How to leverage cultural diversity to drive innovation

How to leverage cultural diversity to drive innovation

by Felicity Menzies

Not long ago, I was contacted by Alison, a senior sales executive of a large Australian property developer. She was anxious—her management skills were under scrutiny after losing two senior sales directors to competitor firms. She explained to me, “I have responsibility for leading the sales strategy and execution for our luxury apartment developments across North Sydney. We are targeting the high-net-worth Chinese buyer. It is estimated that Chinese investors account for around 20 per cent of the luxury apartment market in Sydney, but competition is strong, particularly from Chinese developers. While we sell 30 per cent of our developments to Chinese buyers, Chinese developers sell around 80 per cent. There are significant opportunities in this market that we are only partly capturing.”

Alison continued, “Those statistics indicate to me that we don’t fully understand the cultural nuances of selling to the high-net-worth Chinese investor. Recognising this, last year we recruited two experienced Chinese directors to our sales team. Both directors were born in China but had experience working for Chinese property developers in Australia. It was not easy recruiting Chinese directors—although we offered competitive base salaries and an aggressive performance-based bonus, we didn’t attract many applicants. Eventually, we hired Wilson Ong, who had relocated to Sydney from Perth to be closer to his extended family. Wilson later introduced us to Chen Shu, his second cousin, whom he had worked with in China but at the time was working for a competitor Chinese developer. Both directors had excellent credentials and a solid track record of sales of Australian luxury apartments to Chinese buyers.”

Alison explained to me that she had expected to realise the benefits of her Chinese hires immediately. She was eager to replicate the success of the company’s Chinese competitors by integrating Chinese themes into marketing and sales strategy and practices, and she looked forward to Wilson and Shu’s suggestions about how her team could increase sales to high-net-worth Chinese investors. But it didn’t work out as she had hoped.

Alison has a participative management style. She values lively discussions in team meetings and encourages her sales directors to suggest and debate their ideas for the group’s sales strategy. Sometimes the meetings would become quite heated as the directors challenged each other’s ideas while arguing their own position, but Alison and her team understood that intentional workplace debate was conducive to preventing groupthink and stimulating creativity.

Wilson and Shu, however, rarely contributed to team meetings. While her Australian-born directors enthusiastically argued their different ideas and contrasting viewpoints during brainstorming sessions, Alison’s new hires were quiet and reserved during the meetings. They neither offered suggestions, nor commented on the ideas of their group members.

Three months later, both managers left Alison’s firm to work for a competitor Chinese developer. “What happened?” Alison asked me, exasperated. “Is it cultural?”

Alison and I met up for a coaching session a few weeks later to take a closer look at what might have gone wrong. Her difficulty managing a multicultural group is not unusual. Cultural diversity increases the complexity of work groups and managers need new knowledge and skills to manage that complexity.

I suggested that Alison’s western management style likely contributed to the loss of her Chinese directors.  I advised Alison that workplace debate is deeply countercultural to the Chinese. While Australians value assertiveness and individual expression and resolve conflict through a competitive win-lose approach that involves pitting opposing parties against each other and in which the most dominant and forceful party wins an argument, the Chinese value interdependence with colleagues and relational harmony and resolve conflict through a cooperative win-win approach, whereby diverse perspectives and opposing ideas are integrated to achieve an outcome acceptable to all parties. Alternatively, in Chinese contexts, conflict might be avoided altogether to maintain social harmony. Alison’s combative brainstorming sessions were likely a source of discomfort for her new hires.

The Argument for Workplace Debate

By stimulating diversity of thought, workplace debate increases the breadth of solutions available for problem-solving, promotes more critical information-processing in decision-making and stimulates innovation and creativity.

Constructive Workplace Debate

However, not all workplace conflict is positive for group outcomes. Studies show that while task conflict—disagreements about the allocation of resources, practices or ideas—facilitates workgroup performance, relationship conflict—differences that relate to personal preferences and interpersonal styles—negatively affects group performance. Unlocking the value in diversity of thought requires the presence of task conflict but an absence of relational conflict.

A Culture of Debate

Some researchers have suggested that firms can avoid relational conflict by integrating conflict into work processes and fostering a culture of debate to promote dissent. This approach presumes that when employees perceive conflict as integral to effective decision-making and enhanced organisational outcomes, they are more willing to enter into debate with colleagues and are less likely to take personal offence in confrontations.

Amazon is an example of a company that espouses a culture of debate as a competitive differentiator. “Have Backbone; Disagree and Commit”, is one of the company’s core leadership principles that drives a culture of innovative excellence that underpins its success.

Understanding the Cultural Boundaries of a Culture of Debate

However, a culture of debate can be problematic when managing across cultures. There are cross-cultural differences in the acceptance of workplace conflict that limit the universal applicability of this approach.

A culture of debate, in the nature of Amazon’s “Have backbone; Disagree and Commit” form, is congruent with an individualist and high assertiveness preference for a dominating—competitive, aggressive, forceful—approach to conflict resolution. The subtext requires that leaders are tenacious and do not compromise for the sake of social cohesion. In individualist, high assertiveness cultures, conflicts are resolved by letting the strongest party win.

In collectivist and/or low assertiveness settings, however, a competitive approach to conflict is deeply countercultural. In those cultures, interpersonal conflict is a mark of disrespect that threatens the maintenance of face and social harmony. In collectivist and low assertiveness settings, there is a preference for integrating—compromise and negotiation—, and avoiding—preserving relational harmony through restraint— approaches to conflict management.

Cultural Dissonance

All individuals, irrespective or their cultural orientation, seek to maintain a positive view of themselves and to experience a sense of worth and positive well-being. Individuals are motivated to engage in behaviours that lead to the fulfilment of these needs. Actions that the individual perceives will support a positive view of themselves, a sense of worth and positive well-being are more likely to be adopted than behaviours that do not support self-motives.

Self-evaluations are heavily influenced by cultural values. Cultural values are standards or preferences for a desired mode of conduct or being. They are represented in the self and influence one’s self-concept. When an individual behaves in a manner or achieves a state congruent with their cultural values, self-concept is positively affirmed and the individual experiences a sense of worth and positive well-being. Those positive emotions reinforce and promote the behaviour.

When an individual’s behaviour or state of being is incongruent with their cultural values, the individual’s self-concept, self-worth and well-being are negatively impacted. The emotional dissonance experienced when an individual is required to act in a manner, or even observes activity inconsistent with his or her cultural values, acts as a demotivating force that discourages the behaviour.

Eliciting Diversity of Thought and Driving Innovation in Cooperative Settings

A concern commonly voiced among Western managers working in Asia is how can organisations elicit diversity of thought in a cultural context with a strong preference for social harmony and cohesion? This question is also relevant for multicultural workgroups. A multicultural workgroup offers a greater variety of thought than a monocultural group, but capturing the value of that diversity in thinking relies on the sharing and integration of the ideas of all cultural groups.

Fortunately, innovation studies in China have shown that eliciting diversity of thought is possible in a collectivist context, but it requires a different approach. Countering groupthink and unlocking innovation in collectivist cultures is achieved through a cooperative approach to conflict, in contrast to a competitive approach.

Whereas a competitive approach to conflict involves a win-lose context, a cooperative approach to conflict involves a win-win context that emphasises collective goals and success and supports relational harmony. In cooperative conflict, group members share their ideas, take the perspective of others, confirm their commitment to resolving the conflict for mutual benefit and integrate diverse perspectives to create new solutions.  A cooperative approach to conflict is less likely to trigger relationship conflict than a competitive approach. It is also an effective strategy for reducing avoidance tendencies that threaten open discussion in collectivist cultures.

One approach that was suggested to me by a colleague at INSEAD, which I have subsequently adopted in collectivist settings involves employees jotting their ideas down anonymously on post-it notes that are placed around the room’s perimeter for colleagues to read. The manager then facilitates a group discussion of the ideas noted in the context of looking for the best way to integrate those ideas to achieve the group’s shared objectives. This can be contrasted to a competitive workplace culture where colleagues compete against one another to deliver the winning solution. In a competitive workplace, individuals are recognised and rewarded when their unique idea succeeds. In a cooperative workplace, groups are rewarded when their collective idea succeeds.

Eliciting Diversity of Thought in Multicultural Workgroups

Studies report that cooperative conflict management strategies are more effective than competitive strategies even in individualist contexts. This raises questions about the usefulness of an aggressive culture of debate in any cultural context and supports cooperative conflict management as an effective strategy for multicultural groups.

In today’s global business environment, companies that can successfully elicit a diversity of thought from their multicultural workforces have an enviable competitive advantage. But, as with any management practice, the ‘how’ requires careful consideration of cultural nuances and constraints.

Felicity Menzies is CEO and Principal Consultant at Include-Empower.Com, a diversity and inclusion consultancy with expertise in inclusive leadership, unconscious bias, cultural intelligence and inclusion, gender equity, empowering diverse talent. Felicity is an accredited facilitator with the Cultural Intelligence Centre and the author of A World of Difference. Felicity has over 15 years of experience working with and managing diverse workforces in blue chip companies and is a Fellow of Chartered Accountants of Australia and New Zealand. Felicity also holds a Bachelor of Commerce and a Bachelor of Arts in Psychology.