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Walmart is a company based in the United States with operations in over 50 countries. So, is Doug McMillon, the CEO of Walmart, a global leader?
Theobroma is a bakery chain based in India but provides delivery globally. So, is Pooja Dhingra, the Founder of Theobroma, a global leader?
These examples force us to ask, is anyone who operates internationally part of Global Leadership? Is there a specific definition attributed to global leadership? This is what we will highlight in this article: the definition and characteristics of global leadership and the way of developing a global leadership skill. So, let’s dive in!
Meaning Of Global Leadership
Global leadership is a multifaceted concept involving various aspects and is more complex than traditional leadership. Prof. Sebastian Reiche attempted to define global leadership in his Journal of International Business Studies article. According to Reiche, global leadership is “the processes and actions through which an individual influences a range of internal and external constituents from multiple national cultures and jurisdictions in a context characterised by significant levels of task and relationship complexity”.
Let’s understand this in simple terms. Global leadership means things that a person does to guide and affect a diverse group of people both inside and outside their organisation. These people come from different countries and have various customs and rules to follow. Global leadership occurs when tasks are pretty complex, and building relationships can be challenging. So, a global leader is someone who can handle these challenges and lead effectively in this kind of diverse and complex environment.
This interconnected nature and complexity of global leadership is what makes it most important in the present day. Let’s see some of the factors that make global leadership important.
Importance of Global Leadership
As our world shrinks through the rise in technology and shared challenges, the need to develop global leadership increases.
Here are just a few reasons why the role of global leaders is more vital than ever:
1. Developing Ethics
Global leadership plays a crucial role in developing and promoting ethics on a global scale. Ethics encompass principles of right and wrong, moral conduct, and values, which are essential for fostering trust, sustainability, and responsible business practices. Different countries have distinct legal and ethical frameworks. You need to ensure that your organisation complies with such international standards while upholding ethical principles. Anita Roddick was a strong advocate for ethical sourcing and fair trade. Under her leadership, the Body Shop was one of the first companies to emphasise the use of natural ingredients, prohibit animal testing and promote fair trade practices with communities around the world.
2. Trade Collaborations
Global leadership provides opportunities for collaborations between businesses around the world for trade and commerce. According to the United Nations Conference on Trade and Development (UNCTAD), the value of global trade increased to a record-breaking $7.7 trillion in the first quarter of 2022, compared to $6.5 trillion in 2021. A World Economic Forum survey reveals that over 90% of global leaders believe collaboration between businesses and governments is essential to address global challenges. Imagine engineers from Tokyo and entrepreneurs from Nairobi joining hands to tackle poverty, both fueled by their unique experiences and insights. Global leadership is important because it makes this possible.
3. Sustainable Growth
Global leadership contributes to sustainable growth and profitability while enhancing people’s overall well-being. It uses a strategic approach to integrate ethical decision-making, innovation, diversity, and social responsibility. By fostering a culture of inclusivity, investing in talent development, and collaborating with stakeholders, global leaders ensure that their organisations thrive not only financially but also by positively impacting society and the environment. Initiatives such as Unilever’s Sustainable Living Plan (USLP), which sourced 100% of agricultural raw materials sustainably from farmers, are the top examples of sustainable growth through global leadership.
4 Characteristics of Global Leadership
Characteristics of global leadership include the skilful handling of cultural conflicts, the ability to adapt behaviours across diverse settings, the skill to foster shared goals among international teams, and effective management of the tension between global and local approaches.
Let’s break these characteristics down one by one.
1. Handling Cultural Conflicts
Global leaders adeptly handle cultural conflicts by being culturally intelligent and fostering open communication. They understand diverse cultural norms, values, and communication styles. When conflicts arise based on cultural differences, these leaders seek to find common ground, promote mutual understanding, and facilitate respectful resolution.
For example, Airbnb is an online marketplace for house rentals based in the United States. Airbnb failed to expand to China due to their lack of understanding of cultural differences. They failed to understand that in Chinese culture, people do not prefer renting their houses to strangers, they do not clean their places themselves, and one major loophole was the lack of Chinese-speaking customer support.
On the other hand, McDonald’s, as a company, has established itself as an expert at understanding cultural differences. It often introduces regional or country-specific menu items to cater to local tastes. For example, in India, where a significant portion of the population follows a vegetarian diet, McDonald’s offers a range of vegetarian options, including the McAloo Tikki burger. In the UAE, a predominantly Muslim country, the menu is adjusted to exclude pork products.
2. Adapting Your Behaviours
Global leaders showcase adaptability by adjusting their behaviours to suit different cultural contexts. This involves being flexible in leadership styles and decision-making processes. Adaptable leaders understand that what works in one cultural setting may not be effective in another. They embrace diversity and modify their behaviours to resonate with the values and expectations of the diverse individuals they work with.
A successful example of this is Starbucks’s expansion to Indonesia. Starbucks adapted its behaviour and partnered with local coffee farmers to offer regional coffee blends to the people of Indonesia. Their in-store experience with well-articulated Balinese architecture helped them to build brand loyalty and also support the local economy.
3. Creating Shared Goals
Global leaders emphasise common objectives that align with the overarching mission of the organisation. They bridge cultural and regional differences by highlighting the collective purpose that unites team members. By establishing clear and shared goals, global leaders ensure that everyone is able to see a common vision, promoting cohesion and collaboration.
For example, shared goals are Rolex’s story of maintaining brand value as a common objective throughout the world. Rolex is known for its commitment to quality, precision, and craftsmanship. To control the demand and supply of their watches, Rolex implements a unique allocation system whereby customers are required to join a waitlist to be able to purchase a watch. This practice is particularly associated with Rolex’s sports models, such as the Submariner, Daytona, and GMT-Master II. By managing the availability of their watches, they maintain the brand’s prestigious image and prevent dilution of their perceived value.
4. Adopting “Glocal” Approach
“Glocal” is a contemporary word given to an approach to effectively manage the tension between global and local approaches with a delicate balance. This approach involves creating a harmony between a cohesive global identity and being responsive to local diversity. It acknowledges that a one-size-fits-all approach may not be effective and that flexibility is required to accommodate variations, especially in the global markets.
Examples of glocal approaches include multinational companies such as IKEA that offer products or services with global appeal. For instance, IKEA’s Ingatorp is a universally known dining table which IKEA adjusted to be extendable to meet the requirements of Asian families. While maintaining a standardised design, IKEA’s adaptability ensures that its dining tables also resonate with local customers. This is a brilliant example of doing things glocally.
5 Global Leadership Skills to Develop
Global leadership requires a unique set of skills that go beyond what may be considered essential in ordinary or domestic leadership roles. These skills are crucial for navigating the complexities that come from around the world and culturally diverse environments.
Let’s learn more about developing global leadership skills.
1. Cultural Intelligence
Cultural intelligence is not restricted to just understanding different cultures. Leaders need to be culturally intelligent to see, appreciate, and work effectively with people from different cultural backgrounds, communicate effectively across different languages, and bridge the gap between such cultures.
Let’s take the example of an extraordinary global leader, Akio Toyoda, the CEO of Toyota Motors. Toyoda leads a team with members from Japan, the United Kingdom, India, and others. He doesn’t just acknowledge the cultural differences within the team; he understands them deeply. He knows that a Japanese member of the team may prefer indirect communication and value hierarchy, and an Indian member of the team may appreciate a more informal and expressive approach. In contrast, members from the UK would prefer a formal approach to communication. So, Toyoda adapts his leadership style to resonate with each team member’s cultural preferences, creating a harmonious and productive work environment.
2. Global Mindset
Developing a global mindset is like developing a mental map that extends beyond the borders of a single country. Leaders with a global mindset see the world as an interconnected system, where events in one part of the globe can have implications far beyond. These leaders focus on local market trends; they closely monitor economic shifts in emerging markets, anticipate the impact of international trade policies on the supply chain, and understand how cultural preferences influence consumer choices worldwide. A global mindset not only helps leaders navigate challenges but also identifies growth opportunities.
A perfect example of a global mindset is Apple Inc. switching to a USB-C port for charging and syncing data across its devices to meet the regulations of the European Union. The EU has announced all phones will have a USB-C charger to enable uniformity in different devices by the autumn of 2024. As a result, Apple, which used a lightning charger for its iPhone, has to switch to a USB-C charger to stay relevant in the European market. Apple’s head of marketing, Greg Joswiak, mentioned that the company will be supporting all global regulations and that using C-type ports will also benefit the environment.
3. Political Awareness
Political savvy or political awareness refers to a leader’s ability to understand and navigate the international political landscape. It involves being aware of political structures, dynamics, and influential stakeholders within a given political system. Political decisions, regulations, and relationships can significantly impact business operations. Therefore, possessing political savvy is essential for making informed decisions, anticipating potential challenges, and building successful partnerships. Political savvy is not about engaging in politics but understanding how political factors can impact business.
A leader’s political awareness contributes to effective decision-making, risk management, and the establishment of positive relationships with government entities. Warren Buffett’s political savvy is a testament to his understanding of the intricate relationship between leadership and politics. His annual letters to Berkshire Hathaway shareholders often include commentary on economic conditions, taxation, and government regulation, showcasing his ability to articulate complex economic concepts in a way that resonates with a broad audience.
4. International Networking
International networking involves actively establishing and nurturing professional relationships on a global scale. In the present inter-connected world, leaders need to network for several reasons. Building a network that spans the globe allows leaders to tap into diverse perspectives and insights. This diversity can be invaluable for problem-solving, innovation, and gaining a better understanding of global markets. Global networking opens doors to collaboration opportunities.
One major global networking story is of Alibaba Group, founded by Jack Ma. Alibaba started in 1999 as an e-commerce platform connecting Chinese manufacturers with international buyers. In 2014, Alibaba went public on the New York Stock Exchange (NYSE) in one of the largest initial public offerings (IPOs) in history – all through Jack Ma’s connections with international investors and financial institutions. Alibaba hosts events like the Alibaba Cloud Summit to bring together experts, thought leaders, and innovators from around the world. Using such networks, they are able to form strategic partnerships and stay updated with societal advancements.
5. Handle Ambiguity
The global ecosystem is marked by ambiguity and uncertainty. Hence, tolerance for ambiguity becomes an important leadership trait. Operating in such an environment involves being comfortable and effective in situations characterised by uncertainty, lack of clarity, or incomplete information. Leaders with a high tolerance for ambiguity can navigate through complex and unpredictable scenarios without feeling overwhelmed. One skill that can help you navigate ambiguity is flexibility.
In a global context, where conditions can change rapidly, leaders need to be agile and able to pivot when necessary. One of the top examples of ambiguity or uncertainty is the depletion of oil around the world. Depletion of oil is not a new phenomenon; however, in recent times, it has become severe, resulting in increased demand for electric vehicles (EVs). Elon Musk was the visionary who understood this demand and prepared for it beforehand. While other companies launched less efficient EVs, Elon Musk launched Tesla, a brand created for high-performance electric vehicles. Besides Tesla, Musk also handled one of the most vague spectrums, i.e., space travel, through his company, SpaceX.
Leaders who rise above cultural, geographical, and political boundaries are the architects of progress in our globalised society. Global leadership is something that has to be attained through a consistent process. You can start by attending conferences and workshops to understand more about global leadership and look at the case studies of successful and unsuccessful global leaders. You can undergo a global leadership training program or higher education to inculcate it better.
As time passes, the importance of developing leaders who can guide companies to grow globally will only increase. The ones who do well in international markets, who appreciate different cultures and work together across different countries, will be the ones who survive the rapid change. So, are you ready to be a global leader?