People often ask us the question, “How can you know what you need to change in your approach to succeed in different export markets?”
Marina, Vadym, and I have been putting together new business training courses on Russia lately. As part of that process, we have been thinking about how to best answer this question without overwhelming you with data.
The short answer is that we don’t just rely on experience to provide successful outcomes. We also base our work on tools that allow global managers and exporters to look at cultural differences with actual data, like the Hofstede model.
The problem with working with complex science-based analysis tools and models, though, is that they can be a little tricky to grasp. We want to give managers and directors what most of you prefer: actionable and clear explanations of how you can apply the insights we get from that data in your business to provide better outcomes.
All the data in the world coming from great sources won’t solve these problems unless you can translate it into something concrete.
This is not to say the models themselves aren’t insightful. You should definitely invest some time in getting a better understanding of everything they can offer. However, someone who already has spent years on them can definitely provide a shortcut for practical business implications.
In fact, today, I’m going to go through the basics of what you need to understand about cultural dimensions that are the basis of these value-based models so you can continue diving deeper into the world of cultural intelligence. I’ll explain more about this in a bit.
This article will share one of the essential tools we use to help exporters reach their strategic goals with cultural intelligence. I’ll also share some of our philosophy about how managers should think about cultural competence as a key part of their exporting strategy very early on.
Our science-backed analysis tools: building an understanding of culture through Hofstede Insights models
I started learning about the work of the Dutch social psychologist, Professor Emeritus of Organizational Anthropology and International Management, and IBM employee Geert Hofstede long before becoming an Associate Partner with Hofstede Insights, who provide some of our analysis tools.
The theory is useful. Having models based on empirical data allows us to work with factors that apply to the real world and real people that we can leverage in our work.
You might not be aware that the original data on cultural differences for Hofstede’s studies came from IBM employees, for example. He developed some of his key findings from realising that other factors could not account for differences he faced in introducing and applying data from employee opinion surveys in the various national subsidiaries of IBM from Europe to the Middle East.
A framework for solving cultural issues in practice
For me, it was striking to realize how well the research explained my own previous experiences studying in the UK and later working as a Nordic manager in Russia.
Not only did the findings explain many of the cultural issues, awkward moments, and unexpected situations I had been facing. They also provided a framework for solving cultural issues that were not obvious even for someone with my practical experience in the field.
I would have loved to have these tools and information available when I first arrived in Russia to lead the Moscow office.
Instead, I had to adjust to people expecting my boss to walk in after me to the most important partner negotiations. My local team also needed much more micromanaging than I was used to. I had the tight, uncomfortable feeling in my chest before situations I knew did not follow the best practices I had learned in London as part of my MBA.
Since first reading about these principles, we have gone through iterations of helping numerous clients apply them in practice and grow their export businesses in Russia.
And because of the shared experiences we all have from over 20 years of working in the Russian market to help SMEs and foreign companies, we have been excited to become certified in using several beneficial analysis tools in our work.
I have also helped colleagues in the field develop these ideas further, for example, as a co-editor of Huib Wursten’s book “The 7 Mental Images of National Culture: Leading and Managing in a Globalized World”.
The critical thing to understand is that our goal is not to get people to think and behave the same way.
In the era of the internet and cheap flights, the world seems to shrink. But under the surface, people tend to stick to their national values and build barriers instead of dismantling them. Understanding differences first is crucial to finding common ground.
We get results from aligning business strategy with the differences that are an unavoidable and inherent part of the local business environment by understanding the value-based dimensions of that culture and the client’s cultural background.
Despite using the best models, sometimes aspects of local culture can feel alien. I still struggle emotionally to deal with inequality, for example, but have learned to play by the rules of the game of hierarchical societies when needed.
Once you understand the differences that cause problems and make you feel uncomfortable, you can deal with them more constructively and efficiently in your business. What wasn’t working before and caused the biggest issues can become your competitive advantage.
How does it work: the basis of the 6 cultural dimensions model by Hofstede
The main model and tool I want to talk about is the Hofstede 6D model. To understand it, we have to start by understanding a little more about cultural dimensions on the national level.
Cultural dimensions are based on underlying values that guide the average thinking and behaviour of a group of people with a certain cultural background. It creates the acceptable rules of the game within the group.
It does not mean that everybody shares the same values. Individuals will also always vary in what they do and how they think. On average, though, these dimensions become something that we can compare between different cultures.
For example, the Nordic countries score similarly in most of the six dimensions used in the Hofstede model, making them look alike from the outside, even though people in these countries would recognise some differences between them.
To get you a feel for what these scores mean, a difference of more than 10 tends to be something that you would notice and “start feeling” the difference as you interact with people from that cultural background.
The Hofstede 6D model shows scores for each country measuring where they are with the two different opposites that characterise each dimension on a scale of zero to 100.
Generally speaking, below 50 counts as a low score and above 50 as a high score. If you see an average score between 40 and 60, you can assume that the value-based behaviour can be either higher or lower depending on the context.
Geographic proximity does not guarantee cultural proximity, as you will soon see when we take a closer look at the Hofstede model. There are significant differences in all but one dimension regarding Russia and the Nordic countries, for example.
The one thing we can all agree on based on the Hofstede model: Femininity (soft values)
As we dive deeper into the dimensions of the Hofstede 6D model, you might find yourself wondering about some of the new vocabularies we are introducing. For example, Femininity or Masculinity implies the difference between hard and soft values, which are sometimes seen as masculine or feminine behavioural traits.
This dimension plays a role when you consider how you can motivate people. Do they prefer competition, material rewards, measurable performance, and status to show success? Or are they more inclined to appreciate cooperation and quality of life instead?
The fact that both Russia and the Nordics score low on Masculinity arises from shared values such as the importance of work-life balance, the tendency not to brag or advertise own accomplishments, and favouring cooperation over competition between peers as a motivator.
Where Nordic countries tend to take into account all stakeholders’ opinions, Russians generally find them important, but the Power distance (hierarchy) often overrules the consensus thinking. There are also fewer women in decision-making roles.
The big difference in power distance means you need to pay attention to the hierarchy in Russia
Next, let’s consider the dimension of the biggest differences between Russia and the Nordic countries, Power Distance. This dimension tells us something about people’s expectations for how power is distributed and how leaders and subordinates ideally act.
If you have been working in Russia for a while, it probably doesn’t come as a surprise that there is a difference in power distance between these two cultural backgrounds. Hierarchy is important in Russia, and the high score indicates it is Hierarchical. The Nordic countries, on the other hand, fall on the Egalitarian side.
We are used to equality at the workplace, flat organisations, and a consultative management style in the Nordics. You will probably encounter inequality at the workplace, hierarchical organisations, and authoritarian management style in Russia. This can translate to cultural issues across a variety of situations.
Nordic managers might hide their status and consider themselves like everyone else, while the Russians consider it important to show managerial status. They expect respect for superiors and based on title (and age), while we usually treat everyone equally regardless of their status. And while we are used to being more autonomous and emphasising self-management and initiative, hierarchy in Russia dictates decisions are made at the top and executed at lower levels, and not everyone has a similar voice.
Chances are, these issues are something you are either familiar with or will quickly come into contact with as you get more experienced in Russian business. Knowing and understanding them is the first step in adapting your work with this type of organisations.
Russian high uncertainty avoidance translates to the need to iron out the details before your meeting
Russia scores high on Uncertainty Avoidance dimension. This dimension helps us understand the degree to which people feel uncomfortable with uncertainty and ambiguity and how much effort they put into avoiding them.
A high score In Russia indicates formal communication style, thorough planning, detailed preparation, and extensive bureaucracy. A lower score is a sign of more informal communication, less planning before taking action, and more relaxed attitudes in general.
People from the Nordic countries scoring low are more comfortable with the idea that they will work out the details as they go. But Russians are always prepared to deal with problems.
And while the first would generally be more relaxed, unemotional and relatively tolerant and happy not to control everything, the latter might appear more nervous, behave emotionally and seek security while firmly holding onto control and checking the process.
This is not to say these characteristics like nervousness apply in each case and to each individual at all times. Rather it could be translated as advice to prepare well before any meetings and spend time getting your paperwork and presentations to make sure you get the results you want.
Measuring success on the same scale: long and short term orientation
Something as common as measuring export success might seem easy and obvious. You look at the numbers: sales results and bottom line each year. This is how people from the Nordic countries inclined to Short-term Orientation often think, but it is not a universal perspective. Measuring success in cultures with a Long-term Orientation like Russia can involve looking at market share and growth over a longer period of time.
In the past, I’ve seen this lead to two example situations that showcase the dimension in practice.
A Finnish company was pleased with their increasing sales figures in a booming market situation in the first one. At the same time, their Russian sales channel partner saw that as the market was growing exponentially, the market share of their Finnish partner was actually decreasing. What was a big win for one was a disappointing loss for the other.
In another example, a Nordic company did not reach their sales target when a year-end order by their Russian distributor was delayed to the beginning of the next year. A small delay affected the numbers for the previous year. Even though, in practice, not much had changed in terms of business results, market share, or sales in the long term. From the Russian perspective, the disappointment of the Finns was hard to understand.
In general, this dimension measures whether you prioritise links with the past and maintain traditions or focus on preparing for the future to deal with current and future challenges.
Countries with long-term orientation have more focus on the future and long-term rewards. In the business world, it translates to persistence and building long-term relationships. Russian companies might also be more pragmatic and accept many paths of reaching objectives.
On the other hand, people from the Nordic countries look for quicker results and rewards, focusing on the past and present. We can also be a little blind to pragmatic solutions and think there is one way to do things right. Unfortunately, sometimes the expectations are contradicting other cultures.
The time and place for having fun (it’s not while doing business)
Chances are most of us in the Nordic countries take for granted that we’re pretty free to enjoy life and seek the gratification of all the human desires related to having fun. When you joke and smile while in a business setting, you can still be serious about the matter at hand. This is basically what the dimension of Indulgence vs Restraint measures in the Hofstede model.
In Russia, there are stricter social norms. Generally, this translates to knowing that there is a time and place for having fun and joking. It is not while you’re doing business. Life and business are serious matters, and smiling excessively or joking while on duty don’t go together with that.
It might be a bizarre idea that a sense of personal responsibility prevails happiness and even enjoying life in some cultures. But you have to be aware of this when doing business in Russian-speaking countries. It is far easier to build these all-important relationships when you can adapt your behaviour and communication style to what people expect from the expressions of their respected business partners.
Don’t underestimate the importance of trust and relationships in collectivist cultures
In individualistic cultures, people value independence and don’t want to owe others. Russia is almost the opposite, and reciprocal favours and interdependence are an integral part of doing business. Relationships are important, and the preferred treatment of “our people” is common. Giving and saving face is important, and so is deep personal trust. Where Nordic countries score high on Individualism, Russia is more Collectivistic.
Individualistic countries focus more on tasks, universal rules, and equal treatment of all people. There is more initial trust for strangers, and people often rely on a direct communication style. Collectivist countries tend to have a more indirect communication style.
Personal contact network to get things done even has its own word in Russian: ‘blat’. In their research paper “Personal networking in Russia and China”, Snejina Michailova and Verner Worm describe its role in a commercialised and marketised society to gain information flows and services.
“Many Western owners, managers, and expatriates with assignments in Russia face difficulties in the conduct of their day-to-day operations, in many cases due to not being able to understand and deal with the complexities and intricacies of ‘blat’. To ensure financial success, Western business people must be familiar with it and sometimes play the game. They can do this by incorporating its elements in their business strategies in Russia.”, they conclude.
When to incorporate cultural models like the Hofstede model into your export business strategy in Russia
I wanted to share the Hofstede model and some background on applying these models with our clients. Often, it seems like people who understand and work with cultural intelligence and models on culture are naturally gifted in understanding culture and have always had it all together. That’s not the case.
The idea that culturally intelligent people would have a magical touch to figure it all out ‘just like that’ is far from my own experiences. Even though I speak Russian, hold an MBA, have business experience in many countries, I have had to learn to adapt to the culture.
In many ways, the reward is the journey. Looking back, it’s humbling to realise how much many exporters get done before they ever learn about these principles and models. But I wanted to share this so that you can shake any doubt that you would not benefit by adding cultural intelligence to your business competencies.
If you can start with cultural intelligence and develop a working partnership with your Russian sales channel from the start, that’s great. But it’s never too late to start applying these principles and models in your work and enjoy better business results and your work more.
In either case, it makes sense to get all the help on hand to make sure you don’t have to go through a lot of trial and error. That’s why we offer training in Russian business excellence to companies that want to develop cultural competence in this culture.
Summary of the 6 measurable dimensions of the Hofstede 6D-model
In summary, the six dimensions of the Hofstede 6D model are:
- High vs. Low Power Distance: expectations for how power is distributed and how different hierarchical levels should act.
- Individualism vs. Collectivism: is a person’s self-image defined in terms of I or us, and whose interest comes first.
- Masculinity vs. Femininity: hard or soft values, i.e. attitude towards motivation.
- High vs. Low Uncertainty Avoidance: the degree to which people feel comfortable with uncertainty
- Long-term vs. Short-term Orientation: do people prioritise links with the past and maintain traditions? Or do they prepare for the future as a way to deal with current and future challenges?
- Indulgence vs Restraint: attitudes that govern enjoying life and having fun
These factors are unique for each culture you work with. Understanding them will help you make better decisions and react to unexpected situations the right way. In addition to the 6D model, we use other tools like the 7 Mental Images model. It further clusters the world into 7 cultural groups based on their value level similarity, decreasing the cultural complexity for truly global managers.
I hope that after reading this article, you can agree with me that these models are powerful tools. They allow us to, for example, understand better why the business challenges that Nordic managers face when working with Russia are, on average similar.
Becoming culturally intelligent requires an open mind and flexibility but also a solid knowledge base. If you were not born and raised in that culture, it usually doesn’t come to you automatically.
We help companies apply cultural intelligence in their export business. If you would like to learn how to make cultural intelligence your competitive advantage, contact us here.