Frontiers

The Need for Culture Neutrality

Companies today work with an increasingly diverse array of people. To thrive, organizations need culturally neutral, globally coherent leadership standards.

Amit S. Mukherjee Reading Time: 6 min 

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An MIT SMR initiative exploring how technology is reshaping the practice of management.
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Digital technologies aren’t just strengthening customer relationships, reducing costs, and creating competitive advantage. They are changing how we organize work, and thus, how executives must lead.

And while unprecedented technological change might appear to present unprecedented challenges for leaders, that is not entirely the case. Similar technology-driven revolutions occurred twice in the 20th century, and each provides important lessons for leaders.

The first occurred in the 1910s, when American businesses adopted workflow analysis technologies such as time and motion studies and Gantt charts. These tools sharply restricted the breadth of individual jobs and created functional departments with hard boundaries. Harsh boss-knows-best leaders, who prescribed work in excruciating detail, inevitably arose.

The second occurred in the 1980s, when the Japanese challenged these CEO-centric practices. Japanese companies deployed quality technologies (like statistical process control) that made them competitive enough to bankrupt reputable American companies; for example, American Motors Corp.’s demise in 1987 reduced the auto industry’s “Big Four” to the “Big Three.” American executives didn’t oppose the new technologies so much as they resisted the organizational and leadership changes they required, including cross-functional teams and empowered subordinates.1

When change finally did come, decades of ironclad beliefs died out very quickly. Teams became basic organizational building blocks, “Break down the silos!” became the new dictum, and leaders learned that they didn’t have to demean subordinates to get good work out of them. Revolutionary technologies often expose shortcomings of existing organizational and leadership models, and the pioneering efforts of a few companies can provide effective examples for widespread emulation. Eventually, and with surprising rapidity, new ideas bury old ways. When I ask executives if they think teams were common in the decades before the 1980s they say, “Yes,” even though they really weren’t.

Digital technologies, too, are producing profound change in the ways we work. The transformations they are enabling, even requiring — such as the distribution of work over time and across geographies — have become quickly well established. Executives now run projects and businesses that span the globe, incorporating both internal and external teams. The new leadership challenge is how to effectively manage the “networked” organization.

The Rising Need for Culturally Neutral Leadership Standards

The organizational impact of digital technologies undercuts two core assumptions of legacy leadership models2:

Outdated Assumption One: Most people working together belong to a single company and are subject to the same organizational structure, policies, and processes. In actuality, many projects today bring together people from both different companies and different cultures. For instance, the creation of the Boeing 787 Dreamliner was the result of a collaboration between four American companies, four Asian companies, and five European companies.

Outdated Assumption Two: Most employees have a common cultural, lingual, religious, and political heritage. In fact, many companies today are made up of people from a broad variety of cultural backgrounds. And leading companies understand this: For instance, IBM is conducting research on cognition, key to its future, in six very different countries — the United States, China, India, Ireland, Israel, and Switzerland.

Companies that still operate according to outdated assumptions produce leadership standards that implicitly embody “home country” cultural values. Employees from non-mainstream backgrounds or other nations must adapt and conform, or forfeit the right to lead. Even companies renowned for progressiveness aren’t immune: In the 2000s, Johnson & Johnson considered the quality of being “indecisive — shows reluctance to commit to decisions” a career derailer.3 This standard could discount, however unintentionally, the deliberative decision-making common in the Asia-Pacific region, potentially limiting opportunities for competent Asian executives.

History warns us that mastering digital technology won’t determine which companies become corporate winners. Instead, making the necessary organizational and leadership changes will. Because companies employ, or partner with, more diverse peoples today, they need culturally neutral, globally coherent leadership standards. These standards should promote needed outcomes (e.g., “make decisions”) without prescribing behaviors (e.g., “is decisive”) that are countercultural to many peoples. Inevitably, significant advantage will accrue to companies that ready their people for truly global leadership — and do it earlier in employees’ careers than ever before.

Japanese companies such as Hitachi Ltd. and Sony Corp. highlight the dangers of not making these cultural changes. These companies, which had become industry leaders, ceded the dominant positions they had achieved. They developed the core ideas of teams and inclusionary leadership, but they couldn’t extend these concepts to attract and retain talented non-Japanese executives.4 Top Japanese executives privately admit that the digital world is acutely accentuating this critical vulnerability.5

The good news is that pioneering companies are increasing efforts to solve the culture challenge. In 2006, after more than 300,000 global employees participated online in redefining IBM’s values, then-CEO Sam Palmisano assembled a diverse team of senior executives to define a “Global IBMer.” In 2013, J&J began rolling out globally relevant leadership standards, which now apply to 70% of its workforce. Because promotion rates of Asian executives in Western companies lag those of their Western peers, Unilever is focusing on raising internal awareness of “Asian leadership.”6

The bad news is that for now, there is a lack of a “complete” model to emulate. IBM’s leadership team in 2016 resembles the one it had in 2008. J&J’s union agreements will preclude 100% coverage of its new leadership standards.7 And Unilever’s approach is ultimately an interim solution: In a digital world, Asian leaders must be able to rally non-Asians. No one said this change would be easy.

Even so, companies must move forward quickly. Because digital work is already distributed globally, cultural biases in leadership can seriously hurt both projects and the companies behind them. There’s emerging evidence that Asian executives in general feel disconnected from their Western employers, just like Westerners do from today’s Japanese companies.8 Companies should draw inspiration from the pioneers, but learn, test, and scale ideas that fit their circumstances. Since the average corporate life span has dropped below that of humans, these efforts could well impact their survival.

Senior business leaders should lead these initiatives. Last year, Daimler AG’s board commissioned a project staffed by executives from around the world to rethink leadership standards. IBM and J&J also began at the top in making their changes, as did most companies that successfully deployed quality technologies early. Efforts should involve many culturally diverse people. The numbers will provide the critical mass necessary when debate occurs over a legacy standard’s disparate impact on different peoples. Diversity will likely produce an outcome that, if not ideal, will at least be acceptably neutral for many.

Proactive Executives Can Create Conditions for Change

Pervasive heterogeneity can tear global companies apart, and no legacy standard should survive if it doesn’t pass the “How can this hurt us in a digital world?” hurdle. Similarly, no new standard should be adopted without passing the “How will this bind us together?” hurdle.

Good executives don’t need a CEO’s permission to be self-reflective and proactive. Openness, regular conversations with those who are different, and critical thinking can enable anyone to independently and immediately apply the essence of Unilever’s approach: understanding that executives from different parts of the world can be equally effective despite having very different leadership styles, as long as these styles are culturally appropriate in their parts of the world. Making one’s leadership behavior culturally neutral ahead of the organization’s declared policy will create conditions for change and accelerate the policy’s ultimate deployment. It may also jump-start an executive’s career.

Topics

Frontiers

An MIT SMR initiative exploring how technology is reshaping the practice of management.
More in this series

About the Author

Amit S. Mukherjee is a professor of leadership and strategy at IMD’s Singapore campus. He has led technology development teams, served as an executive officer of a public company, and advised CEOs of global companies on strategy and organization design.

References

1. R.A. Heifetz and D.L. Laurie, “The Work of Leadership,” Harvard Business Review (Dec. 1, 2001).

2. By “legacy leadership models” I mean the major standard models that are taught implicitly or explicitly to business students and executives, such as transformational leadership, charismatic leadership, servant leadership, and Level 5 leadership, and also most standard personality profiling tools — such as DISC, Hogan, and TMP assessments — that are used in conjunction with such models.

3. This was one of the negative attributes in the standards of leadership J&J used to assess and provide feedback to executives during the past decade. J&J executives shared the standards with me while my employers were providing professional services to them.

4. C.A. Bartlett and H. Yoshihara, “New Challenges for Japanese Multinationals: Is Organization Adaptation Their Achilles’ Heel?” Human Resource Management, 1988, 27, no. 1: 19-43. In particular, see pages 25 and 26, which describe the challenge of assimilating foreign executives when the primary language of decision-making was Japanese, and the related overreliance on Japanese expatriates.

5. I’ve had direct conversations about this problem with participants in multiple executive programs and with senior human resources executives who are trying to solve it.

6. E. Sogbanmu, “Developing Global Leaders in Asia a Challenge: Unilever COO,” Future Ready Singapore, Oct. 16, 2014, www.futurereadysingapore.com.

S. Majid, “Charting Your Leadership Map at Unilever,” HRM Asia, Nov. 20, 2014, www.hrasia.com.

7. “Leadership Development & Performance Management,” accessed April 20, 2017, www.jnj.com. See in particular “Over the past three years, Johnson & Johnson has undertaken a massive effort to transition from over 200 performance management systems globally, to one global system. In the successful launch of our Performance & Development (P&D) approach, we discovered that a globally consistent way of doing things successfully across the entire organization is possible. Approximately 71% of employees are being assessed using the new approach, including 100% of employees at the management level and above; the exceptions being those employees in manufacturing roles and covered by collective bargaining agreements.”

8. “Demystifying the Market for Executive Talent in Asia,” Corporate Executive Board Co. and Russell Reynolds Associates, 2015, www.russellreynolds.com. “Closing the Leadership Gap in Asia,” CEB Asia HR Leadership Council, 2011, www.cebglobal.com.

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Comments (7)
Robert Jones
Frode Hvaring, there are a number of ways to apply neutrality. The definition to apply is "An Attitude of Impartiality."  The neutral is not indifferent to the conflict, but treats parties in conflict in a way that does not create a material advantage for one over the other.  Neutrality is anything but compromise.  This is where the "harmonization of world wide practices" directly related to neutrality can truly be helpful at operational levels, rather than purely through esoteric and theoretical constructs like implicit bias.  I would welcome the opportunity to share the concept of a CultureNeutral® Framework which Professor Mukherjee has endorsed, and how it is implemented for operational improvement of organizational cohesion, relations and performance.
Frode Hvaring
While I find the proposal of Cultural Neutrality an interesting construct, I still remain skeptical to its concrete application.
Cultural Intelligence (CQ) is supportive to the management of differences, cultural diversities and I have used the CQ approach and tools with success in a few settings, without "neutralizing" the cultural differences, even when they were in opposition.
The word neutrality seems to indicate a place in the middle, somewhere between the extreme poles. Although this kind of compromise can be handy in many situations, I believe it's more useful to focus on harnessing contemporaneously the polarized cultural elements, the complexities present in a given situation.
By wanting to always adapt and "neutralize", one loses the riches of diversity and serendipity. The solutions may be less innovative and less sustainable.
Except perhaps for Values, Business fundamentals and Ethics, as well as communication tools, where indeed a certain harmonization of world wide practices can be helpful... if well accompanied by the right cultural sensitivity.
Robert Jones
JAMES HEMSATH, it is easy to understand the fault in believing that that "neutrality" is somehow equivalent to "moral isolationism."  Those who are unfamiliar with the application of that term of art in international/global commerce and international conflict often suffer the misconception that neutrality somehow equates to a cultural laissez faire, indifference or rejection of involvement in world/cultural affairs.  Especially for those engaged in wars/conflicts, like advocates of "diversity" variants, the idea of failing to take sides in the conflict is anathema. However, it is a badly mistaken view, and creates assumptions . 

The fundamental operational definition of neutrality is 'an attitude of impartiality.'  When we look at a nation like Switzerland, or an organization like the International Red Cross, or United Nations Peacekeeping Operations (DPKO), we see entities that center on a values system based on impartiality, specifically neutrality. In fact, likely every nation on earth has a neutrality policy (managed and exercised in different ways), and those kinds of policies have usually served them well over time.  The United States early history presented opportunities for neutrality, and the first President established the first American Neutrality in 1793...and the history of U.S. neutrality is quite fascinating. 

The somewhat myopic view of practitioners in The Diversity Paradigm has beclouded the issue of cultural neutrality. Like most belligerents, the general philosophy is that "if you're not for me, you're against me." It is the classic binary ally-enemy construct that perpetuates conflict, and ultimately leads to total warfare in which there is no neutral space. That unfortunate position of diversity practitioners is twofold.

First , "diversityism" is coming to represent the idea that anything and everything that is culturally homogeneous is by nature a bad thing, and must fixed.  Your comment validates that The Diversity Paradigm praxis is promulgation of that idea. It has been effective, if not subtle.

Second, and perhaps most importantly, a "differences-based" mindset in which we are taught to meet one another first and foremost on the basis of our differences has proven itself a dismal failure in the USA, and that epic failure of The [American] Diversity Paradigm is spreading around the globe. Promoting a view to differences as an entry point and process path for optimum results simply has no basis in science or history.

While I have only the greatest respect for Hofstede's analytical work, and others' like him, Professor Mukherjee and others around the world are recognizing that being draw in to the intercultural conflict and making attempts to resolve it in business processes will be about as fruitful as efforts to resolve Middle East conflict has been with a focus on resolving their differences within a single state. 

Words do indeed create worlds, Sir. I could not agree with you more. Particularly since the 1890s, the global community has adopted quite formal definitions of the term neutrality as it relates to commerce and conflict, and can rest assured that it means anything but laissez faire or moral isolationism.
Bill Burnett
Back in the 1970s I was working internationally with people from different cultural backgrounds. We also formed several teams that in today's lingo would be 'cross-functional'. In my first management job, I had Russians, Filipinos, Latin Americans, Western Europeans, Armenians, Middle Easterners, and Americans working with me. We worked hard together and had fun together. If the digital impact has done one thing well it is to lessen the importance of cultural differences as those of us in business are exposed to lots of interaction, digital and otherwise, from customers, suppliers, competitors and co-workers from all over the globe. Today I work with small/mid-sized manufacturers in the middle of the USA and the folk who do business globally and have a strong sense of our common humanity and how to leverage our sameness and accommodate our differences. They are not focussed on defining top down standards, but rather figuring out how to allow more and more control on the front-line. They are focussed on shifting the motivational model away from top-down pain, fear, and gain to more peer based motivators - kinship, identity, and meaning which turn out to be universal. They also try to focus on behaviors first, outcomes second. People can control behaviors, not so much outcomes. Your example, to "...promote needed outcomes (e.g., “make decisions”) without prescribing behaviors (e.g., “is decisive”) is mistaken. "Make decisions" is a behavior not an outcome. "Is decisive" is a judgement of a person (we all make decisions all the time and I suspect "is decisive" is not culturally neutral).   Neither example is particularly useful, since deciding to delay a decision is a decision. It may be that the cultural difference problem you're looking for is rarer than ever.
James Hemsath
I respectfully disagree with Professor Mukherjee's column and conclusions and while it might seem that I am parsing definitions words matter, words create worlds and we must be careful of the worlds we create.  Cultural Neutrality is not the way to go in todays global world, it may have value in a single company model such as IBM and the work that Hofstede did to define cultural dimensions, which is the point of Assumption 1, we are in a world as he describes "projects today bring together people from both different companies and different cultures".  This is the "pervasive heterogeneity" that Professor Mukherjee suggests can tear global companies apart.  As an aside, the example given about Boeing was not really an example of collaboration but rather very carefully crafted negotiations and agreement to cooperate (our national airlines will buy your plane if you build parts of it in our country).  There was no real room for collaborative effort in this negotiation and while the 787 is a wonderful, cutting edge aircraft - it ultimately was almost a year late in deliveries due in large part to these transactions.

I have just completed 2 years of research in how multiparty "teams" collaborate when working with groups from different countries (Hemsath, 2017).  One finding was that it was critical to understand and actively manage cultural differences.   You do not want culturally neutral leadership - that is the road to moral isolationism - you want to have culturally intelligent leadership.  This theory of cultural intelligence (CQ) suggests that the greater an individual’s CQ, the more likely they will be successful in developing relations with someone from a different culture (Ang et al., (2007). 

While I concur with the statement "understanding that executives from different parts of the world can be equally effective despite having very different leadership styles", I believe that the continuation "as long as these styles are culturally appropriate in their parts of the world" can lead to very significant ethical dilemmas for an cross-border, multiple organization team the author referenced in his assumption 1.  I strongly recommend the essay "Trying Out One's New Sword" by Mary Midgley (1981) for anyone working in a transnational environment.  A transnational multiparty team is not about homogeneity but, in maintaining the ability for all parties to keep their “identities” it allows people to build on very strengths those differences provide. If a team creates a barrier of moral isolationism it creates a barrier for developing the interconnectedness between participants that lead to trust and empathy.  This forms the basis of creating a true shared vision and creating an environment where collaboration can take place. 

This idea of allowing the deep discussions necessary to create an ethical framework for the team should be based on understanding our common Humanity, knowing what concepts are Preferences and being able to make the moral Judgement that Midgley point us to. This very intimate action will drive the process leading to a sense of interconnectedness of the team at a spiritual level (Mitroff & Denton, 1999).  To isolate ourselves from different cultures as articulated through the moral and ethics of those cultures is to isolate ourselves from our own identity.  We do not live and have not lived in a “sealed box, but rather a fertile jungle of different influences; all cultures are formed out of many streams, morally and physically there is only one world and we all have to live in it” (Midgley, 1981).  Training people to be cultural neutralists is a road to poor performing projects and a continuation of colonialism.
larin kamuna
Every country has other culture. so this is very helpful. 
Thanks for sharing.
Success short time
Robert Jones
Amit S. Mukherjee, you have hit upon a theme that I have used as a central theme in my consulting for quite a few years. If you search the term "CultureNeutral" you will find me. (I don't know if putting a URL in the comment is appropriate.)

I would suggest this, sir.  It is crucial for "leadership" to understand and adopt a sophisticated view of neutrality, but that is far from the only level at which it must exist in an organization to achieve the desired end. The CultureNeutral® Framework I've developed centers on organizational behavior change at multiple levels, and operationalizes the well known principle of neutrality. 

As you intimate, "The Diversity Paradigm" has most assuredly failed...and has run its course. It is collapsing under its own weight. 

The more effective alternative has been here all along. Although you said "...for now, there is a lack of a “complete” model to emulate," I would respectfully argue that "complete" hasn't been a requirement for management models, especially in turbulent times.  That said, the principle and applications of neutrality around the world and throughout modern history (the last few thousand years of it) provide far more of a "complete" picture than you might think. 

Neutrality isn't new...but it's unique as a management concept. Your post is a solid indication that forward thinking management leaders are taking another good hard look at a time-tested and time-honored fundamental principle for dealing with globalization.