Definition of cultural agility

Cultural agility is the ability to understand multiple local contexts and work within them to obtain consistent business results.  For today’s global organisations, cultural agility is the new competitive edge.

While individual capacities are important, successful organisations build an institutional level of a global mindset and skills for effectively coordinating, negotiating and influencing across boundaries.

Building cultural agility often includes making structural changes as an organisation moves from active operations in a few countries to multiple continents.  This brings about diversity of experience and thinking and this usually results in better business decisions.

Example

Crucial changes may include:

  • having board members live in different geographies.  For example, Martin Brudermüller is the Hong Kong-based executive board member and head of BASF’s Asia-Pacific operations - the German chemical company;
  • relocating division headquarters in their growth markets and away from their place of origin in order to force better understanding of customer context.  For example, 3M, the Amercan technology company, moved the headquarters of its LCD-filmmaking optical systems business to Asia in 2008.  Also Clariant, the Swiss chemicals group, is relocating the headquarters of its textile chemicals business unit to Singapore in 2011.
  • promoting executives from other regions into the global board.  For example, James Wei, a Chinese national is on the executive board of Beiersdorf (German-based skin care company), companies such as ABB (Swiss-Swedish engineering group) and Bayer Schering Pharma (German-based pharamaceutical company) have board members of Asian and Middle Eastern origin) ;
  • ensuring global representation in the talent pipeline.

While emerging markets multinationals often have an inherently better understanding of the contexts of other dynamic markets, they also struggle with building cultural agility. For example, Chinese firms going global are challenged by needing to adapt their hierarchical style that centralises decision and holds onto information in markets where employees expect to be granted responsibility, autonomy and trust. [1]

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