When Your Company Is a Regular United Nations

Yves Doz is not the target consumer of cosmetics maker L’Oreal, but the Solvay Chaired Professor of Technological Innovation at international business school INSEAD is fascinated by the company. The French firm requires that managers from mixed cultural backgrounds comprise more than one-third of its product development teams.
As it happens, multiculturals in business is one of Doz’s special fields of study. He notes that L’Oreal’s multicultural approach appears to be working – sales in Asia Pacific grew 18.4% last year and 17.6% in Africa and the Middle East.
On the other hand, Best Buy shut all nine of its stores in China in 2011, just five years after entering the market. The US retailer of consumer electronics has been criticized for applying the global formula of siting big box stores in out-of-the-way locations, rather than respond to the Chinese consumer’s preference for neighborhood stores.
From his research, Doz told CFO Innovation’s Ida Mattsson, managers rooted in more than one culture are more likely to recognize new product opportunities, are more capable of integrating multi-cultural team, and are more able to bridge differences between subsidiaries and headquarters. Excerpts from the interview:
How do you define a multicultural person?
Essentially [a multicultural person] is defined by the ability to reach from one cultural frame to another . . . You need to be comfortable in [all] cultures, at the same time that you do not belong entirely to one community or another.
As an individual, you need to be sensitive to the several cultures and try to keep a balance. In other words, to think and act, say, Chinese and French-Canadian and Brazilian, depending on circumstances and context, and to be able to adjust to local culture and local circumstances as a function of these kind of multicultural identities.
There doesn’t seem to be ready supply of these individuals, especially in the business context. Does every company really need to hire or develop multiculturals?
If the issue is entirely to enforce or ensure conformity and uniformity, then you can say bringing someone from the corporate office, be it the US or Germany or wherever else, may make this easier.
[You hire locals] when there is a need for local sensitiveness, local awareness and adaptation.
But if there is a need to adapt to different practices, different financing practices and tools and contexts and so forth, then probably you would need a few multiculturals to act as a bridge between the global pressure of uniformity, on one hand, and the need for local awareness, on the other.
You may want to have someone from the head office to basically provide the integration and control. You then may want to have locals for local subsidiaries. And you may want to have a couple of multicultural people to act as interfaces, bridges, operating at sub-regional levels.  
Often, [multiculturals are required] in areas where there is a big interaction between local and global, or locally differentiated and globally integrated needs. And also where you need to try to find a good solution which is as uniform and integrated as possible, and yet remain sensitive to local differences.
Can you give us examples of companies that are taking the multicultural approach?
One of the things we [at INSEAD] studied in Citibank some years ago is them trying to develop a more unified back office and a more similar set of portals across various countries for their employees in different parts of Asia. This is an example of the kind of complex knowledge [possessed by multiculturals], because you need to understand the specific banking habits, consumer behavior and so on in different places around very different countries.
At the same time you need to be sensitive about how to integrate all [of these differences] and create a common back office backbone for all the various operations in various countries. That [revolves] very much around retail banking, credit card operations and the like.
When you deal with complex knowledge of this kind, around processes that are not standard routine processes, it may be lead to innovation and new products, like we saw in L’Oreal, for example. It is when you deal with culturally sensitive and complex knowledge that needs to be shared and integrated across borders that I think biculturals and multiculturals are most useful.
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