It’s a given. Businesses need to work hard to survive in this world. Faced with complicated economies, businesses must – either directly or indirectly – explore markets that are no longer just right around the corner. The underlying assumption appears to have been accepted at this point, but an immediate consequence remains less understood, much less accepted, i.e. that everything changes right from the start, even the organisation’s culture, because it is essential to understand what one is faced with culturally when going international if one is to be successful.

A paper by Diwakar Singh at Gujarat University, which was published a few days ago in the Journal of Mechanical and Civil Engineering, can help to better understand this aspect of business management that is an issue for organisations both large and small.

“Managing Cross-cultural Diversity: Issues and Challenges in Global Organizations” diagrams the relationship between globalisation, the organisation and the cultural aspects of management.

“Advances in the field of information and technology and liberalization in trade and investment have increased the ease and speed with which companies can manage their global operations,” Singh writes. “Due to globalization, many companies are now operating in more than one country.”

All of this, however, leads to another experience for the organisation in addition to that of the new market. “This crossing of geographical boundaries by the companies gives the birth of [sic] multicultural organization where employees from more than one country are working together,” Singh continues. And the result? To this day, after years of globalisation, organisations are discovering both the profits to be made from this and also all of the challenges there are in entering into relations with other countries. As the paper states, “The global business is affected by a number of factors like differences in- socio, economic, cultural, legal and political environments. The global business is also prone to a number of risks like political risk, currency risk, cross-cultural risks etc […] [sic].”

All of this points to the fact that we need clear roadmaps so as not to get lost. Therefore, Singh provides a series of landmarks to help keep track of all of the intercultural aspects that an organisation may encounter when going abroad, but the study also comes to a more general conclusion. In globalisation, successful organisations are those that are able to “attract, retain, and motivate people from diverse cultural backgrounds”. This points to a rare talent that is to be developed: the ability to grasp aspects of business management that go beyond mere productivity and the search for new business outlets.

Managing Cross-cultural Diversity: Issues and Challenges in Global Organizations

Diwakar Singh

MBA(HR), MA(Psy)[Gujarat University], UGC NET (Management), PGDHE(IGNOU)

IOSR Journal of Mechanical and Civil Engineering (IOSR-JMCE), e-ISSN: 2278-1684, p-ISSN: 2320-334X, PP 43-50

An organisation produces culture, what can also be seen as “content”. This may seem obvious, but it isn’t. For a long time now – perhaps too long – the enterprise, particularly in manufacturing, has been seen as an entity that pumps out (literally, in some cases) physical products or services, either for other businesses or for the end user. That is of course true, but there’s more to it. Nowadays – but likely in the past as well – an enterprise produces more than one might ordinarily think. It’s everything that comes before, after and all around the product.
It’s “branded content”, something that has still to be given a precise definition, but which, nonetheless, is one of the greatest challenges of many large corporations and is gradually making headway in mid-sized organizations, too. A recent work by Paolo Bonsignore and Joseph Sassoon, a book of two parts, can help to better understand what is actually going on. The first part of the book takes a good, hard look at the theory, while the second provides a series of case studies that are crucial to understanding what’s happening, starting with a tentative definition of “branded content”, which the authors refer to as a new way of communicating that radically alters both the relationships that business have with their audiences, with their marketing firms, and with the media and the very nature of the business itself, its mission, and its organisational structure. In short, branded content is a sort of (often forced) revolution that is changing the nature of a business and its culture.

Branded Content – La nuova frontiera della comunicazione d’impresa (Branded Content – The new frontier in business communication) points to three key elements that are fuelling the spread of this new way of viewing corporate culture and communication: the need for businesses to limit costly investment in advertising; the push of social media, which is driving businesses to become “publishers” that provide useful informational and educational content; and the great number of available (traditional and digital) channels interested in hosting quality corporate content at little or no cost.
As noted, though, Bonsignore and Sassoon don’t stop at mere theory; they go on to describe five case studies that help to explain a great deal. The companies concerned are Illy, Hyundai, Coca-Cola, Lacta Greece, and IBM, and it is from the practical application that we understand much more about what is taking place.

Bonsignore and Sassoon have managed to condense the best information on the new horizons of communication and production for many businesses in just over a hundred pages, for a book that everyone would do well to read.

Branded Content La nuova frontiera della comunicazione d’impresa
Paolo Bonsignore, Joseph Sassoon
Franco Angeli, 2014

The EU’s plan to stimulate manufacturing is reiterated in a document, published last week in Brussels, which contains the strategic guidelines of the newly appointed EU commission under Jean-Claude Juncker and centres around two pillars: greater attractiveness of Europe for international resources (and so a strengthening of competitiveness) and a series of massive investments in the “digital economy” and in bringing together the knowledge economy, communications, culture and the medium and high-tech industries. This is an ambitious strategy that moves in the direction of the commitment already undertaken by the EU to raise the contribution of manufacturing to 20% of GDP (from the current 15.1%) by 2020.

In other words, we are moving ever closer to an industrial compact, and the Italian presidency of the European semester will further strengthen this strategy. “Enough with ‘turbo-finance’. Now let’s get back to the real economy,” said Italian Prime Minister Matteo Renzi in a recent interview with Il Messaggero (23 June) in which he reiterated the thoughts of Romano Prodi and spoke explicitly of “industrial policy” (a strategy that brought an end public investment in “cathedrals in the desert”, great petrochemical facilities and steelworks, and subsidised businesses to focus – much more appropriately – on promoting conditions that would favour private investment both domestically and internationally).
Italy can start from a strong position when embarking upon the road towards the industrial compact, given that it is Europe’s second leading manufacturer with manufacturing at a level of 16.5% of GDP. If we look even deeper, we see, in addition to the average figures, that the level in northern Italy is 21.6% and that the 20% target has even been exceeded in the Marche and Abruzzo regions and in as many as 37 Italian provinces.
The crisis has yet to release its grip, but industry is holding its own (and the ISTAT confidence index rose from 86.9 in May to 88.4 for June and improved across all industries, with manufacturing rising to 100, the highest it has been since July 2011), and even respected economists have confirmed what we have always said here on this blog, that there can be no future without manufacturing. This knowledge is also shared by the Italian Minister for Economic Development, Federica Guidi, who is putting together a plan for Italian manufacturing that features 100 million in investment and initiatives to strengthen exports (adding 50 billion to the current 470 billion) and to attract at least 20 billion in international investment for a decisive turnaround in both competitiveness and development.

We could go even further, looking at the medium-term strategy, and follow the advice of Roland Berger, a major German advisory firm, contained in a recent document entitled Industry 4.0, “a sort of manifesto on industrialism in the era of smart manufacturing” (as astutely summed up by Paolo Bricco in Il Sole24Ore on 27 May). And what does Berger have to say? Over the last twenty years, global value added in manufacturing has gone from 3.5 to 6.5 trillion euros. Twenty years ago, Europe, the US and Japan accounted for 79% (with Europe at 36%), but now they control just 60% as a result of a major process of deindustrialisation and illusions that growth depended on finance and on high-tech services.

Now, though, we have come to our senses, having been wounded by the Great Crisis of turbo-finance, and we have begun to focus on the real economy, giving rise to vibrant trends in reindustrialisation and backshoring, i.e. the return of manufacturing to the countries with the longest history of industrialisation. Despite it all, Germany has remained a great manufacturing nation, with Italy in second place, but as Roland Berger reports, “No individual nation, including Germany, can fully transform its industrial system without a European industrial policy agenda.” This is why we must make decisive strides towards the EU industrial compact and give substance to moves towards reaching the target of manufacturing at 20% of GDP by 2020: 90 billion in investment per year and, looking ever farther into the future, a total of 1.5 trillion by 2013.
And in Italy? We will need 15 billion in investment per year in the medium and high-tech segments, where we can boast cases of manufacturing excellence, but there is still room for improvement, as well as policy regarding digital infrastructures (and extending the availability of broadband), training and development, research, bringing businesses together, the widespread digitalisation of public administration, and so on. “Industrial models need to be completely transformed,” said Roberto Crapelli, managing director of Roland Berger Italia, “in a paradigm shift comparable to that of the 1980s and the introduction of automation and robotics in Italian industry.” As summed up by Il Sole24Ore, it will take strategy in which networked factories all organise around technology and in which the connective tissue between businesses changes, not to mention product innovation and “ultra-tertiarised” manufacturing. In other words, “Industry 4.0”.

Quality at all costs. That is the law that reigns supreme in the modern business, and justifiably so, but that alone is not enough. Along side quality in both product and production processes, it also takes quality in culture, a changing of gears in management and for all those working in an organisation. This is easier said than done, but it is just as mandatory for a business that truly wants to grow and not just to survive.

The paper “TQM and Modern Marketing in Developing Countries – Theoretical and Conceptual Frameworks”, by three authors in three different countries (specifically, Tahir Iqbal of Jubail University College, David Edwards  of Birmingham City University Business School, and Eman El-Gohary of the AMAC Centre, Cairo), lays the groundwork for better understanding the relationship between Total Quality Management (or TQM, one of the most common approaches to achieving quality in production) and the organisational culture to be changed.  The study looks into the relationship between TQM and productivity in manufacturing, with an emphasis on businesses in developing nations, but – when it comes right down to it – the basic principles apply to any business in any nation.

The work begins with a review of the current literature on the topic and seeks to determine the ties to and changes in the organisation’s culture. “The initial literature review confirmed that quality has a significant impact on productivity,” the authors write. “Better productivity gives cost advantages over competitors, thus resulting in lower prices and higher profit margins for manufacturers.”

But where does corporate culture play the most important part? Not just in the application of the TQM approach, but also – and above all – in the acceptance of the approach psychologically speaking. The authors have found that the key to success in adopting TQM lies in the attitude of both senior management and the workforces as a whole. In order to better understand the approach, the study also provides a useful breakdown of the costs of quality and of the various aspects of a business that have an impact on quality.

But that’s not all. The authors continue by claiming that there needs to be an awareness that an improvement in quality will also translate in a greater need for goods and services and, above all, in the potential that a more productive organisation “would be able to pay higher wages, thus attracting more highly skilled and qualified employees”. In short, better quality is a good thing not only for the owners of a business and for profits, but for everyone concerned. So long as it’s understood.

TQM and Modern Marketing in Developing Countries – Theoretical and Conceptual Frameworks

Tahir Iqbal (Department of Business Administration, Jubail University College, KSA
David Edwards (Professor of Industrial Innovation, Birmingham City University Business School)
Eman El-Gohary (AMAC Centre Cairo, Egypt)

International Journal of Business and Social Science Vol. 5, No. 6(1); May 2014

“No services without manufacturing.” Being led by a talented economist such as Luca Paolazzi, it’s only natural that it would be the Confindustria Research Centre to shed light on the false dichotomies in growth that drove the uninspired public debate of the 2000s (such as the decline of manufacturing and the rise of the service industry, with the economies of developed nations increasingly “emancipated from any grubby involvement with the physical world”, to use a Paul Krugman quote from 1996 in reference to the dirty, ugly factory). Indeed, the June issue of Confindustria’s Scenari Industriali featured a segment packed with facts and data about the importance of manufacturing, the complementary role played by services and the community, and the rise of “local” industrial policy. The message is clear. A “headquarters economy” specialised solely in the production of high-value services is not sustainable over the long term. In other words, without a “factory economy”, there can be no future even for a significant part of the service industry.

The observations of Confindustria fall within the now-established context of a return to the importance of manufacturing, both in the US (where Obama is emphasising the development of digital technologies as applied to large-scale manufacturing) and in the EU, engaged in establishing a sound “industrial compact” (investing some 150 million euros in the reindustrialisation of Europe to increase manufacturing to 20% of GDP by 2020, which is five percentage points higher than it is now), and point to the rising trend of “reshoring” (or “back-shoring”), i.e. the return of industrial investment from countries where labour costs were low back to their more industrialised countries of origin in search of quality, high value added in manufacturing and competitive excellence in the tools used. (In Italy in recent years, 79 cases of back-shoring and 12 cases of near-shoring, i.e. shifting investing to geographic areas that are very near to the organisation’s headquarters and main production facilities, have been documented.) And why? Because this is the only way to take advantage of sophisticated skills, high-quality supply chains, and a series of innovative services related to production, all of which are essential to the new way of viewing competitiveness.

According to Confindustria, demand for services in Italian manufacturing is as high as 17% of total value of production, a level which is uniform across all of the various industries with few exceptions, and leading the way are technical and scientific consulting and analysis (at 33% of all services purchased), followed by transport and sales services (24%) and financial services (10%). Actually, Italian manufacturers themselves generate services of over 6% of total value of production, although this varies significantly from one segment to another, with peaks of higher than 15% in electronic equipment and heavy transport vehicles.
If we look closely at how manufacturing has changed, we clearly see that it is at the heart of a sort of web that unites the factory to business and logistics services, to telecommunications, transport and utilities, to finance and construction, to agriculture and to extraction activities in a complex series of mutually beneficial relationships that involve both the strengths of the districts that feature high levels of specialisation and the capabilities of the value chains and of the so-called “meta-districts”.  Indeed, the main strategic role of manufacturing is that of connecting the various nodes of the economy’s production network.
So we need to get back to manufacturing in Italy and to strengthen those manufacturing skills that we fortunately still possess, to rediscover our “industrial pride” and to again see manufacturing as a means of “redemption” or “liberation” (to use terms from Italian journalism, including a recent work by Filippo Astone about manufacturing, Europe and how to revive the Italian economy).  In its recent study, Confindustria confirms the factual bases of the knowledge economy and reiterates the vital interconnections between product manufacturing and the services that both precede and follow the making of the product and that require a certain geographic continuity for the entire process to even take place. In other words, without manufacturing, demand for such services would simply not exist, and without a constant interaction with manufacturing, these services would not advance or improve and knowledge and know-how would not progress.
Hence the sense of urgency for governments to establish industrial policy that goes beyond out-dated and pointless “industry plans” and the current plethora of incentives to focus, instead, on the fundamentals of (high-value) production and of Italy’s competitiveness as a whole, bringing together manufacturing and business services. As Confindustria notes, public action is justified in theory in that it focuses on promoting a progressive aggregation of industrial activities around innovative projects and with a more systemic view – i.e. that involves multiple parties in segments that go beyond just manufacturing – and complementary specialisations. It’s a good start and a road to be followed quickly and effectively and with an emphasis on both the regions of industry and the various European strategies.

When the fog sets in and the waters get rough, it takes a confident navigator to reach one’s destination. The same can be said for businesses of all sizes, especially when faced with turbulent markets and multifaceted competition.
Many books on economics and business management have been written, but a recent work by Annalisa Tunisini, Tonino Pencarelli and Luca Ferrucci has two important things going for it: clear language and thorough coverage of the topic. Written for schools, their Economia e management delle imprese (Enterprise management and economics) is a good read for anyone in business.

The essential idea underlying the textbook is that an enterprise is not an entity removed from the context in which it operates and without any ties to its past, nothing more than a production machine. To this end, the work provides a holistic, progressive view of the enterprise and of its relationship with the outside world. But that’s not all. Change in the modern enterprise is also seen within its historical context and in relation to various industries and geographic areas, and the book includes analyses of the latest transformations brought about by the growing importance of science and technology, of globalisation, and of the tertiarization of the economy. The evolution of economics and business management as they apply to the enterprise are seen in relation to the evolution of manufacturing and of the rest of society.
In addition to all of this, Tunisini, Pencarelli and Ferrucci then describe a series of management tools, focusing on three aspects in particular: the dynamics of production of marketing and of internationalisation, as these are the three key elements of doing business today, i.e. the ability to produce efficiently and competitively, knowing how best to sell a product, and having a keen focus on international markets – key points to take advantage of both to survive and to continue growing.
Economia e management delle imprese is a good book to keep on hand in order to better understand both the past and the future of the industry in which one operates. 

Economia e management delle imprese
Annalisa Tunisini, Tonino Pencarelli, Luca Ferrucci
Hoepli, July 2014

The socially responsible organisation. There are a great many, in all shapes and sizes and in every industry. A focus not just on profits, but also on the impact a business has on its environment, is important in that it builds consensus and goodwill, increases sales and, ultimately, increases profits as well. Corporate social responsibility is quite a bit more than just a marketing tool. It is an attitude that transforms the way of doing business, changes corporate culture, and alters the outlook of the business.

“Social responsibility” is a Bachelor thesis in Management by Alexander Baumann and Bob Oskar Kindred, which the two presented on 28 May for their studies at the School of Business and Economics of Linnaeus University in Växjö, Sweden. The work starts from the classical assumption of enterprise as a means of making profit before looking at how the work of an enterprise can also have a positive impact on local communities by applying the concept of corporate social responsibility.

The study opens with a clear presentation of the theory of entrepreneurship and of corporate social responsibility before moving on to a series of interviews with senior executives of firms in a given area of Sweden in order to determine what leads to efforts to unite profits and social responsibility. As the authors explain, “The motivation behind our respondents taking on a social responsibility in the local community could be explained by factors [such] as them wanting to feel appreciated, respected, [or] internal motivation – like personal agenda, context and economic factors.” The study lists four motivations in particular: the need to earn the respect of those who matter in a community; the presence of specific, personal motivations; a social context that pushes towards an interest in the issues of the community; and, of course, a series of economic factors that push towards corporate social responsibility.

“Social responsibility” by Baumann and Kindgren helps to understand an important aspect of business management and the culture of enterprise and makes for interesting reading.

Social responsibility

Alexander Baumann, Bob Oskar Kindgren

Bachelor thesis in Management, Linnaeus University, Växjö (Sweden), May 2014

Communicate, grow, produce

A study presented in New York in early June seeks to better understand the link between corporate communication and culture

Communicating leads to growth,both in life and in business.In fact, communication both inside and outside of an organisation contributes to the growth of the culture that is created and gives form to the business itself,and this growth then opens doors and creates profits, jobs and wellbeing.Of course, this is nothing new,but it is true that much work needs to be done in order to fully understand the great potential of effective communication both inside and outside the organisation.

Some help in this regard can certainly come from reading “Effective Communication: Strategy for Efficient Organizational Culture and Performance”, by Uti Charles Amechi, Choi Sang Long and A.I. Chikaji (of the Faculty of Management, Universiti Teknologi Malaysia), which was recently presented at the sixth annual American Business Research Conference held in New York on 9-10 June.

What ten traits does the ideal manager possess? A sort of love of rankings has led Corriere della Sera (on 13 June in an article by Iolanda Barera) to conduct a survey of experts at a number of leading international business schools ranging from Saïd Business School at the University of Oxford to HEC Paris. And the result? Topping the charts of traits of good conduct are humility, ethics and a sense of humour, important values that show how the rules of leadership have changed even in business and how critical reflection and achieving consensus are just as important as propensity to lead. In fact, an ability for honest self-reflection ranked higher than the much-touted vision given that one must first know oneself before being able to know where to lead a team or a business. “If you don’t know yourself well, you can’t lead others,” said Peter Tufano, dean of the Saïd Business School (applying to business the Delphic aphorism of “know thyself”, which was inscribed in the forecourt of the Temple of Apollo and was held so dear by the wisest of the Greek philosophers). In other words, critical awareness and, of course, self-awareness (and so a sense of humility), a sense of responsibility and, at the same time, of curiosity (a tendency to ask questions of oneself and of others, to take on the challenge of the unknown or of that which is not yet understood), and the foresight to grasp context.

Markets are volatile. Business contexts change. The factors that affect business decisions and conduct are tied not only to a rational calculation of interests, but also to a lengthy – and often contradictory – series of desires, expectations, emotions and other psychological factors, and differences in attitude, orientation and culture are accentuated by the intersection of multiple factors when it comes to multinational contexts. This is why a profound, sincere propensity to challenge ourselves, to learn to communicate effectively (which also means knowing how to listen before seeking to persuade), to ask questions, and to take advantage of a variety of talents is so crucial.

Try, make mistakes, start again. Throughout the twentieth century, the philosophy of science taught us that research moves forward through falsification and a cycle of trial and error (hence the importance, for a good manager, of paying close attention to the lessons of Karl Popper), so we must shun out-dated dogmatic approaches, empty authority, and fear of criticism by our peers even when delivered in a brusque manner. The boss isn’t right just because he’s the boss, but rather his leadership rests on his propensity to listen, to admit when he’s wrong, to reassess and to start from the beginning. Infallibility is no longer a virtue (and perhaps never was).

What is needed is a healthy sense of humour and a gentle touch even in the most important things, as well as a strong sense of ethics and social responsibility, so as to earn, defend and renew authority and merit and to give new strength to leadership. “Nowadays, managers need to be more flexible, particularly in the international marketplace, ready to adjust the trajectory of their decisions or to change direction entirely,” continued Tufano – to be resilient (to come back to an aspect of the culture of enterprise that has been discussed here on multiple occasions).

It takes “convocational leadership”, a term used by the sociologist Francesco Morace to describe leadership based on the paradigm of trust and sharing and on the commitment to not only pursue a vision (which is the age-old work of the innately innovative entrepreneur), but also – and above all – to stimulate the interest of others and motivate them to play an active, responsible part in that pursuit. It takes a “chain of trust”, something that was discussed recently at the Pirelli Foundation during the nineteenth Amici di Aspen (Friends of the Aspen Institute) conference, which was chaired by Beatrice Trussardi and was dedicated to “The New Entrepreneur”, one who is international, open to risk, and a skilled communicator. It’s the challenge of leadership.

It does take a propensity to lead, but above all it takes an ability to lead through influence, engagement, and setting an example. “Don’t demand that people do this or that. Make it so that they want to do it,” as explained by Alexander S. Haslam, Stephen D. Reicher and Michael J. Platow in The New Psychology of Leadership: Identity, Influence and Power, a good read that includes an interesting foreword by George A. Akerlof, Nobel Laureate in Economics.

It’s a sort of “identity-based” leadership founded on four pillars: leaders represent the group that they hope to lead; they are defenders of the group’s interests; they exercise their influence by promoting the group’s identity and by engaging its individual members; and they actually embody that identity by using available energies to achieve common goals.  It is a new type of charisma, a new culture of responsibility: leading, engaging, pointing the way forward, properly interpreting the surrounding context (without being hard-headed and fanatic about a cause), and, of course, smiling.

Mistreated warriors faced with a greater, more powerful destiny than their own. Alone, the enemy of all, trapped in an image that is often far from the truth, in search of a way to make their true nature known. This could be the portrait – a valid one in many cases – of the Italian manager, faced with a crisis that is without end and with a yearning for redemption, not only for themselves, but also for the businesses for which they work. Although you are free to disagree with it, this is the portrait that is painted in the book Risorse sovraumane. Autoritratto dei manager italiani di oggi (Superhuman Resources. Self-portrait of today’s Italian managers), written by Monica Fabris and Emma Villa and which is about to be released in Italy. It is being promoted by Federmanager in order to better understand the nature of the Italian manager and, above all, to bring justice in the face of too many stereotypes. 

While it may be a “biased” work, it is also an important one, and interesting in that it seeks to answer a series of questions about the self-image of Italian managers, as well as about the values, lifestyles, and ways of living and working of such managers after a crisis that has hit hard and which is calling on them to use their skills to breathe new life into enterprise competitiveness.

The work has an unusual start by taking an almost anthropological look at a small group of managers before taking these initial results as the basis for a study of a much broader sample population with the help of a questionnaire. It comes to a close with a series of four interviews of the Italian managers Giorgio Squinzi, Susanna Camusso, Angelo Bagnasco and Giulio Sapelli.

The conclusion reached is that we need to lose the image of the self-centred, individualistic manager interested in nothing but money and power, a person who feels privileged and never goes beyond the mindset of the company for which he works. As the two authors explain, today’s Italian managers actually feel they are responsible for bringing in a new culture centred around merit and responsibility, fighting, in a way, with their own talents and tools in order to make a decisive contribution to the country’s wellbeing, actual flesh-and-blood individuals driven by passion and aspirations. 

An important passage is also to be found in the introduction to the book, which states that the hierarchy of values now being promoted by managers has been completely overturned, with the aspects of ethics and responsibility being placed before the material needs and importance of image that were once the priority. This results in an entirely new virtuous circle among managers, businesses and society, starting with the values of the individual. 

Risorse sovraumane is a book to be read carefully and an interesting snapshot to be studied in detail.  

Risorse sovraumane. Autoritratto dei manager italiani di oggi

Monica Fabris, Emma Villa 

Franco Angeli, July 2014