Trust – A Lubricant in Human Relations

Everywhere in our human society, trust works as a psychological link between us. Were there no trust, an individual would become more defensive and exploitative for sure. In The Harvard Business Review’s “Take the Money—or Run?” the gas and oil pipeline startup Petrolink is pressed for the decision of whether or not they will make a deal with a Polish VC firm, BRX Capital. BRX’s offer looked very attractive to Petrolink’s founders, Robert, Karl, and Nigel. Nonetheless, after having witnessed BRX’s deceptive alterations to the antidilution clause, those founders came to see BRX as untrustworthy. The deal with BRX is risky enough to harm this startup business by creating ethical issues, involving them with the East European politics, and even messing up the founders’ relationships.

Even though BRX has not confessed, it is obvious that they are trying to take advantage of the deal. They, furthermore, did not ask Petrolink a barrage of questions as the other VC firm, London Development Partners, did, meaning that BRX is not interested in a deeper commitment to Petrolink. These facts implied that it is quite hard to build win-win relationships. Some may say that trust is a mutual pipeline between stakeholders for which everyone should be equally responsible. The thinner the “pipeline” is, the slower the communication flows. A weaker link of trust will result in a leak of profit. Petrolink must have a sturdy and thick connection as LDP is trying to make.

Apart from the ethical viewpoint, as the commentator Charalambos Vlachoutsicos points out, the gas pipeline industry in Eastern Europe has complicated political aspects. Due to the historical importance of the strategy on raw materials in terms of national defense, Petrolink’s new gas pipeline will attract “more attention from governments,” including Russia and Gazprom. Robert and other board members must sniff BRX’s real intentions and figure out who has been pulling the strings in this deal. Petrolink would have very little chance to win this psychological warfare against the experienced, crafty competitor.

The deal with BRX will also likely lead to a rupture in relations between Petrolink’s founders. Each founder has a different background; Robert has experience in several jobs as CEO, while Karl and Nigel are familiar with the oil and gas industry. Robert is scrupulous about BRX’s behavior, whereas the other are more or less obsessed by their job security. When their interests diverge, Petrolink will naturally break up. Therefore, it is time for them to discuss Petrolink’s ideology again. If their business is not distinctive enough, they should return to their old jobs since it will be swallowed by another competitor, as Karl worries.

To avoid tremendous undisclosed risks, Petrolink must not make the deal with BRX. This Polish firm seemingly has hidden agendas, which will harm and eventually culminate Petrolink’s adventurous business. The founders also need to be aware of political stakes. They will never overestimate the clout of Party members. Trust among the founders’ team, in addition, is essential for their success. The deal with BRX might demoralize Robert, causing a rift between the founders. The other firm, LDP, seems more reliable, but it will require more time to brew trust towards each other. Far before building actual gas pipelines, Petrolink needs to construct heart-to-heart pipelines between stakeholders, which facilitate and accelerate their business like a good lubricant.

References

• Take the Money—or Run? - Harvard Business Review

The Knot Being Unraveled – JV at a Tipping Point

There is a stereotype that East Asians get married for their parents and the society, whereas Americans do it for themselves. Scrutinizing Harvard Business Review’s “Trouble in Paradise,” one will easily find that such cultural differences split by the Pacific Ocean may affect not only a marriage of individuals but also that of companies, namely a joint venture. In this case study, Mike Graves faces difficulty keeping up a joint venture in the textile industry. Throughout the five years of his career as the general manager at the Zhong-Lian Knitting Company joint venture in China, he has demonstrated conformity to Chinese customs as well as the achievement of turning a profit; however, his boss on the American side, Bill Windler, has never been satisfied with him, wanting a higher ROI in the short term. Qinlin Li, the top executive on the Chinese side of this joint venture, on the contrary, has expressed his ambition to elevate Zhong-Lian into the national brand by proposing a new acquisition, which is apparently not profitable. In order to address this complex situation, Mike must formulate shared goals as soon as possible and reconsider the American side’s involvement in this 50/50 joint venture, proactively.

Perhaps the most urgent task Mike has to accomplish is to settle specific goals that benefit both sides of the joint venture: Suzhou First Textile Company in China and Heartland Spindle Company in the United States. The widening divergence of their purposes is severe enough to ruin their relationships. To fix this problem, he should step back to the fundamentals. He needs to re-read the original intensions of the joint venture and assess what has changed in the past ten years. For instance, as the average salary in China has increased, China might be no longer an ideal place for mass production. Rather, China may have market potential for increasing Zhong-Lian’s sales. Mike must declare new goals, which will help make a decision on the latest acquisition proposal and reach a secure consensus with Qinlin.

It is also essential that Mike persuade Bill and Hartland to change their minds. Bill’s suggestion for automation and lay-offs seems sensible at first glance but would not work well in China. According to a study by professor Erin Meyer at INSEAD, there is a significant difference in how people grow trust between the American and the Chinese. In contrast to Americans, who build trust in a task-based fashion, Chinese slowly brew trust by deepening relationships and sharing personal time. Were Mike to lay off a thousand of his employees, he would immediately lose trust from others. Even the government might penalize him, leaving a severe impact on Heartland. As his wife says “[d]on’t they understand that the Chinese way of doing business is different from the American way,” Mike needs to convince Bill about what and how the Chinese culture values.

If Mike finds making an agreement between Suzhou and Heartland difficult, it is time to restructure the balance of the two companies’ investments. Even though he has brought Zhong-Lian into the black, he feels this joint venture unfair, depicting the continuous expansion as “a drain on cash.” Mike, therefore, could decide to reduce Heartland’s share or exit from China completely. As commentator Paul W. Beamish at the University of Western Ontario mentions, the Japanese see the Chinese market as less attractive than before. One statistic shows the clear trend that Japan shifts investment from China to Southeast Asia: the growth of their investment in China has leveled off, while the amount invested in ASEAN(Association of Southeast Asian Nations) has tripled between 2010 and 2015. It can be a decent option for Mike to cease Heartland’s involvement in China, whether gradually or abruptly, and seek an alternative partner.

A final proposition is that Mike not be an observer but an initiator. He might have realized that Qinlin is more respected by both the government officials and the employees than he is. Without Mike’s approval, Qinlin spoke out about the new potential acquisition at their tenth anniversary party. Nonetheless, Mike must show his strength as the top executive of the joint venture. In a multicultural organization, it is a good idea to define its own culture code, a manifest-like document that succinctly illustrates the organization’s philosophy. For example, a culture code includes what the final goal of the company is, how to respect each other, or what makes their products distinguishable. The key here is to bring some of the American culture into the company; a blend of cultures stimulates employees. Mike, as a matter of fact, is on the right track in that he has introduced “Total Quality Management” and “Six Sigma.” What to do next is to announce his vision by using his own words.

After experiencing a successful ten years, Zhong-Lian Knitting Company is at a tipping point. Mike must retighten the “Chinese knot of red silk,” the symbol of cooperation, by seeking goals to which each side of the partners consents. This is not easy. Firstly, he needs to map out a unified strategy for the Chinese-side partner. Since the Chinese trust others not from the head but from the heart, employing motivational devices such as a culture code would be helpful. Secondly, for task-based trust-building Americans, he has to convince them by logically detailing the cultural differences between China and the United States. Only if Mike finds the equilibrium point in these cultures will this “marriage” bear fruit.

 

References

• Trouble in Paradise - Harvard Business Review
• Book – Erin Meyer
• Japan Shifts Investment From China to Southeast Asia - Bloomberg

Conservative or Risk-taker

Living in the United States, I see many American pedestrians ignore crosswalk signals regardless of their ages. Even if a signal shows red, they do not stop walking and cross an intersection, whereas the average Japanese stops until the sign turns no matter if there is a car. Furthermore, quite a few people cross the road when they are not in a crosswalk. This is one cultural shock many Japanese experience in other countries.

Are Americans risk-takers?

Some Japanese might think that Americans lack common sense.

While I contemplated this phenomenon, several reasons came to mind.

Firstly, everyone should know that obeying rules is generally safer than breaking them. Most Japanese people abhor needless risks. If I recognize that there is 0.1% chance of danger, I will not take a risk unless there is a worthwhile benefit. (But actually I will categorize myself as a risk-taker.) Japanese people believe in the proverb, “More haste, less speed.” We know that only one mistake can wreck our lives. Be conservative and stay safe. It is true that the Japanese are more conservative than others, but I do not think this is the only reason why we embrace such strict adherence to rules.

Secondly, if you do not obey signals in Japan, you will be blamed for violating conformity. Ignoring a road signal is seen as a kind of a petty offense even for a pedestrian. We have been repeatedly taught to obey rules, including road signals, by parents and teachers since we were young. Keep up with ethics. A moral hazard can be so susceptible that it ruins the entire society. Such social pressure makes people stay obedient, and actually I feel ashamed when I go against a red light in Japan. In the US, on the other hand, no one except a honking driver blames you when you cross the road during a red light.

Some Americans say, “Drivers are watching us, so we are safe.” What? Are you a child? What a selfish idea! I believe that Japanese people always try not make others upset. This will eventually help keep you out of trouble. When you offend another person, you might be offended as well, which is not a good strategy to survive in an enclosed community such as Japan. A driver is no different. We obey road rules because we do not want to offend drivers, too. As a consequence, drivers trust pedestrians, and a society becomes more orderly.

A final perspective is that God is always watching you. Do I believe in God? I do not know, and I do not have a specific religion. But we have to admit that we are confined in these sort of beliefs. For instance, before and after eating, we always thank nature and living creatures. We admire the elderly and pray for ancestors. We visit temples and shrines. We never depreciate “penny” coins, as some Americans do so, because it will incur divine punishment. We, therefore, may think that ignoring crossroad signals is an immoral behavior, which might make God unhappy. This kind of belief implicitly affects our daily life. In other words, it is a relief in Japan that we obey this rule and persevere the unwilling red-signaled time at a crosswalk.

Do you stop at a red light?

Rediscovery

She resembles the sun.

We cannot live without her.
She alters her face every day.
We periodically see the same landscape over generations,
yet life is so short that no one can remember that.

He resembles the moon.

We rediscover him in each decade.
Only if she helps us can we see him.
He frequently changes his appearance not because he is evolving
but because we are revolving.

We call her nature.
We call him artifacts.

“The Culture Map” – the Compass in the 21th Century

Ambitious navigators in the Age of Discoveries used compasses in order to indicate where they were and find the new world. In this century, we already have an accurate world map and we can identify the location in a second just by using cell phones. However, there are many misunderstandings with cultures worldwide, resulting in having a difficult personal relationship or making business unsuccessful. We definitely need another tool to confront the tidal wave of globalization. It is “The Culture Map.”

Before I came to Boston, I read a book, titled The Culture Map. Although it functions as a guide for business people who work in a multi-national environment, I believe it is quite instrumental for all professionals to help them understand other cultures. The book was published in 2014 and written by Dr. Erin Mayer, an American professor, who was selected by the Thinkers50 Radar list as one of the world’s up-and-coming business thinkers in 2015. She developed eight scales to visualize culture traits by studying for more than ten years and interviewing thousands of business leaders. This book provides the eight scales−communicating, evaluating, persuading, leading, deciding, trusting, disagreeing, and scheduling−as well as dozens of case studies for each scale, and practical solutions so that we can learn easily. Thanks to her careful investigation and acute insights, I found not only the difference of cultures but also our own culture itself; just as fish don’t know they are in water, people often find it difficult to see and recognize their own culture.

Erin is no exception in that. She admits that she had never noticed her American tendencies until a Chinese journalist, Chen, pointed them out in a meeting. Although he is quite an articulate, extroverted, and very knowledgeable person, he doesn’t speak out about anything during a meeting with her customer. She gradually gets frustrated, upset and disappointed with him thinking he is unprepared. At the end of the meeting, she makes mention of this. He begins to explain things clearly, and the meeting turns out thoroughly successful. He was patiently waiting for her to call on him, showing he is a good listener by keeping quiet. Interrupting one’s speaking is considered to be very impolite in China. “You have two eyes, two ears, but only one mouth. You should use them accordingly,” says Chen. Erin realizes she has been speaking out so much. This episode totally meets my experience. Americans may have stereotypes of “the shy East Asians.” It is a fact that Americans speak twice as many words as Japanese do on average. I, however, don’t think I’m too shy. I just need more silence before jumping in.

Reading this book, I rediscovered how unique a culture we Japanese have. Erin illustrates that Japan is the highest-context country in terms of communicating. We have developed our culture with only one language and only one nation on our isolated island over two thousand years. Consequently, we are sharing deep context, and we incline to be emotionally unexpressive and avoid confrontation. If someone speaks the words “no, thank you,” in Japanese, it can mean either yes or no. It depends on the context and we are implicitly trained to communicate between the lines. In a high context culture, we prefer fuzzy expressions to clear ones. We do not speak a lot. We do not have to answer to a question directly, and even accept leaps in logic. This is because a listener is expected to have a large assumption. On the other hand, the United States is the lowest-context country in the world. The speaker always has a responsibility to explain things clearly. They think the more explicit answer is the better and abhor keeping quiet. Even though I am struggling with this gap, I try to use words as clearly as possible when I speak English.

The most interesting scale in the book is the trusting. Erin mapped countries in a range from task-based to relationship-based. In a task-based country like the United States, trust is made by accomplishments, while in a relationship-based country like Brazil, China, and Japan, trust is developed very slowly only by personal relationships so that they can trust them by heart. In my work experience, drinking together and having social events are the best way to brew trust. Since I have lived in the United States, I was surprised that Americans are so friendly to strangers. However, Erin concludes that friendly does not equal relationship-based. She states that there are two cultural tendencies and describes them as a peach and a coconut. In peach cultures, people tend to be soft with others they have just met, but after some interactions, you may suddenly get to the hard shell of the pit where the peach protects their real self. In coconut cultures, people are more closed with those they don’t have friendships with. It takes a while to get through the initial hard shell, but relationships last longer. Erin also says that the task-based trust can quickly drop, so American companies sometimes made a crucial decision to their employees or customers. This explanation makes a lot of sense to me.

I was curious why people from some countries like China, Brazil, and Saudi Arabia are not very punctual. The scale of scheduling is a key. Germany, Japan, and the United States are ones of linear-time countries, which means that time flows linearly, and we are ruled by a clock. On the other hand, some countries have flexible-time perception. Erin argues this is connected to the country’s fluidity. For example, political systems and financial systems are somewhat unstable there. Transportation or water supply might frequently cause problems. In the Middle East, the schedule is often altered by religious leaders or events like a sign from the moon. Successful managers ought to ride out the changes with ease and flexibility. In those countries, people believe the fixed schedule is even inefficient, and the schedule must be flexible. Personally, I feel comfortable with punctuality that Germans and Americans have rather than tardiness. Even though we need to recognize those differences, we had better try to conform to a culture that we are in.

In school, I meet students who come from many different countries, having different cultures. Of course each person has his or her own background and different characteristics; however, only if we understand and respect other cultures can we build a truly good relationship. Erin’s words make my comprehension of others easier. By using neat concepts of scales such as communication, trusting, and scheduling, I am now able to visualize cultures underlying every person, including me. In addition, I was impressed by this book because Erin mentions much about Japan. While our faces and colors are similar to those in China and Korea, we have completely different cultures. I highly recommend this book, The Culture Map, to everyone, especially to the language teachers of expatriate students. This compass will surely help your exploration of life.

  

References

• Erin Meyer – Author of The Culture Map