Entering a strategic partnership is an adventure in itself. It takes careful planning and consideration for it to succeed. When it’s a cross-cultural strategic partnership, culture clashes, language barriers, and even different ways of doing business, can make things even trickier and complicate the path to success with challenges.
You can, however, make it work – and make it work well! Here’s what you need to know when entering this kind of partnership and what you should do to make it work wonders for your business.
Key Benefits of a Cross-Cultural Strategic Partnership
There are several reasons why businesses enter a strategic partnership which involves more than one culture or nationality. These include:
A Wider Reach and Easier Access to Goods and Services
The main benefit of a cross-cultural strategic partnership is the increased ability to reach an international audience, or at least gain another market outside your country’s national boundaries. By working with, say, a Maori-owned business in New Zealand, and sharing resources with them, you may find it easier to ship to or transport your products on New Zealand soil. The benefits you enjoy from your cross-cultural strategic partnership will vary depending on the exact nature of the partnership, but many businesses will opt for sharing patents or manufacturing resources.
Better Collaboration, More Innovation
Anne-Marie Soderberg and her colleagues, writing in the Journal of International Management, drive home this point. She stresses, “cultural diversity in global teams may enrich collaboration and generate more innovative solutions” and that, can indeed, be so. Different perspectives from another culture can give rise to solutions that may be difficult to find otherwise.
To illustrate this point, let’s revisit our hypothetical partnership with a Maori-owned firm in New Zealand. Let’s say one of the strategic partners, an Australian firm, has some difficulties with keeping its workers, particularly those in entry-level positions. They want to keep these people, but despite offering substantial raises, the talented newcomers jump ship and go elsewhere.
When they met with their partner corporation’s leaders in Rotorua, New Zealand, they mentioned that they had no such problems in their company. They cited a Maori proverb, “The leader at the front and the workers behind the scenes.” The executives explained that in Maori culture, their company must value both the lower-level and C-suite employees, as, if it weren’t for them, the company would fall flat.
The Australian firm’s leaders hadn’t thought about their problem from that perspective before. When they arrived back home, they immediately began to recognize their entry-level workers for their achievements, thank them publicly, and ask them for their input. The new way of looking at an old problem—thanks to having a cross-cultural strategic partnership—could save the day for a floundering company.
Avoiding Complications of Cross-Cultural Strategic Partnerships
With the aforementioned benefits also come possible complications which include cultural misunderstandings, differences, and even lack of knowledge of the laws that govern each other’s countries. However, there are several things you can do to avoid these problems and make it easier for the partnership to flourish.
Keep an open mind
If for example, our hypothetical Australian firm had taken offense at the Maori executives’ mention of the proverb about worker equality, the strategic partnership itself might have been in danger of falling through. An open mind and open ears are therefore essential ingredients to a successful cross-cultural partnership. This helps in terms of understanding your partner’s perspective. Having an open mind also helps reduce unnecessary cultural biases which might hinder you from building an effective professional relationship in a cross-cultural partnership.
In our recent Strategic Partnership Expert Panel webinar it was noted that cross-cultural partnerships work best when you keep in mind the uniqueness of such a strategic partnership. Having an open mind helps you do this, assisting you to appreciate and manoeuvre the intricacies of the partnership to avoid cultural misunderstandings.
Bridge Differences and Build Common Goals
Soderberg stresses that, to bridge differences and build common goals, partners must develop a shared understanding through negotiation. Face-to-face meetings, she advises, are the best mechanism for that. Body language can stretch across divides too vast to bridge with mere words. Relational trust-building, she says, is the key to a successful cross-cultural strategic partnership.
Another way to help bridge differences in cross-cultural partnerships is the willingness to share. As discussed in our Strategic Partnership Expert Panel webinar, a cross-cultural partnership is a contractual agreement between two culturally different businesses. Sharing of technology, manpower, and other assets increases the confidence the partners have for each other and minimises the fear that ulterior motives are in place or that a partner is not 100% willing to co-operate because of cultural differences. This in turn boosts collaboration within the partnership.
Seek Local Guidance to Build Understanding
When Australian businesses, for example, look at a foreign partner’s business practices through their own eyes, they may be stumped and this could lead to misunderstanding. When, however, they rely on their strategic partner’s team for cultural guidance, they can learn why these practices are effective in their local context. They may even, as in our illustration, provide a new way of seeing business practices which could also turn out to be useful as well on the Australian side of the partnership.
Seeking guidance and communicating with your strategic partner gives you a better of idea of what to do, what to expect, and how to properly communicate and deal with your partner and their practices. This also builds respect which, as we all know, is important for all kinds of partnerships.
Know the Laws
Cross-cultural strategic partnerships will likely fail when those involved don’t research the laws in their partner’s country to avoid pitfalls. Again, local guidance can help foreign partners understand local laws and find a way to do business within those laws. If shipping is part of the partnership’s business activities, do your homework. Don’t have your goods stopped at the border because your legal team didn’t bother to check with your partner’s customs requirements!
Being clueless is never an excuse. Remember, as was stressed in our Strategic Partnership Expert Panel webinar, a cross-cultural strategic partnership can run into challenges because of the differences in terms of laws and customs. It’s prudent to research, ask questions, and be well-informed especially with the legal elements in this particular kind of partnership.
Success in Cross-Cultural Strategic Partnerships
With work and understanding, cross-cultural strategic partnerships can bring more revenue and expanded markets to those involved, creating a win-win situation for the partners. Here are a couple of examples:
Air Canada and Virgin Australia
In 2016, the two airlines created a successful strategic partnership that provided access to Canadian cities for the Australian carrier. A codesharing agreement allows Virgin Australia’s customers to book flights on Air Canada planes traveling from Los Angeles to Montreal, Toronto, Calgary, and Vancouver. Meanwhile, Air Canada customers will be able to book flights on a single ticket to more Australian cities thanks to the partnership. This makes things easier for the passengers which could potentially lead to higher satisfaction ratings for both airlines.
Plaut Australia and MSG Global Solutions
In 2015, SAP services provider Plaut Australia formed a strategic partnership with MSG Global Solutions, an integrated technology provider for the financial services industry with offices in several countries around the world. The partnership allowed MSG to expand its consulting services and insurance technology into Australia, while Plaut Australia expanded into international markets that MSG Global serves. Both companies leveraged each other’s expertise to expand into different markets, enhance their services, and modernise their operations.
Like these companies, yours can also benefit from a cross-cultural strategic partnership. If you’d like more key insights on cross-cultural strategic partnerships or on partnerships in general, we encourage you to view the full recording of our Partnership Expert Panel webinar – you won’t be disappointed!
If you’re looking to build or strengthen your partnership capability or want expert advice and guidance on forming strategic partnerships, Partner2Grow has the right tools and resources to help you build the right alliances that will take your business to the next level.