How culture impacts business team performance

Working in six global cities and across a multitude of countries has taught me a lot about the impact of culture on team performance.

culture impacts business relationships

Nine years of my multinational career were spent in Japan – first as president of an ad agency then as an entrepreneur. (It’s where I founded Aprais). What I hadn’t already learned about the impact of culture on team performance and business relationships from my years of management in Singapore, Hong Kong and New York was sorely tested in Japan. There I learned how social culture can pervade business and personal relationships. I experienced the pains and pleasures of my own leadership behaviour and I observed stunning successes and failures of other foreigners in this oft-confounding market.

The culture of anti-culture

While most foreign leaders conformed to the Japan playbook, one of the most profound experiences I had was an example of success through non-conformity.

Until the year 2000 Adidas in Japan was operated under licence to a major local sports distributor. With only two years to go before Japan would co-host the World Cup with Korea, Adidas decided to take back the licence and go it alone in Japan. That required creating a team almost from scratch and bringing that team up to speed in time to leverage the multi-million-dollar sponsorship fee under the watchful gaze of powerful shareholders and the largest viewing audience of any world sporting event.

Under the leadership of an unconventional French chief executive, Adidas began by recruiting uniquely internationally minded locals and importing expatriate talent. In effect, creating a non-Japanese company within Japan. Almost every rule about dealing with Japanese culture was broken. Yet the result was an enormous success. One could argue, however, that it was a short-term tactical success rather than enduring change.

Cultural complexity

All this to say that when it comes to culture and business, I believe no rules apply universally. Each team has its own chemistry made up of a combination of individual personalities, their cultural background and the company culture. The skill of a team leader is to be sensitive to the unique make-up of each team and to motivate them accordingly.

Around the same time in Japan, another gaijin (foreign) leader was making waves in a Japanese company. Carlos Ghosn – now featured in a Netflix documentary about his downfall and dramatic escape from custody – was transforming Nissan. Clearly, not without ruffling feathers!

Nowadays, many team members have advanced business degrees that will surely have covered cultural sensitivity as part of their curriculum. Many may even have pursued study abroad precisely to better understand different cultures. So the level of awareness is far greater than in the past, even among juniors. That said, nothing beats real experience.

One might even argue that in an increasingly multinational, multicultural business environment, business is developing its own culture?

What are the cultural factors that affect business?

In her book The Culture Map, INSEAD professor Erin Meyer highlights the challenges that can arise when people from starkly different ethnic backgrounds are expected to work harmoniously together. She encourages readers to develop cultural intelligence, enabling them to interpret behaviours, avoid misunderstandings and bridge gaps between varying cultural norms.

Meyer identifies the variables. She introduces eight scales on her ‘culture map’, which provide a visual representation of how cultures differ along key dimensions.

The Culture Map, by professor Erin Meyer.
The Culture Map – Prof. Erin Meyer

Like so many frameworks, this culture map is a particularly useful model that can certainly heighten our sensitivity to the nuances of various cultures – but is totally dependent on the people who use it.

How does culture impact a business relationship?

One of the many fascinating observations from Aprais’ 20 years of client-agency evaluations is that relationships in the Americas (North America and LatAm) score consistently higher than other regions. We covered this in a blog post: Are client-agency relationships really better in the Americas?

Behavioural psychologist Dr Gains says ‘…this higher scoring could be explained by “Extraversion Bias” this phenomenon particularly prevalent in Western culture, where it causes people who are more outgoing, talkative and lively to be perceived as also more competent and more creative. Americans are generally more extravert than other cultures and therefore may be rated as being more creative and competent’.

For this reason, Aprais prefer regional or local comparisons when advising on business team performance.

Where cultures collide
The impact of culture on business relationships.

In my humble view, ethnic or social culture is one of three cultures that today’s leaders need to be mindful of. What’s more influential in building stronger team relationships? The personality of the individual, their ethnic or social culture or the culture of the organisation that pays their salary?

Surely all three have an influence on the team dynamic and need to be balanced and managed for harmony and productivity. Being sensitive to these influences and managing the balance is a crucial skill in team leadership.

In conclusion

There is a growing awareness of the need for cultural sensitivity in today’s multicultural business environment.

Regional differences in team relationship evaluation results remind us of the the impact of culture on team performance. When it comes to team dynamics, leaders must navigate not only ethnic or social cultures but also individual personalities and the culture of the organisation itself.