Leading S&OP/IBP across geographies

This is the last in a series of four articles on leading an effective S&OP/IBP culture. The first article was on effective S&OP/IBP behaviour. The second article on leading S&OP/IBP change. The third article discussed on how to lead sustainable S&OP/IBP and introduced the ‘S&OP leadership quadrant’. This fourth article is about leading S&OP/IBP across geographies.

Leading S&OP/IBP across geographies

Once a company starts crossing the borders other complexity enters the S&OP/IBP equation. Across geography and cultures, S&OP/IBP processes are facing the same challenges, but sometimes one culture just has a preferred way dealing with these relative to other cultures. There is no right or wrong in different approaches, but when leading S&OP/IBP across cultures, it will be effective to understand what the preferences in different cultures are.

It is important to understand that many leadership and business theories (like S&OP/IBP) have been developed in the West under the assumption that they were universally applicable. It was only in the beginning of the 1980’s that researches, led by Geert Hofstede’s work, started to challenge this assumption and showed that management ideas and practices were not universally applicable, because national culture played a significant part in the way people thought and behaved. From that time, significant research in cross functional has established the need for adapting leadership practices to local context.

In his pioneering work on geographical cultural environments ‘Cultures Consequences’, Geert Hofstede identifies four main geographical cultural drivers for work related values in over 40 countries. They are:

  1. Power distance: Social inequality. The extent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally.
  1. Uncertainty avoidance: deals with a society’s tolerance for uncertainty and ambiguity. It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations.
  1. Individualism versus collectivism: is the degree to which individuals are integrated into groups. On the individualist side we find societies in which the ties between individuals are loose: everyone is expected to look after him/herself. On the collectivist side, we find societies in which people from birth onwards are integrated into strong, cohesive in-groups, in which people look out for one another and organizations protect their members’ interest.
  1. Masculinity versus femininity: Masculinity reflects a preference for achievement, heroism, assertiveness, work centrally and material success. Femininity reflects the values for relationships, cooperation, group decision making and quality of life. Both men and woman subscribe to the dominant value in masculine or feminine cultures.

On the website http://www.geert-hofstede.com/ you can check the scores on the four cultural drivers for over fifty countries. The country preferences might have impact on how leaders in different countries create a trusted and respectful environment and deal with important behavioural S&OP/IBP principles like open and honest communication, transparency, conflict resolution, meeting discipline and coaching to improve. From my own Western viewpoint and experience I’ll discuss how these four principle S&OP/IBP behaviours can have other meanings for different cultures and offer some guidelines on how to approach cross cultural S&OP/IBP implementations.

1. Open and honest communication

In my 2011 S&OP pulse check, 142 participants from over 30 countries indicated that the main reason to implement S&OP/IBP is to improve cross functional communication. Communication in S&OP/IBP meetings needs to be open, transparent and honest to bring all issues and information to the table. If this is not the case decision making and therefore the S&OP/IBP process will be less effective. For communication to be open and honest we need a trusted environment. It is the company leaders who have to establish this environment. When communicating across geographies leaders have to take in to account how some cultures prefer to communicate.

In S&OP/IBP meetings we have to ask and answer questions to come to consensus and make decisions. If we view this from a cultural perspective, there are two ways cultures respond to questions or ask questions. The American culture as well as the Dutch culture will go directly to the point, both in asking and in answering questions. These are specific or low context cultures. On the other part of the spectrum, cultures in southernEurope,AsiaandJapan, will circle around the point, talk more about context, before actually ask or answer the question. These are diffuse or high context cultures. The specific culture wants to go straight to the point or business deal and might perceive the diffuse culture as not coming to the point and wasting time. The diffuse culture might perceive the specific approach as too direct, impersonal and pushy. These different perceptions might lower trust levels between the cultural S&OP/IBP parties and hence negatively impact open and honest communication and therefore effective S&OP/IBP.  In a cross cultural S&OP/IBP meeting where we ask and answer many questions to try to solve issues and make decisions on our business, we have to keep in mind what the preferred cultural way of answering or asking questions is.

2. Conflict resolution and consensus:

In a monthly S&OP/IBP cycle, we don’t always agree across functions or business units and we have to solve conflicts to come to consensus. If we do this in a cross cultural environment we have to keep in mind how different cultures prefer to solve conflict and adapt our behaviour to that. In masculine or assertive countries likeAmerica, it is acceptable to resolve conflicts through relative more aggressive means and with a good fight: Let the best man win! In feminine countries like theNetherlands,DenmarkorSweden, the preference is to resolve conflicts through negotiation and compromise. Southern European countries will be more emotion driven in discussion, where Northern European countries tend to be more factual.

As supply chain manager in a beverage company, I once received a letter from an American customer. Signed by the vice president of supply chain and a lawyer, this customer threatened legal action because of one late delivery. My first reaction was; ‘why didn’t this guy just call me?’ As I never had any issue before with this customer, my Dutch expectation was that I would get a call to discuss the issue, understand the issue and offer my help to resolve it. This is what Hofstede calls masculinity versus femininity. My Dutch feminine or nurturing expectation was to get a call to solve the dispute. The American approach was masculine and in my perception very aggressive. In masculine or assertive countries like America, it is acceptable to resolve conflicts through aggressive means and with a good fight. Hence America has the highest rate of lawyers per capita in the world. In feminine countries like the Netherlands, Denmark or Sweden, the preference is to resolve conflicts through negotiation and compromise. Threatening with legal action is not part of the preferred business dialogue to solve issues.

3. Meeting discipline

Personally, I like to end an S&OP/IBP meeting with a roundtable to provide feedback as this can be an important part of S&OP/IBP communication to continuously improve effectiveness of S&OP/IBP meetings. In individualistic cultures like Australian, American and Dutch cultures this is no issue. In more collective cultures like Japanese, Asian and southern European cultures, there is no preference to give feedback in group form. These cultures don’t want to insult the group or lose face by making a critical comment in front of superiors. Feedback is preferred in person. Therefore, when leading cross cultural S&OP/IBP, we have to be cultural intelligent and apply the most effective approach on gathering feedback depending on the cultural environment we’re in.

On feedback maybe Fons Trompenaars, author of the book Riding the Waves of cultures, gives the best example himself: ‘I try to avoid asking a Dutch audience for criticism after one of my workshops; the experience is much the same as being machine-gunned. Afterwards, however, they tend to ask the corpse for the next date it will be available. In contrast English and French managers will make a few mild suggestions in a context of positive congratulation, never to be heard of again.’

Process and meeting discipline and discipline in general is an important factor for continuous improvement. According to Collins, discipline is also one of the features that define great companies. Process discipline is seen as one of the top three S&OP/IBP roadblocks in the 2011 S&OP pulse check. Discipline comes back in many ways; in S&OP/IBP project deliverables during implementation, in gathering data in time, sticking to meeting agendas and meeting timings or following of agreed communication lines are some examples. But the definition of discipline gets harder when you implement S&OP/IBP across geographies.

Imagine jumping a queue inEngland, all hell would break loose. On the other hand, if you don’t protect your position in a queue inItaly, you’ll never get served! For an English person, standing in an Italian que must be horrible. But both countries have in common that in their communication they provide feedback in an indirect way, circling around the main message. To cross a red light as a pedestrian inSwitzerlandis not done, but in theNetherlandsit happens all the time. Still both countries show similar discipline in starting their meetings on time and stick to the agenda. In southern European countries likeSpainandItaly, time is perceived differently and they will stick less to meeting timings and agenda’s then Northern European countries. Different cultures are disciplined in different ways. We have to keep this in mind if we expect S&OP/IBP discipline in a cross cultural environment.

4. Coach to improve

In a trusted environment where we respect each other’s opinion, cross functional coaching can be a powerful way to share knowledge, create shared interests and collaborate to improve our S&OP/IBP process. In an environment like this we can engage pro-actively with peers, superiors and subordinates across functional areas and provide our point of view on improvement opportunities for the other person, function or part of the S&OP/IBP process. Coaching to improve can drive improvements throughout a company across functional boundaries.

In low power distance cultures, a leader or manager is seen as equal and it is more likely to provide each other coach to improve feedback. A subordinate in a low power distance culture can provide a process or communication improvement suggestion to a superior.  Personally, I have given feedback on behavioural improvement opportunities to a superior and board member. This would not be possible in a high power distance culture.

In high power distance cultures, subordinates are more likely to only accept feedback from their superiors, less from their peers. It’s very unlikely to provide coach to improve suggestions to a superior in high power distance cultures like Arabic and Asian countries. A coach in Asia is not seen as equal. He or she is seen as a respected elder or teacher. This status is ascribed from the social hierarchy present in Asian society. Personally, I have been a mentor for a similar aged peer. This would be very unlikely in high power distance cultures.

Asian collectivism and group thinking on the other hand, makes it easier to have common collaborative goals and work as a team towards them. In individualistic cultures it is more likely to be side-tracks by personal or functional goals and the associated political games. This leaves the question open if coach to improve as S&OP/IBP behavioural principle is more important for individualistic cultures then for collectivistic cultures.

These examples show that these four S&OP/IBP behavioural principles can have different approaches in different geographical cultures. As you can change a company culture, but you can’t change a country culture, learn to adapt if you want to be effective in leading global S&OP/IBP. The following guidelines might help you:

  1. Design globally, implement locally: design process and technology globally, but take local culture and behavioural preferences in to account when implementing. Get the local HR team involved for change management, communication and knowledge of the local culture.
  2. Create cultural awareness: Train your S&OP/IBP implementation or S&OP/IBP process teams in different behavioural aspects of cultures and teach how to reconcile behaviour between cultures. There are many books and training courses available.
  1. Listen and measure: Listen to local HR and S&OP/IBP stakeholder feedback during and after meetings and collect this feedback in a structured way so you can track it. Measure S&OP/IBP engagement across different countries as part of company engagement surveys and identify if different levels of engagement can be contributed to cultural aspects.
  1. Communicate: make sure you let the local S&OP/IBP stakeholders know that the cultural aspect of S&OP/IBP is part of the S&OP/IBP implementation and continuous improvement. Keep them updated on what you are doing about it to keep their involvement.

Many articles and whitepapers have been written on how to overcome the process and technology aspects of S&OP/IBP. Not many S&OP/IBP whitepapers have been written on how to lead to overcome cultural aspects of S&OP/IBP. I hope the four articles in this series provided you with some thoughts and guidance to lead in cultural and behavioural challenges when implementing and sustaining effective S&OP/IBP, either locally or across the globe.

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