Tag Archives: cross cultural

Balancing Wealth and the Public Good: An Interview with the COO of Abu Dhabi’s Development Company

As noted by McKinsey Quarterly, Mubadala Development Company is a study in contrasts. An investment company with assets of $24 billion, its businesses deliver both strong commercial and social returns—reflecting the government of Abu Dhabi’s policy agenda. Its subsidiaries span multiple industries, including aerospace, energy, health care, hospitality, infrastructure, real estate, and technology—and while its sole shareholder is the government of Abu Dhabi, it has announced plans to take several of its local subsidiaries public in the next decade. This makes it a virtual incubator of companies that the government expects to play a critical part in the economy that Abu Dhabi is building.

Among the most distinctive contrasts at Mubadala is its charter’s mandate that it should not only be profitable but also lay the foundations for a diversified economy in the Emirate. Its mission is closely aligned with Abu Dhabi Economic Vision 2030, an official document mapping out the Emirate’s primary development areas from a government perspective. In an era when companies around the world seek to integrate social values and the public interest into their business models, Mubadala stands as a vivid example. Its mission and structure are built around what it calls a “double bottom line”: pursuing opportunities that could deliver both strong social returns and commercial profit. In a July 2010 interview, Mubadala’s chief operating officer, Waleed Al Mokarrab Al Muhairi, spoke with McKinsey’s Zafer Achi about Mubadala’s role in Abu Dhabi’s economic development and the trade-offs the company makes to fulfill seemingly competing mandates.

Here is an interview conducted by McKinsey Quarterly:

The Quarterly: How do Mubadala and Abu Dhabi’s development fit together?

Waleed Ahmed Al Mokarrab Al Muhairi: The Abu Dhabi Economic Vision 2030 is a directional blueprint that maps out the primary areas of development for the Emirate. Its purpose is to enable the Emirate to, among other things, shift the balance of its economy from one primarily reliant on hydrocarbons as a source of GDP to one in which nonhydrocarbon industries will play a much larger role. If you look at the different priority areas where Mubadala deploys its capital, you’ll see that there’s a very good fit between what’s articulated in the 2030 vision and what we do. We invest in highly innovative industries that play to Abu Dhabi’s strengths and competitive advantages, such as those that are capital intensive or rely on world-class logistics. Such industries help meet our aspiration to increase innovation and the role of intellectual property in the Abu Dhabi economy.

The Quarterly: How do you meld the pursuit of economic wealth and of strategic social goals in the public interest?

Al Muhairi: We look at a number of filters as we debate the Abu Dhabi Economic Vision 2030 and figure out what makes sense for Mubadala. Those filters range from goodness of fit—meaning playing to our strengths—to things like how significant a sector could be over time and the types of jobs an investment might create. We take a very deliberate approach to picking sectors, picking clusters, and understanding what’s needed to get from a large investment to a thriving, productive contributor to and, ultimately, driver of the GDP and the economy.

Take our investment in Emirates Aluminum. This joint venture between Mubadala and Dubai Aluminum is constructing the largest single free-standing smelter in the world. Phase one is already operational, and we think we’ll be able to reach 1.5 million tons per annum over the next few years, with an aspiration to be a top-three or -four producer worldwide. This investment was a good fit: aluminum is an energy-intensive business and relies on a multifaceted transport infrastructure, both of which we have. It also creates the type of employment we think will be quite beneficial for Abu Dhabi. So in many ways, it meets our priorities. Now, there are many opportunities for deals we might make to support Emirates Aluminum once Mubadala has firmly established itself in that space. For example, we want to diversify and secure our upstream supplies. We don’t necessarily have a target in mind, but we will look for potential transactions.

The Quarterly: Does any part of Mubadala invest for purely financial returns—without a strategic objective?

Al Muhairi: Yes, although all our deployments of capital, even from a financial perspective, have had a strategic twist. For example, our investment in General Electric has certainly turned into not only one of our largest, and most important, deployments of capital on the financial-investing side but also into a very strong and very strategic relationship—as a result of the framework agreement that we’ve put in place. So what started out as, “Hey, we think it would be a great idea for you to invest in GE,” ended up with the creation of a significant joint venture, Mubadala GE Capital, along the lines of a GE Capital, here in Abu Dhabi.

We have many examples of investments that start out as financial investments but take on a strategic angle. But nothing prevents us from looking at pure financial plays—and we will do so increasingly over time.

The Quarterly: How do you trade off financial returns against strategic contributions to society?

Al Muhairi: We tend not to compromise on this. Part of the thinking is that if you start making those trade-offs, you’ll end up on a slippery slope that can take you places you wouldn’t ideally want to be. So we always use financial returns as the first filter when making an investment. If it passes the financial test, we look at the strategic metrics and see if, together, the financial and strategic metrics create a cluster or businesses that make sense from an Abu Dhabi perspective.

If our shareholder asks us to do something that makes sense only from a social perspective, we’ll try to turn it around and engineer it in a manner that respects the mandate of Mubadala to produce economic returns. If that doesn’t work, we’ll go back to our shareholder and say, “We don’t believe this is the right project from Mubadala’s perspective.” And the government of Abu Dhabi and our board of directors are quite adamant about staying true to both sides of our mandate.

The Quarterly: What about the trade-offs between the responsibility to produce annual returns and long-term goals that are 20 years out?

Al Muhairi: Because of our bondholders, we are committed to being very transparent about our financials, which we release twice a year. We have our pro forma midyears and then we have final statements we release at the end of every year. We’re committed to doing that and think that’s done wonders, from a transparency perspective, for Mubadala. But we are an investment vehicle that is quite mid- to long-term focused. Our board has given us very, very clear guidance: “The shareholder wants you to think seriously about developing these clusters. We know you can’t do that on a six-monthly timetable.” So it’s important to keep yourself honest. It’s important to be transparent, hence the six-monthly reporting. But don’t lose track of your vision.

We’ve taken that advice to heart, and that’s really the way we manage as an organization. Not having the intense quarter-on-quarter expectations takes away some of the pressure but none of the discipline.

The Quarterly: Mubadala has a renewable-energy initiative, Masdar. How does that fit into your mission?

Al Muhairi: Masdar signals a commitment from both the leadership of Abu Dhabi and Mubadala to deploy significant amounts of capital into an area we think will have superior financial returns—and which we’ve also identified as a target area for innovation and growth from an economic-diversification and -development perspective. In many ways, Masdar is similar to our health care initiatives, our aerospace initiatives, our technology initiatives. You can think of it as our renewable-energy initiative. Now, it tends to be a little bit more encompassing than some of the others, in the sense that it has embedded educational partnerships, including venture labs and accelerators. So it’s a very holistic view of how we want to approach what we hope will be an important sector in Abu Dhabi’s economic future.

The Quarterly: How do you deal with the limited availability of talent and labor in Abu Dhabi?

Al Muhairi: It’s one of the things that we’ve had to tackle quite quickly. Everything we do, in health care, aerospace, semiconductors, even Masdar—all that revolves around how we find solutions for human-capital issues. It’s something I spend a lot of time thinking about.

As a result, we’ve worked quite closely on curriculum issues with the Abu Dhabi Educational Council, for everything from primary schools to tertiary education. And we’ve tried to find models that work for the different types of positions we need to fill in different industries. For example, in the semiconductor industry we need people with a polytechnic type of background, all the way to PhDs who can help us on manufacturing and process design. So we work with the authorities to create the linkages between industry and academia, and as a third and important pillar we’re thinking about how we can use R&D to help bridge that talent gap as well.

The Quarterly: This is certainly important for the economic diversification of the Emirate, but doesn’t it add to the portfolio companies’ cost of doing business?

Al Muhairi: I wonder if that’s true. The way we think about it is educating our own people and getting them in productive industries. Any way you look at this, it’s positive for the economy and therefore has benefits, whether through social dialogue or the impact educated parents will have on educating children.

Source: McKinsey Quarterly

Russia’s Influence

After years of work, Moscow has made significant progress in regaining control over the former Soviet states that are crucial to Russia’s security. Russia’s window of opportunity to exert control in its near abroad is a narrow one, however, and so Moscow has prioritized its list of countries where it is trying to consolidate influence. After reining in the four countries imperative to Moscow’s interests — Ukraine, Belarus, Kazakhstan and Georgia — Moscow will turn its attention to a group of countries where it would like to have more influence.

There are six countries — Estonia, Latvia, Lithuania, Azerbaijan, Turkmenistan and Uzbekistan — where Moscow would like to reconsolidate its influence if it has the opportunity. Although these countries are not crucial to Russia’s survival, as long as they remain outside Moscow’s control, the West has the ability to get too close to the Russian core for comfort. All these countries know how serious Russia is about its grand plan of expansionism. The 2008 Russo-Georgian war revealed Moscow’s willingness to militarily intervene on its former Soviet turf and sent the message to these countries that they must obey or cut a deal with Moscow, or else risk being crushed. Since then, these countries have watched Russia consolidate Kazakhstan and Belarus into a customs union (with the promise of becoming a formal union) and have seen a pro-Russian wave engulf Ukraine. (Stratfor)

In Response to Outcry, University of San Diego Offers New Certificate in Cross-Cultural Competence & Multinational Business Practices

The New York Times reports that training to communicate across cultures has long been part of the preparation for executives moving overseas to work. But now, the training is increasingly for employees who may never leave the country, yet will work closely with companies and people around the world.

“Whether a multinational or a start-up business out of a garage, everybody is global these days,” said Dean Foster, president of Dean Foster Associates, an intercultural consultancy in New York. “In today’s economy, there is no room for failure. Companies have to understand the culture they are working in from Day 1.”

Mr. Foster recounted how an American businessman recently gave four antique clocks wrapped in white paper to a prospective client in China. What the man did not realize, he said, was that the words in Mandarin for clock and the number four are similar to the word for death, and white is a funeral color in many Asian countries. “The symbolism was so powerful,” Mr. Foster said, that the man lost the deal.

In response to an outcry by global executives, the University of San Diego is now offering a Certificate Program that has the strategic focus of prospering in the global economy with the professional sophistication, knowledge, understanding and tolerance necessary to be successful in a world where crossing borders is as close as the nearest Internet connection. The program is designed by principal instructor Denise Pirrotti Hummel, J.D., Director of Universal Consensus a global consulting firm, and is now available online.

Guest Speakers will appear in person and by teleseminar from the 14 different nations of the Universal Consensus Global Alliance to augment instruction by Ms. Hummel.

Etiquette & Protocol Across Cultures: April 5, 12, & 26, Monday 6-9:30 pm
These workshops have been created to educate and inform participants as to effective business communications and appropriate etiquette when interacting with professionals from other cultures, whether employees, suppliers or customers.
Guest Speaker: Dr. Li Rong Lilly Cheng is a Professor in the school of Speech, Language, and Hearing Sciences and Director of Chinese Studies Institute at San Diego State University. She is Managing Director of the Confucius Institute, and the Co-Chair of the Asian Task Force at SDSU.

Presentations Skills Across Cultures: May 10, 17 & 24, Monday 6-9:30 pm
Culture influences the way in which we establish rapport, make the pitch, and close the sale or deal. Visuals, demeanor, body language, attitude, and content that is impressive in one culture can be unimpressive, confusing or even offensive in another.
Guest Speaker: Unwha Choi is the founder of MindsGroup, an international HRM solution provider offering consulting, coaching and training in global business development, and innovation. She has more than 22 years of experience in training, marketing, supplier management, and general corporate and consultancy management.

Conflict Resolution Skills Across Borders & Boardroom: June 14, 21 & 28, Monday 6-9:30 pm
Ms. Hummel has developed an adaptation to the Western Facilitative Mediation Model into a paradigm that more closely aligns Non-Western Cultures. She further adapts the paradigm to the specific culture of the participants. Utilizing this methodology helps those trained in the concept to assist in avoiding conflict and when that conflict does occur, participants are better prepared to resolve it effectively.
Guest Speaker: Mark Kirwin is a University of California certified mediator and a California Superior Court appointed mediator, arbitrator and judge pro tem, with over 18 years of conflict resolution experience. His multinational experience includes extensive travel in S.E. Asia, India and South America performing humanitarian field work as the founder of the Kirwin International Relief Foundation and is the Asian Coordinator for Mediator Beyond Borders.

Cross-Cultural Team Building:July 12, 19 & 26, Monday 6-9:30 pm
An international staff has its own unique advantages and challenges. This training promotes inter-cultural staff integration, thereby reducing cross cultural conflicts and building team spirit.
Guest Speaker: Katrina A. Burrus, Ph.D., MCC of Switzerland coaches international executives in all areas of business. Dr. Burrus specializes in coaching global nomadic leaders, high potential, and abrasive senior managers.

Cross-Cultural Mergers, Acquisitions & Joint Ventures:August 9, 16 & 23, Monday 6-9:30 pm
When individuals from two or more cultures meet around the table, there are inevitable differences in strategies, styles, planning, expectations, and business mentality. This training helps participants to develop a knowledge base and practical skills that will keep the initial proceedings and ultimate transition free from unnecessary misunderstandings, which often lead to suspicions, communication breakdowns or failure of the venture.
Guest Speaker: Miguel Duarte Ferreira is an international consultant and competitive intelligence expert based in Portugal who will discuss cross-cultural competitive intelligence in scoping out the perfect merger, acquisition, and joint venture.

Global Emergence & Marketing:September 13, 20 & 27, Monday 6-9:30 pm
When a business has achieved a certain standard of success domestically, and it has been ascertained that a foray into another target culture may yield positive economic results, a confirmation analysis of this presumption must be undertaken, followed by a process of establishing a global marketing plan.
Guest Speaker: Tomas Sibaja is an international contractor with more than 15 years of experience in promotion, international sales, foreign investment and off-shore marketing strategies in cross-border regions where comparative and competitive advantage exist.

Enroll Now

Course Website

Questions?/Contact Us: Denise@UniversalConsensus.com

Unwha’s Visit

How blessed we were to have a visit from our Global Alliance partner, Unwha Choi from Korea who gave us incredible insight about the inner-mechanisms associated with doing business in Korea. Her website is a must-see.

A Cross-Cultural Christmas

The Clash of Civilizations, a political theory developed in the early 90s, proposes that cultural and religious identities will be the primary source of conflict in the post-cold war world – all well and good, but does it hold true on a more personal level?

Since the fall of Milosevic, Serbia has attracted many foreigners and quite a few relationships that have crossed the cultural divide have been cemented. Are we drawing back the curtain that was drawn between western Christianity and Orthodoxy?

In the former Yugoslavia the majority of people were orthodox by ethnicity but religion was kept out of the public space until Tito’s death in 1980. Bozic bata (Father Christmas) became Deda Mraz (Grandfather Frost) and the day of celebration became the 31st of December. Now, Bozic is back but the Christmas tree and present giving have stuck to the last day of the Gregorian calendar, despite the rise of new believers since the fall of communism.

Unlike much of the former Yugoslavia, Serbia, under Milosevic’s rule was largely protected from ‘foreign’ influence and only since his fall did many see the need to protect the home grown culture. So, paradoxically, along with the rise in the number of ‘foreign-style’ restaurants and bars there has been a commensurate surge in ‘traditional’ restaurants.

Marina Babic, who works as a translator in Belgrade, thinks that “some people here seem to try and reinforce traditional values because they fear a loss of identity, whilst at the same time, they want the ‘progress’ and commercialisation of Christmas that they see elsewhere.”

Marina, does not consider herself very religious but will nevertheless be fasting for 40 days prior to the Orthodox Christmas. She says that the way her parents spend the period hasn’t changed a lot, but that for her things are different. “I am fasting and I am actually celebrating Christmas, she said.
Her British partner, Pete, has been making an effort to learn about the Orthodox Church as Marina regards it as an important part of her life – and of Serbian culture. Not a fan of the traditional British Christmas, he says it will be a relief to not have to take part in rituals which he doesn’t identify with and the “endless days of preparation necessary to produce the ‘traditional’ meals that no one is all that fond of.” He’ll be happily foregoing the traditional turkey this year, because Marina’s fast forbids her to eat meat.

It is of course not only a process of foreigners learning about orthodoxy – the process works both ways. Claudia Mayr spent last Christmas together with her Serbian partner in Austria and ‘says “he was amazed that we sang Christmas carols and read stories to each other”. His family is atheist and there are no signs of Christmas to be seen in the house, although there is modest exchange of presents on New Years Eve.

It is difficult to make any form of generalized statements in regards to the way people celebrate Christmas in Serbia or what kind of importance it has in people’s lives. For some, Slavas (the celebration of patron saint’s days) seem to carry a similar connotation to Christmas in ‘the West’, for others, neither has.

Ana Seferovic says that in her family religion and ‘pagan’ traditions were always a taboo topic after experiences with village ‘healers’ many years ago and Ana herself does ‘not want to be associated with a church that she says supported some of the excesses of the past.The church, she says “is still too traditional and conservative”.

Ana and her partner, Toby Brundin, exchanged their presents last year on New Year’s Eve, but, he says, more modestly than if they had been in England. The consumerist culture of a British Christmas has, he thinks, “still not invaded Serbia, as people still do not have that much money to spend.”
Kosovo, which over the past few years has seen a huge increase in foreign presence, celebrated last years Christmas with quite some excess, even though the Christian minority makes up just 3 per cent of the population. Aside from this minority however, this seemed to be a longing to celebrate with the majority of the rest of the world – a commercial Christmas almost devoid of religion.

And, as we all know, you do not have to be religious in order to take advantage of religious holidays. Celebrating with someone from a different cultural background and in a different country can bring out what should really matter – spending time with friends and family.

On the whole then it seems that the political scientists can keep their theories. Love across the interdenominational divide seems to be alive and well even at this most religious time of year. (Source: Balkan Insight)

TEN CROSS-CULTURAL BLUNDERS TO REMEMBER

The challenges of global marketing, product-placement and advertising are many. Here in the United States, despite the availability of cross-cultural consultants, many companies fail to take advantage of these resources before launching a product. Significant blunders are still being made by some very “significant” companies. Without mentioning names, here are ten to remember.

1. A US telephone company tried to market its products and services to Latinos by showing a commercial in which a Latino wife tells her husband to call a friend to inform them that they would be late for dinner. The commercial bombed since Latino women do not generally tell their husbands what to do in the manner depicted, and further, the “elastic” approach most Latinos have to time would not require a call about lateness.

2. American Motors tried to market its car, the “Matador,” in Puerto Rico based on an image of strength and courage, however, in Puerto Rico the word, literally translated, means “killer.” The inappropriate name is linked to the car’s lack of popularity because of the many hazardous roads in the country and the correlation with death made by consumers.

3. A cologne for men pictured a pastoral scene with a man and his dog. It failed in Islamic countries since dogs are considered unclean and should never have been used in conjunction with an image-enhancing product meant to be applied to a man’s skin.

4. Marketing executives were disappointed to learn that the brand name of the cooking oil they were promoting in a Latin American country translated into Spanish as “Jackass Oil.”

5. One of the largest multinational companies in the world launched a television commercial in Japan that was popular in Europe. The ad showed a woman bathing, her husband entering the bathroom and touching her. The Japanese considered this ad an invasion of privacy, inappropriate behavior, and in very poor taste.

6. An American executive refused an offer of a cup of coffee from a Saudi businessman. Such a rejection is considered very rude and the business negotiations were terminated.

7. One company printed the “OK” finger sign on each page of its catalogue. In many parts of Latin America that is considered an obscene gesture. The entire catalog had to be re-printed.

8. Marketing executives approved a global promotional campaign that compared an American luxury Hotel in New York to the Taj Mahal in India, a magnificent structure to be sure, but nevertheless, a tomb (mausoleum). The comparison was inappropriate in many parts of the world.

9. A golf ball manufacturing company packaged golf balls in packs of four for convenient purchase in Japan. Unfortunately, pronunciation of the word “four” in Japanese sounds like the word “death.” There is great superstition associated with the number four and items packaged in fours are unpopular.

10. A U.S. phone company tried to promote its telephone and services to Saudi’s. Its ad portrayed an executive talking on the phone with his feet propped up on the desk, showing the soles of his shoes– something an Arab would never do as the soles of the feet are considered unclean.

All of the above would have been “quick fixes” for a cross-cultural consultant who would have evaluated everything from attitude, to mannerisms, non-verbal communication, color, word-usage, and religious connotations. In an era where the majority of products can and will be marketed globally, a marketing campaign needs to have “legs” that will take it longer distances than around the block.

Mackenzie Pipeline Gets Thumbs-Up

According to Nathan VanderKlippe, A decades-old northern dream has taken a major step forward after the panel tasked with reviewing the Mackenzie Valley natural gas pipeline concluded that it should go forward.

The joint review panel, which has spent the past half-decade assessing the pipeline, has concluded that the $16.2-billion project “would deliver valuable and lasting overall benefits, and avoid significant adverse environmental impacts.”

While the 679-page report from the panel, released Wednesday afternoon, does not give formal approval to the project to go ahead – that power lies with the National Energy Board – its positive findings mark a big advance.

Read the panel’s executive summary

“It would appear that the JRP has recommended that the project should be allowed to proceed subject to certain conditions. Which, from the proponent’s perspective, is obviously a very positive development,” said Pius Rolheiser, a spokesman for the project’s lead backer, Imperial Oil Ltd.

The report includes 176 recommendations aimed at diminishing the pipeline’s impact on the people and environments it would affect. It concludes that the pipeline will “provide the foundation for a sustainable northern future” – one that would be better with this major project than without it. Its recommendations touch on the pipeline’s design, as well as on the need for government funding to help protect environmentally sensitive areas and species in the North.

Notably, it recommends a suite of guidelines that would temper the pace of Arctic development, in an effort to avoid “cumulative effects” from multiple projects. It finds that the pipeline would not adversely affect fish, but says that broad regional plans must be created to limit cumulative industrial activity that could hurt animals such as polar bears, caribou and beluga whales. It recommends a new protected area in the Mackenzie Delta, the heart of the Northwest Territories’ gas reserves, to protect wildlife and ecosystems. (Source: Globe and Mail)