An Ideas-Based Online Magazine of the Global Network for Advanced Management

The Art and Science of Cross-Cultural Management

According to Miriam Erez, professor emeritus of behavioral science and management at Technion–Israel Institute of Technology, the most successful cross-cultural managers are those that value diversity over homogeneity and become part of the community they create. Erez talked to Global Network Perspectives about her research on the theory and practice of fostering better productivity, contentment, and innovation in international teams.

What are the particular skills needed by managers in cross-cultural contexts?

One common situation for global managers is when you are an expatriate, located in a different culture. In that case, it’s very important to be familiar with the local culture, and to learn about the values, norms, and appropriate ways of behaving in this new context. My colleague Shmuel Onn studies cultural intelligence, which is the ability to adapt to new cultural situations.

Another scenario for global managers is when their team is itself multicultural. In this case, the most important thing is for managers to have the sense of belonging to this global community. I call it “global identity.” It’s not something that you are born with, but you can develop it.

Once you identify with this global context, you can convey a sense of inclusion. If you’re their manager, your other essential skill is to help team members understand each other, to feel psychologically safe to express misunderstanding. If they don’t dare to ask for more information or clarification, you may end up with mistakes and inefficiency. Trust is important in any context, but particularly important in a global context.

What’s the first step for a manager leading a multicultural team?

The biggest priority is to have a tolerance of diversity. You must think in terms of being part of a multicultural team, working together and thinking positively. What I mean by thinking positively is that you understand that the pool of resources that you have with others who are different from you is deeper than the pool of resources of people who are similar to you. There are tremendous benefits to this way of working, but it requires overcoming the tendency to divide and categorize people.

Miriam Erez

What can we learn from multinational firms that have succeeded in new contexts?

Some tech companies have had success by analyzing the data they collect from different places in the world. I’ve spoken to people at a relatively mature start-up in Israel that does exactly this. They get data points from big companies, analyze them, and send feedback to these companies about what’s going on with their customers and employees. In the process, they see that messages coming from one culture are different from messages that come from another culture. You have to take off your own culture’s glasses, so to speak, to interpret what’s going on, and put on the glasses of the other culture. Companies that are interested in taking the perspective of the other culture into account are going to do better. Their employees and customers will all benefit.

Global companies have employees from all over the world. Do they need to have a shared set of values to succeed?

In my research, I have identified three cultural values that enhance creativity and innovation. As it happens, they are all typical of Israeli culture. Maybe this is why we have so many startups; every multinational company wants to have their R&D center in Israel.

First of all, you need a low uncertainty avoidance, where people feel comfortable in ambiguity. In Israel, the culture enables uncertainty and tolerates variation. Some cultures tolerate deviation from the norm, but some are very tight. You find less innovation in these cultures.

Another cultural value is what we call “power distance.” In Israel, power distance is very low. That is, you feel more comfortable criticizing your boss or telling your boss that he or she is wrong. It helps a lot creatively. First of all, it gets you into the habit of thinking for yourself: come up with your own ideas, then test those ideas on your boss and see whether you convince him or her.

The third value is debatable. In the research literature, it says that individualistic cultures are most important for innovation, because people don’t have to conform to the group. On the other hand, if you think about startups, they are not one-person companies; they are team-based. Therefore, in order to build a team—to develop a network with investors, potential consumers, and so forth—you need to have some sense of collective values. Aiming for a moderate level, not too individualistic and not too collectivistic, supports creativity and innovation.

How does creating the right setting for innovation work in practice?

Again, it’s a process. It’s not only bringing in talented people, it’s also the context that you provide them and how you manage it.

I developed a model that I call the journey of the idea. It has six steps in the model I teach; I also do experiential learning while I teach it, which means that students who participate in this course have to form a team and to go through these steps until they have a product, technology, or service that is ready to bring to the market.

The first step is to identify a challenge, opportunity, or problem, and think about where you want your company to be five years from now. That means that from the beginning, you have to be open to getting information from outside your company to learn about a new technology, new competitors, new markets, and so forth. The next step is idea generation. Now you have many ideas, but you have to choose one for application, which you can do with a technique I call the value matrix. The idea that gets the highest value is the one that you’re going to implement.

The third step is issue selling, which you have to think about in advance. Who is going to support this idea? Who isn’t? What should you do in order to convince them? Also, can you change the idea so it works for the group that is not going to immediately embrace it? The fourth step is to build a prototype or model. At this point, you use the technique called open innovation to get customers involved so that you can check the original idea against what the market actually needs.

In the fifth step, you identify the manufacturer or delivery system. The last step is market penetration. You really have to think about that from the beginning, how to convince the market to accept your invention. This is what I teach students—and also managers and companies—to enhance the level of innovation in Israeli companies and beyond.

You’ve written about the goal-setting theory of motivation. Can you talk about that theory?

The theory is both very simple and highly valid. It’s been replicated in many, many studies. What the theory says is that specific and difficult goals lead to high performance—a goal that stretches you to do more, to do better. This also works well with people who are high achievers.

I added two boundary positions to this theory. One is that you have to provide feedback. If you don’t provide feedback, people don’t know how far they are from the goal, and they may go in their own direction. Furthermore, it’s not enough just to set the goal if it is complex. You also need to set the strategy, the tactics, the tools, the methods, and the resources that will help people accomplish it.

If members of my team are located in many different countries, how do I motivate all of the different cultures and moving parts to get to that goal?

You have to integrate two different perspectives. One is related to that sense of inclusion. The other one is setting a team goal to provide feedback. And, of course, the incentive system helps a lot. Instead of rewarding each person individually, you reward the whole team. If I want to get the reward, I have to make sure that my colleagues coordinate the work with me. I’ll help them because the outcome is the team outcome—it’s not mine alone.