serious at work. No small talk, no conversation about the weekend, no interest in his American background — in fact, no interest really in him at all, it seems.

“At first, Michael blamed the “uncaring” Germans. But he then started to wonder whether he was, in fact, the problem […] Michael started to make small talk anywhere and everywhere he could. But these efforts seemed to fall on deaf ears, and worse, alienate his colleagues, who appeared more distant than ever before. As he considered next steps, Michael wondered: What could have gone wrong?”

(Molinsky & Hahn, 2015)

This excerpt from a Harvard Business Review article by Molinsky and Hahn (Molinsky. A & Hahn. M, 2015) identifies this in a simple and clear way. An indulgent, open and optimistic individual from an indulgent society approaches a restrained individual without realising the different approach needed. Without the insight into how the “restrained” German colleagues or society operate, the indulgent is left with a negative view which could have long-term effects on future relationships.

The ability to understand this cultural difference is vital when building long-term business relationships between Ireland and Germany. The open, direct and more informal approach as applied by an indulgent culture may not immediately match with a restraint attitude.

In conclusion, acknowledging and adapting to different cultural etiquette with business partners can have great impact on the long-term success of an exporting operation. The objective is never to highlight differences, but to be aware of what fine details and slight adaptions in behaviours can transform intercultural business relationships. The Hofstede insights model is one that outlines an insight-led framework for this approach across cultures worldwide.

 

Sources:

* Whitzman. C (2016) Culture eats strategy for breakfast’: the powers and limitations of urban design education, Journal of Urban Design, 21(5), pp. 574-77


** Hofstede Insights (2021) Country Comparison, Culture Analysis Tool. Available at: https://www.hofstede-insights.com/country-comparison/germany,ireland/ [10.12.2021]


*** Rick, T (2014) Organizational Culture eats Strategy for breakfast, lunch and dinner, [Online] Available at: https://www.torbenrick.eu/blog/culture/organisational-culture-eats-strategy-for-breakfast-lunch-and-dinner [10.11.19]


**** Molinsky. A & Hahn. M (2015) Building Relationships in Cultures That Don’t Do Small, Cross Cultural Management: Harvard Business Review. Available at: https://hbr.org/2015/04/building-relationships-in-cultures-that-dont-do-small-talk [10.12.2021]