How evolution drives success in the digital era
Change. Survive. Thrive. What your company needs to know to prosper in the digital age.
by Neelima Mahajan
illustrations by Jeanne Detallante
Visionary thinker Tsedal Neeley is pulling back the curtain on what it means to be a multinational. Here, she speaks to Think:Act about language in the workplace and turning global teams into a cohesive unit.
Peel back the layers, and a lot of companies that appear to be global just aren't. Simply having a token presence in countries outside of the head-quarters with limited revenue contribution isn't all it takes to make a company global. "A global company is one where your share of revenue and your market presence is significant worldwide, outside of the headquarters, even though you will always dominate most likely in certain markets, depending on your products and services," says Tsedal Neeley, professor at Harvard Business School.
Having grown up all over the globe, Neeley speaks four languages fluently and is the poster child for the well-adjusted global citizen. She is also very well aware of the challenges that can be present when people find themselves working across national boundaries and, for a few years now, she has been focused on the role language plays in globalizing corporations.
In her 2017 book, The Language of Global Success: How a Common Tongue Transforms Multinational Organizations, she gave a blow-by-blow account of how the Japanese e-commerce giant Rakuten took a leap and made the transition to becoming a truly global company by making English the company's lingua franca – and giving everyone a deadline of just two years to become fluent in it. This announcement sent shockwaves around the company. Here, Neeley talks about how a common language can become the tool to harmonize corporate culture across countries, transcending even national identities.
At Rakuten, what was going on in CEO Hiroshi Mikitani's mind when he made English the company's lingua franca?
You can think of Rakuten as this online powerhouse. It's the Amazon meets eBay meets Expedia in Japan. At that time, Rakuten had near 90% market share in Japan. [It] had to go outside of Japan to grow. The second problem was the shrinking GDP in the country and constraints with human capital. When they were trying to grow, Japanese companies would compete for the exact same 36,000 engineering or technical graduates in the entire country. How do you hire if that's your pool? And you have all of these amazing Japanese companies competing for [talent] as well.
They needed to access a worldwide talent pool. Mikitani says the moment he moved to an English language company, which is the common language of business in the world, his company could access up to three million engineers from top schools across several countries. Human capital no longer is this incredibly scarce resource.
Rakuten is a services company, and that means the interdependence among people across the world would be high. Knowledge sharing was very important for the company – in fact, a big source of competitive advantage for them. But how do you get knowledge to move in the company when people can't speak to one another in any language?
So this is why he made this huge announcement in March 2010. But his move is not unique. He joined the 60% of multinationals around the world that had migrated to an English-speaking company long before he did. It was radical because it was Japan. It was radical because he said two years.
What is Rakuten like now?
They've gone from [approximately] 200 million users in 2010 to 1.2 billion users today. Clearly, the 1.2 billion users are absolutely not Japanese, right? That is a huge marker. The second thing is, they now have a presence, I think in 37 countries. For example, they own Ebates in the US. Many people in the US use Ebates; they've no idea that they are Rakuten customers.
They've become a global brand. Go to any airport and look at sports paraphernalia. One of the first things you will see is FC Barcelona's jersey with Rakuten on the jersey itself. Billions of people are looking at and recognizing their name. They're [now] able to strike these deals with sports institutions that view them as a global company and a global brand.
Live within their native country, yet give up their native language within their workplace.
Native speakers of the lingua franca, yet struggle with organizational values.
Non-native to both the lingua franca and the organization's home culture, they show the easiest time adjusting to language changes.
How do language, organizational culture and national culture connect, intersect and also impact each other in a global corporation?
Whenever you're dealing with language in an organization you're also dealing with national culture. Rakuten is headquartered in Japan, and now they're speaking English. Their national culture doesn't go away, but now they have to adopt a different language in order to operate. An intersection between these two is that because they migrated to English, they now have the capacity to transport their national culture worldwide and across all of their organizations in ways that they hadn't before. I call this the Trojan Horse of language.
The angst that people express often is: "Are you diluting people's national languages and cultures by introducing this common language?" Historically we've seen colonialism, we've seen imperialism, we've seen a lot of things. But in the commerce space this operates quite differently. The reality is that by participating in the common language of the world, a company has the capacity to transport their culture across the world as opposed to disappearing themselves. And Rakuten has done that.
Meetings that require interpreters cost more time and more money, while translated documents can slow down transactions and remove nuance. When speaking the same language, global team members can collaborate freely to advance an organization's goals.
Working across cultures isn't just about language; it's also about overcoming deeply ingrained biases. To what extent does language help in doing that?
There is a very huge research stream that has proven that contact with different cultures actually helps build empathy. Developing collaboration, or connection, or any kind of exchange, knowledge sharing, is one of the big ways in which Rakuten has shaped contact. These would be literally requirements for people in different parts of the world who are in charge of divisions, or areas, or customers, to speak to one another regularly. It could be about knowledge sharing or problem solving.
They have systematized these frequent contacts. These frequent contacts, in turn, reduce biases, increase relationship building and development among others. People begin to seek others on their own because they're exposed to the idea, "I know you're in Indonesia, or Taiwan or in Bamberg, Germany, but you can actually have a conversation with someone in Brazil who's really good at this thing." All these things decrease bias and increase contact and collaboration.
Global work orientation is not a trait where we say people are culturally intelligent or not, [or] they have the capacity to work across cultures or not. What we learned at Rakuten, with employees across many countries who possess global work orientation, [is that] they had several practices that allowed them to deal with cross-cultural tensions or differences. One is seeking contact and seeking commonality. Many people across cultures who have these biases, the moment they engage others they are looking for differences and overemphasizing the discomfort that they may feel. Those who have this global work orientation will actually sit with someone and immediately seek commonalities.
What kind of challenges did Rakuten face while they were rolling this out?
Hiroshi Mikitani underestimated the extent to which people would have strong emotional responses to such a mandate. He didn't realize how anxious people would become and how viscerally scary it is to make such a mandate. They addressed those issues head-on through massive increase of buy-in. People had to believe that what they were doing was a critical path for their future. So Hiroshi Mikitani started messaging the importance of this English language change and this global expansion imperative every single week for two years straight.
A professor at Harvard Business School, Tsedal Neeley's trailblazing research is focused on multinational business and how firms can capitalize on the promise of global reach. She published her first book in 2017 and has also contributed to Harvard Business Review, the Strategic Management Journal and the Journal of International Business.
Beyond language, does your research have implications for how the corporate headquarters should see their role? Usually, they see themselves as close to the central resources, close to the decision-making, so they feel that they are in some way superior.
Yes, it is interesting because that is changing in a lot of places, by the way, depending on where the markets are, where sometimes certain regions have more power than the headquarters. So we are seeing a lot of changes. The online space is confusing those things as well. But the global-local tension is a tension that's not gonna go away.
Wherever the head of the company is, is going to be a power center. That's just not going to change. The question is how do companies deal with that healthy tension between global-local? I don't think companies necessarily deal with it well, whether it's through structural solutions, reward systems, recruitment and retention strategies. There's a lot that you need to do in order to make that really work for you.
There are some things that global headquarters can and should dictate, and some things they could never dictate for a local market. In fact, the best global leaders of various entities that are outside of their headquarters, are those who can yield to the expertise and knowledge of local representatives. This global-local tension, as we know it, might change some depending on how the configuration of work shifts because of the digital shockwave.
Change. Survive. Thrive. What your company needs to know to prosper in the digital age.
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