Most marketing models for consumer goods business place “assessing the landscape” at the heart of any business-building exercise. This of course includes understanding consumer preferences, the competitive landscape, and the regulatory framework in the market in which a company wants to operate.
When doing business in emerging markets, deep understanding of the culture and how it affects not only consumers but also business dealings can be critical to success.
In leading P&G businesses in the emerging markets of Pakistan and Ukraine, there were instances where my understanding of the culture helped me close deals and move the business ahead, while at other times my lack of understanding created hurdles for the business, or left my local organization with a negative feeling about the company.
Several instances come to mind from my two stints in Pakistan in the early 1990s and in the mid 2000s. Shortly after the launch of P&G’s soap-man
ufacturing plant in a tribal area outside Karachi, I was visited in my office by local tribesmen. Two of them came up to our sixth-floor offices, while two more waited with guns outside our office building. The tribesmen I met in the conference room in our office started off with a very friendly conversation, congratulating me on the startup of our new soap plant. But soon they moved on to requests for financial payoff from the company in exchange for “protection.” We didn’t need their protection and weren’t going to do them any favors. However, how I treated them during our more than hour-long meeting in my office was very important to ensuring that this didn’t turn into ongoing animosity that would disrupt our plant operations, and that we would not get repeat visits of this type.
Then there was the time I had to negotiate the purchase of a trademark with owners of a small local business. We had determined that they had a legal right to this trademark, and that the only way forward for P&G was to conclude a deal to purchase it from them. Even after the financial terms had been agreed we had trouble closing the deal, because these Pakistani businessmen were suspicious of the terms and conditions spelled out in a contract P&G lawyers had drafted. They were concerned about “being taken for a ride by a large multinational company.” It took every bit of cultural understanding and sensitivity I had to close the deal. In fact, it was finally over a cup of tea at my home that I was able to give them the confidence in myself and my company to move forward. This opened the door to the launch of an iconic P&G brand in Pakistan, which to this day remains a flagship in the company’s portfolio.
Being originally from Pakistan gave me a reasonable level of cultural competence in that market. On the other hand, upon transfer to Ukraine I sorely missed this skill, particularly in the early days of the assignment. Over time I developed this cultural sensitivity, in part by surrounding myself with local employees I could rely on.
March 8 is celebrated in Ukraine and most former Soviet republics as International Women’s Day. It is a holiday that celebrates all women and their contributions, including in the workplace. It is kind of Mother’s Day, Valentine’s Day, maybe Female Coworkers Day, all rolled into one. Ahead of the holiday I was approached by some employees asking for permission to send flowers to women in various government offices with which the company had regular dealings. The amount of money involved was very small, but I was sensitive to the ethical implications of sending any gifts to government employees on the company’s behalf. I thus turned down the request. I was later told that many employees had seen this as a singular act of mean-spiritedness by this American company.
While I had tried to follow to the strictest interpretation of the company’s guidance, in fact it would have been well within company policy to get approvals for the small gesture of goodwill. I can only guess how much this may have set back my effort to be a trusted leader of the organization.
While company principles related to ethics can never be violated, it is important to apply such rules with cultural sensitivity. How you turn down an inappropriate request for favors, or how you explain your decisions, may have material impact on your business and on your ability to be seen as an empathetic leader.
August 14, 2017