The case under consideration represents a bright and almost “academic” example of a crucial lack of cross-cultural communications, motivation, and management skills in the company’s top leaders. Nomura Securities International (NSI) is Japan’s‘ giant,’ with a kind of superiority complex due to sound success in the past but not adapted to work in today’s dynamic and highly diverse business environment. Cultural differences play a very important role in organizations and have an impact on the effectiveness of international activities. Hence, cross-cultural problems in international business arise – contradictions when working in new social and cultural conditions, caused by differences in thinking stereotypes between certain groups of people. The formation of human thinking occurs under the influence of knowledge, faith, art, morality, laws, customs, and habits acquired by society in the process of its development, and understanding it is the basis of cross-cultural competence. In international business, cultural factors pose the greatest challenges.
A correct assessment of differences in national cultures and their consideration are becoming increasingly more important in international companies. This situation requires special attention to the formation of cross-cultural competence of managers working in international companies. In turn, it defines the necessity of an active study of the specifics of cross-cultural communications that arise in the activities of joint ventures among founders, in the interaction of company management and personnel. Specifics of multicultural groups working on projects should be understood, and, especially, behavior during negotiations between representatives of companies belonging to different cultures. George Rosebush manifested surprising incompetence in the intercultural communications in Nomura. He did not resort to scientific bases of management but rather to common sense management, trying to resolve the issues by discussing problems in the way suitable for his American counterpart but naturally causing resistance and even sabotage in Japanese colleagues, partners, and subordinates. It was especially evident in conferences call held every morning with Tokyo headquarters where the most important news of the day and expected market developments were discussed. Mike represents even worse example of unshakable conviction of the only correctness of the American model of management.
The development of cross-cultural competence in the management process urgently requires increased attention on the part of managers to the organization of the cross-cultural communication process, which requires considering communications as a systemic structure. The presence of representatives of different cultures in the divisions of international companies is a common business practice. Cross-cultural distribution can be varied, ranging from single representatives of another culture to fully multicultural subdivisions [112]. In all cases, the specificity of communications will be associated with a difference in value systems, organizational and national cultures, principles of group organization, principles of management, organization of space and time, manifested through verbal and non-verbal communication, a difference in external, internal and temporal contexts.
The problem of recognizing and overcoming communication barriers does not have an unambiguous solution, and there is no single point of view on the definition of cross-cultural barriers. However, competence and soft-skills in the intercultural communications allows finding right and effective solution in every situation. At first glance, for example, the slowness of the Japanese may seem like an insurmountable obstacle. However, it can easily be handled using techniques of intercultural communications and diversity management.
Nomura experienced entropy in its organizational system due to ineffective and even destructive nature of communications between departments. Immediate measures should be taken to prevent further ‘sliding into the abyss’ and complete market failure, as the company already faced drastic decline of customers’ loyalty and possibilities to attract new clients. Stock market crash was evident proof of destructive corporate behavior. The company was rapidly losing investment attractiveness and, if it would decide to measure its goodwill, most likely, its value will be negative.
Nomura, in its current state, significantly differs from modern successful engineering and technology companies, with their popular and well-established Agile approach to management on all levels – operational, tactical, and strategic. The dominant trend of the 21st century – the development of the digital economy – poses new challenges for management. The scale of digitalization shows the need and possibility of changes in the management system of the company in many aspects, including in the field of organizing office work, in order to transform routine and boring activities into creative communication of a new generation. Modern economic and technological trends carry the creative potential for creating innovative business models that are leading to a radical transformation of the modern business ecosystem.
The needs of the markets are changing, and the business is in the process of transformation. Since there is no reliable information on how the situation will develop further, medium-term and long-term macroeconomic forecasting is not possible. Flexibility and adaptability move from temporary measures (for the period of reorientation of production and business processes or the introduction of innovations, changes) into permanent ones, that is, they become the style, system, and culture of management of the modern world. Many Japanese companies managed to integrate in these trends successfully but when it is about departments in other countries such as the USA, or inviting USA managers to head Japanese departments, conflicts can arise. According to Hofstede dimensions, the USA and Japan are on the opposite ‘poles,’ and George Rosebush has to take this into account in the efforts to adjust corporate communications, teamwork, and departments interaction. The problem of Nomura is not wrong organization of communications processes but lack of ‘catalyzer’ for them – inter-cultural mutual understanding and culture of diversity.
It is also worth noting that various manifestations of ethnocentrism, that is, beliefs in the superiority of one’s nation over others in the intellectual, economic, aesthetic, power and other spheres, can also become a significant obstacle to effective communication. Distortion of perception, bias of assessment, unwillingness to carefully analyze the informational consequences of ethnocentrism are obvious. It is since an essential circumstance is that in its implicit manifestations ethnocentrism may not seem to pose a serious threat, and namely in this form it is inherent in many quite intelligent employees of multinational collectives (Thomas & Peterson, 2017). Meanwhile, precisely these implicit manifestations are often doubly dangerous: on the one hand, the employee does not pay attention to his inadequate perception of information, and on the other, his interlocutor does not dare to directly raise this issue and various kinds of misunderstanding and develop into a conflict.
In case of Nomura, taking into account the level of tensions in the corporate hierarchy, and overall situation, unlikely training in intercultural communications can bring results – on the opposite, it can even aggravate the overall climate, implicitly emphasising inter-cultural differences, being initiated by American manager. It seems rational to plan and implement gradual changes to built Agile culture and achieve the culture of diversity and knowledge sharing.
First of all, it can be offered to diagnose the culture of the organization using a questionnaire, which includes an extended description of the key dimensions of the four types of culture: power, role, task, and personality. Based on the questionnaire, the profile of the organizational culture is determined and displayed graphically. This allows recording visually the variable preferences of the respondents for each of the four main types of culture. Moreover, carrying out such a survey itself could have some positive influence, as it will show efforts of top-management in raising level of attention to inter-personal relations in the company and striving to the improvement of situation.
Based on the survey results, plans to introduce Agile culture can be developed, taking into account moods dominant in the departments, as well as employees’ concerns. Some executives worry that flexible ways of working can mean a loss of control and, inevitably, chaos for their companies, but it is not about control of work. Agile is all about inspiration for behavior change; for agile leaders, the most important task is to clearly describe the desired outcome and empower teams to work autonomously to achieve that outcome. Focus of the organization on the goal – “why?” – helps leaders step back and empower teams. The teams, in turn, will move forward, and the business will develop.
Successful agile adoption in an organization begins with changing the way senior management operates. It is necessary to adopt a flexible mindset, share the values and principles of flexible approaches. Rigid organizational hierarchies are an obstacle to agile work. BCG experts suggest 5 steps to help senior management support the agile transformation (England & Vu, 2019). One of the main theses is not to be afraid of losing control over the work, since a clear business goal is formulated in front of the team. Japanese teams can be given more flexibility, and employees of sales and trading departments can be organized in cross-functional teams, empowered to initiatives.
References
England, R., & Vu, Ch. (2019). The Agile manager: New ways of managing. Two Hills.
Thomas, D. C., & Peterson, M. F. (2017). Cross-cultural management: Essential concepts. SAGE Publications.