I met Jacques Renard in Shanghai a few years ago, where he was CFO of the subsidiary of a global consumer products company. A French national, Jacques has had a long career as an expatriate for his company; the last time he worked in his native France was fifteen years ago. He has been assigned to Austria, Warsaw, Caracas, Jakarta, and now Shanghai. His wife and their two children are used to moving with Jacques every few years. Jacques is part of a small but enduring breed of managers who spend their careers working outside their home country.
As I have written elsewhere, cultural sensitivity and global mindset – in addition to having the right set of technical skills and integrity – are important for success as a global manager. Recently, I came across a study that suggests that these may not be enough, although this was not a study of global leaders. Let me explain. Groysberg et al. (2006) examined 20 high-level executives who were leaving one company (GE) to join another company at an even higher level of responsibility (e.g., Chairman, CEO). In their study, which covered the years 1989 to 2001, they found mixed results for what they called the portability of these executives; some were successful, others less so. For example, Robert Nardelli went to Home Depot and failed there; James McMerney went to 3M and thrived. Both were at some point considered to be potential successors to Jack Welch at GE.
Why GE? For many years, especially during Jack Welch’s time, GE was well known as a breeding ground for leadership. I know several executive recruiters who used to keep close tabs on up-and-coming GE managers because of the company’s reputation for identifying and developing leadership talent.
What Groysberg and his colleagues found was that portability depended on a match between the executives’ skills and the requirements of the new position in terms of four areas: strategy, industry, relationships and culture/systems/processes. For example, companies’ subsequent performance was better when those executives had strategic skills that were a good match with their new company’s strategic requirements. If an executive’s strengths were in cost cutting but the new environment required skills in growing the business, the chances were that the executives’ new company would not perform as well. In other words, the portability of an executive (at least in the limited sample they studied) was a function of the match between the executives’ strengths and the company’s situation in these four areas: “The more closely the new environment matches the old, the greater the likelihood of success in the new position.” Subsequent research by Araoz supports this idea that “origin and destination matter.”
What about managers like Jacques? Despite the moves from country to country, he and other global managers for the most part remain in the same company. Will similar cautions apply to the portability of global managers who are assigned to different country subsidiaries? Or does having cultural sensitivity and a global mindset trump any potential mismatches in portability?
Many years ago, the company I was working for acquired a small business in an African country that was founded by a very successful entrepreneur. To help integrate this business with the company, we sent a British manager who I shall call Philip. He had been with the company for over twenty years, had been assigned to several overseas subsidiaries during that time, was highly experienced in operations, and was very familiar with the company’s culture and processes. Unfortunately, Philip did not do well in his assignment. His constant clashes with the local founder and his attempts to run a command-and-control operation did not fit with the loose, free-wheeling culture of the local company. Using the Groysberg framework, there were mismatches in all of the four areas:
· Strategy. This was a situation that called for an executive with skills in blending together an entrepreneurial company with a massive global enterprise; Philip had never faced this kind of challenge before.
· Industry. As an emerging market, this country’s regulatory environment was not sophisticated, consumers had little awareness of the brand that the global company represented, and the competition was mainly other local companies. These were unfamiliar challenges for Philip, and very different from what he had faced in the past.
· Relationships. Philip flew in “solo;” he had met the founder briefly but had no friends or allies in the company whom he could trust. As a result, he had blinders on and was not able to get feedback or advice that could have helped him adjust his behavior and style.
· Company culture/systems/processes. Philip was used to working in a bureaucratic environment where processes were defined and well established. Nothing in his past experience prepared him for this situation.
While Groysberg’s framework certainly fits, a certain level of cultural sensitivity and global mindset on Phil’s part could have helped mitigate these risks. For example, being willing to learn about other cultures and building connections (two critical elements of global mindset) would have helped him understand the local company’s industry and processes, as well as establish productive relationships. Therefore, the first screen in selecting potential global managers is still their global mindset orientation. Assuming that companies have vetted their global managers on global mindset, what if it is apparent that there will not be a good match? A company has three alternatives:
1. Find someone else in the company with a better match for the situation, while sending the manager to another country where there is a better match for him or her. This presupposes that the company has a pool of such managers and the capability to match them to the most appropriate situations. If not, at least find the closest matches.
2. Fix the manager by providing her with some counseling and coaching. A global manager who may not be familiar with the regulatory environment in the country she has been assigned to can prepare by learning from more experienced colleagues about what to watch out for, consulting with country experts, or doing a lot of homework.
3. Fix the situation to enhance a better match, for example, by sending the global manager to a subsidiary where he already has a network. Angela was a global manager for a technology company who had led a global team whose members were primarily in India. When there was an opening for a manager to be assigned to the company’s Indian subsidiary, she was the logical choice, and Angela was able to take advantage of the alliances that she had already built in the subsidiary to have a successful assignment there.
Araoz, C. (2014). It’s Not the How or the What but the Who. Boston: Harvard Business Review Press.
Grosberg, B., McLean, A. and Nohria, N. (2006). Are Leaders Portable? Harvard Business Review.