The Competencies of the Global Leader
Because the concept of global leadership is fairly new, researchers and global organizations alike are asking similar questions: What exactly is a global organization? Is there such a thing as a truly global leader? How should companies in this day and age choose people to be their future leaders? Are there specific qualities or qualifications that indicate high potential for global leadership? How can companies ensure that those chosen will be culturally adaptable and operate competently across borders? What does the term “global mindset” really mean? Are leaders of global organizations born or made?
It has become increasingly clear that leaders cannot be studied meaningfully in isolation from their surroundings. It is essential to differentiate between those leadership characteristics that are nonculturally contingent and those that are valid only in a limited cultural context. Many people would agree that a “leader” could be defined as being a rational, directive, pragmatic, cost-driven, hierarchical, male (or female who “thinks like a man”) technocrat with a short-term time orientation. Yet upon closer inspection, we realize that this description is derived from observing the successful behavior of political and business leaders of the most powerful nation in the world—the United States.[2] This is a nearsighted approach, since the value Americans place on extreme individualism and on participatory management is often in opposition to leadership practices in other parts of the world.[3]
For example, as Asian and Pacific Rim countries began to outperform the United States and Europe economically in the 1980s, attention turned toward Asian management practices. Rooted in ancient Confucian tradition, they seemed to provide a significant competitive advantage, appearing (at least for some time) to be more effectively adapted to that region than Western practices. It became obvious that Asian leaders had a different set of values—particularly persistence and perseverance, the ordering of relationships by status (and the preservation of this order), and thrift. Persistence and perseverance indicate tenacity in the pursuit of goals, ordering relationships by status ensures loyalty and interrelatedness, and thrift leads to availability of financial resources.[4]
In addition, some of the most successful male global leaders have traits and values that are often labeled feminine in the West. These include interdependence, humility, and a respect for the overall quality of life (including concern for the environment). In our own studies of female leadership, we have observed women's greater willingness to empower people; greater effectiveness in networking; greater realism regarding personal limitations (implying a lesser degree of narcissism); concern about a balanced lifestyle; and their broader, more humanistic vision of how to construe life in organizations.
If we distill the aforementioned observations to arrive at a kind of “essence of leadership,” we find that there are some universal leadership characteristics. The most effective leaders take on two roles: a charismatic role (consisting of envisioning, empowering, and energizing) and an architectural role (designing the organization, setting up structures, and formulating control and reward systems).[5] A set of behavioral characteristics—which contribute to specific emotional and cognitive “competencies”—differentiate exceptional leaders from other people and allow them to assume these roles. These behavioral characteristics include surgency (a broad term that embraces competitiveness, achievement orientation, self-assuredness, and dominance), agreeableness, conscientiousness, emotional stability, and intelligence (including emotional intelligence).[6] Exceptional leaders also tend toward controlled extroversion and have a great deal of physical energy.[7] Finally, they feel that they have control over the events in their lives (internality).[8]
In our work with top executives, we have found that the new global leaders have all the qualities of exceptional leaders just discussed. However, excellent leadership qualities alone are not enough.[9] The global organization, as we have pointed out, is a fairly new type of organizational structure. Before looking into the specific traits of the global leader, it would be wise to discuss what we mean by the term global organization.
The Global Organization
As domestic organizations began to look toward foreign markets in the postwar period, the fundamental challenge that faced them was balancing the economic advantages of global integration with the political imperative of dealing with foreign stakeholders.[10] There were two apparent options: a global strategy or a country-centered strategy. Globalization seemed to be the better choice. There were trends toward increasing homogenization of products across countries, as well as marketing systems and business infrastructure. Transportation was becoming cheaper and more reliable. Improved telecommunications and computer systems sped up all processes.[11] However, organizations were soon faced with a growing counter-trend toward a more nationally oriented strategy, fueled by the growing number of powerful foreign stakeholders. Organizational leaders had to worry not only about their subsidiaries' viability (e.g., meeting profit objectives), but also about their legitimacy (i.e., stakeholder perceptions as to whether the firm's activities are consonant with the values of the host country).[12]
In response, organizations moved from an ethnocentric predisposition (all strategic decisions guided by the values and interests of the headquarters and the home country; focus on profitability) to a more polycentric predisposition (strategic decisions tailored to suit the culture of the various countries in which the organization competes; focus on legitimacy). Ultimately, though, this decentralization proved to be difficult to control. For example, in the 1970s, Procter & Gamble came out with a new laundry soap. Unilever's decentralized, national detergent companies responded to the challenge and came up with 13 new soaps—but Unilever soon realized that the development costs were extremely high, and not one of their new products was as good as Procter & Gamble's.[13]
More recently, in the past 15 years or so, a growing number of organizations have become more geocentrically oriented, meaning they focus on both profit and legitimacy; governance is mutually negotiated at all levels; communication is vertical and lateral; allocation of resources is decided by both local and headquarters management; strategy focuses on global integration and national responsiveness; the structure consists of a network of organizations; the best people everywhere in the world are developed for key positions anywhere in the world; and finally, the culture is global.[14] Throughout this chapter, when we use the term “global organization,” we are referring to this kind of geocentric orientation, and we will focus on the specific skills and qualifications that are demanded of successful global leaders of this type of organization.
A Definition of Leadership
In the context of the global organization, the homegrown, up-through-the-ranks, insular CEO of the past is an anachronism. For example, as we said earlier, standard U.S.-based definitions of excellent leadership fall short in a global context. Everyone knows -apocryphal horror stories about “star” CEOs who speak only English, depend on Hilton hotels, and only eat familiar foods wherever they are in the world. What has amazed us in our research and consulting is how often we find real evidence of this kind of behavior and attitude, and how this can seriously affect or derail subsidiary–headquarter relationships, or even once-promising mergers and acquisitions. We find examples almost weekly of top executives who can hardly be considered global leaders, no matter how brilliant their domestic record might be or how many international trips they log in a year. We know of an American Fortune 500 high-tech organization whose French R&D subsidiary executives refer to the American vice presidents' and directors' visits to France as the arrival of the “elephants.” In other instances, headquarters-based directors rely on others for information on what is happening in their foreign subsidiaries. They run the risk of alienating foreign employees, who may see their leaders as “corporate cultural imperialists” and feel themselves to be a sort of corporate underclass. As a result, these executives rarely develop the kind of understanding of local markets that will give them an edge over competitors.
It is crucial, then, that companies choose excellent leaders who are also culturally adaptable and able to operate competently across borders. The new organizational paradigm requires cross-functional and cross-cultural process skills. These competencies are essential because global leaders must rise above the particularities of many regions and national cultures while at the same time meeting the expectations of followers in those different cultures. Global CEOs who are dazzled by numbers and neglect to take into consideration the human factor—and that includes the cross-cultural dimension—do so at their own peril.
As an example of that danger, we can point to the 1995 merger between two pharmaceutical firms, one Swedish and one American, that formed Pharmacia & Upjohn. This merger—a likely winner, on the face of things—did not meet expectations for several years. An inability to deal with cultural differences was generally cited as one of the reasons for American chairman John Zabriskie's departure in 1996. It was not until a CEO with a global background—Fred Hassan, born in Pakistan, educated in England, veteran of two other U.S. pharmaceutical companies—came on board in 1997 that Pharmacia & Upjohn began to fulfill its promise. Hassan's first move was one that we have documented many times for other successful global leaders: he visited subsidiaries and listened. He emphasized that, as an outsider, he had no favorites among the Pharmacia or Upjohn people. Hassan then streamlined overlapping departments and functions, which was painful at the time but resulted in increased sales and ultimately improved performance and morale.
In contrast, when British Petroleum faced a dramatic fall in consumer confidence and market share in the early 1990s, then-CEO Robert Horton devised an ambitious program to transform the organization. It looked good on paper, but it quickly became bogged down because employees felt that Horton was imposing change rather than fostering it. People felt out of touch, and many blamed Horton's “abrasive, American leadership style.” (Horton is British, but spent many years in the United States.) Horton was replaced by David Simon, who was known for his friendly, reassuring manner. Simon's first action was to listen and to be accessible. He quickly earned a reputation as being a fair and trustworthy leader. One of the goals of the significant transformation process that followed was to create a very flat, team-based organization, consisting of small business units—grouped according to function not geographical boundaries—in which decision making was pushed down to local levels. Ironically enough, Simon continued the restructuring program designed by Horton—including divesting and downsizing—but this time people had confidence in their leader and the transformation was successful. After this internal transformation had been digested, BP went on to form important mergers in Europe and the United States—an example of global leadership built upon excellent internal leadership. Last but not least, we were not surprised to find that Simon also has a multicultural background; he is Welsh with a French stepfather and speaks five languages.[15]
Another interesting example is Coca-Cola, currently going through a dramatic shift in perspective under CEO Douglas Daft. His predecessor, Douglas Ivester, had underestimated the public relations damage done in Europe by allegedly contaminated cans of Coke found in Belgium in 1999. One of the first tasks Daft set for himself was to regain the confidence of Europeans. He went on a four-week “good-will tour” during which he met with officials to listen to their point of view. He learned that they felt Coca-Cola based its strategy on what was legally acceptable in the United States. Coke used “bulldozer behavior,” showed contempt for European officials, and used “abrasive, domineering, and unacceptable American practices.”
Daft's approach was unusual in that he deliberately went in not only to discover others' perspective on the company, but also to integrate this perspective into the organization's culture and future strategy. Inspired by his European tour, he quickly took action. He told executives they should think of the Coca-Cola corporation as a collection of villages, each with its own culture, but all part of one organization. He quickly replaced almost all of Coca-Cola's senior management in Europe with local people. He intends to have offices in Brussels and London as well as Atlanta, and work there regularly.[16]
Daft is aware that a large majority of Coca-Cola's profits are generated overseas, and the organization's continued growth depends on its good standing in foreign countries. Daft sees his most important leadership role as being to change the image of a corporation often considered outside the United States to be arrogant and overly aggressive; he will focus on gaining the confidence of both Coca-Cola clients and employees throughout the world. In a clear example of global as opposed to multinational leadership, Daft has realized that his job as CEO is to create an egalitarian and symbiotic organization in which the whole is greater than the sum of its parts.
From our study of these and many other global leaders, we have found that successful global leaders have certain qualities above and beyond those found in excellent domestic or multinational leaders.
A strategic awareness of, and deep interest in, the socioeconomic and political scene of the countries in which they operate.
Excellent relational skills, including verbal and nonverbal communication across cultures.
Physical hardiness (global leadership requires a great deal of travel and adaptation).
Resilience and a high tolerance for frustration and uncertainty.
Cultural relativity, including an awareness of their own biases.
Curiosity about different cultures, and a willingness to adjust their own behavior where necessary.
A “teddy-bear” quality that makes them accessible and trustworthy to followers from different cultures; the willingness and ability to listen.
It could be argued that excellent domestic leaders also have many of these qualities; these leaders often work with diverse groups with specific identities (e.g., people with firm ties to Hispanic or Asian communities). We observed, however, that global leaders retain these capabilities even when they find themselves in completely unfamiliar situations (e.g., on a personal level, functioning effectively in countries where they don't speak the language; on an organizational level, operating in chaotic markets in developing economies). Furthermore, such leaders search out unfamiliar situations as a way of continually challenging themselves and their organizations. An oil executive working with subsidiaries in Texas, California, and Alaska will certainly face obstacles, but the executive dealing with guerillas in Columbia or oligarchs in Azerbaijan who are exploring new oil fields will be confronted with difficulties that are in a different category altogether.