MAGAZINE THE ASSOCIATE PARTNER BUILDING BRIDGES An interview with Eric Koch, European Innovation Council and SME Executive Agency 1- 2021 BY HOFSTEDE INSIGHTS1 IN THIS ISSUE 03 BUILDING BRIDGES - AN INTERVIEW WITH ERIC KOCH 07 DOING BUSINESS IN MALAYSIA CUSTOMER NEEDS AND BEHAVIOUR IN NIGERIA 17 10 LATEST NEWS 19 CASE STUDY - WHAT WOULD YOU HAVE DONE? 20 THE OPENING OF HOFSTEDE INSIGHTS INDIA 21 WALK THE TALK - PART 2 26 NEXT TIME 25 MEET OUR ASSOCIATE PARTNERS HOW TO FOSTER A CULTURE OF INNOVATION 11 15 TEST YOUR KNOWLEDGE WITH CUBE IN QUIZZES2 CONTRIBUTORS Welcome to the second edition of the Hofstede Insights magazine. In the first issue, we dived into team spirit and remote work. This time, we take a wide lens to examine what surrounds teams and build bridges between two crucial concepts that to this day remain vague and cryptic in the eyes of many: Culture and Innovation. The past year alone has worked as a stark reminder of the relevance and the link that exists between Culture and Innovation. As we were forced to be flexible and innovative, it became clear that some Organisations supported the process better than others. While some attributed the difference to luck, we know in this case luck comes to play in the form of Organisational Culture and unlike luck, you can actively change it. We will start our journey with Eric Koch, Project Officer at EISMEA and celebrate how the CUBE IN project has done its part in raising awareness amongst the European SMEs on the link between culture and innovation. We will then travel to Asia and Africa to explore innovation in various parts of the world. We will test your knowledge and share examples. We hope this magazine gives you a few ideas and some insights on how you can foster innovation in your organisation. There is always more work to be done in the field of culture, and Hofstede Insights will always be in the front lines. As Eric Koch puts it himself: “We should not be complacent, and continue delivering excellent content as well as shouting it loudly.” We are thankful to all those who have contributed to making this magazine a reality. Contributing writers: Okechukwu Okere, Jaime Ong Yeoh, Navkaran Singh, Akhilesh Mandal, Ger Rombouts, Chris VanderWalt, Gong Zaiyan, Erika Visser. Special thanks to our entire team, Eric Koch, and many others. Marketing and public relations: Celia Zanin, Alexandra Paksiova, Kari Säkkinen. sales@hofstede-insights.com Images: EASME, Hofstede Insights, iStock, AS. The opinions expressed in this publication are those of the authors. They do not necessarily reflect the opinions or views of the Hofstede Insights. EDITORIAL TEAM WELCOME3 Copyright Hofstede Insights. All rights reserved cil and SMEs Executive Agency (EISMEA) has been set-up by the European Commission on 1 April 2021 to create strong synergies to support the recovery of the European economy, and in par- ticular small and medium-sized enterprises, notably through inno- vation. It groups together in one agency all the activities of the European Innovation Council (EIC) and other programmes related to SMEs to implement EU financed programmes including Horizon 2020, COSME, LIFE, and the Euro- pean Maritime and fisheries fund (EMFF). The Agency has supported 20,000 projects and a wide range BUILDING BRIDGES An Interview with Eric Koch, Project Adviser at EISMEA A few weeks ago, we had the chance to interview Eric Koch, Pro- ject Adviser at EISMEA to discuss the future of European SMEs and the CUBE IN Platform. CAN YOU TELL US BRIEFLY ABOUT EISMEA? The European Innovation Coun- Emerging markets offer great opportuni- ties for business and innovation. The CUBE IN or Cultural Understanding for Business Expansion and INnovation Platform, is designed to give small and medium-sized enterprises (SMEs) the tools they need to prepare themselves and their business for operating in the unfamiliar business environment of emerging markets. CUBE IN is owned by the European Commission through the European Innovation Council and SME Executive Agency (EISMEA) it was designed and is maintained by Hofstede Insights, now in collaboration with SPI.4 Copyright Hofstede Insights. All rights reserved may be because they probably adapt their offer to the different needs of other markets and/or their offer is so varied that they would like to seize great market opportu- nities outside Europe. In the CUBE IN project, we are focussing on cultural background and oppor- tunities in emerging economies. While there is no clear definition of the word “emerging”, we mean countries and markets that have the population size and growth rates that make them interesting for European SMEs. Obviously, you cannot just go and sell your prod- ucts or services. A proper strategy, planning and cultural knowledge of the market going beyond the “customs and admin duties” is vital. It is about understanding how consumers in other countries tick, and adapting your behaviour and service/product offer. CUBE IN of- fers ample information in this area. CAN YOU TELL US IN YOUR OWN WORDS WHAT IS CUBE IN FOR YOU? CUBE IN stands for cultural busi- ness expansion and innovation. It is not only a buzzword; it is about explaining the multi faceted aspects of culture and its impact on human and thus business trans- of companies and organisations. The objectives are to strengthen European competitiveness and innovation, especially for small businesses. Other objectives in- clude fostering job creation and also contributing to the EU energy efficiency and climate targets. The overall budget is €11billion. WHAT WAS THE ORIGINAL TRIGGER FOR STARTING THE CUBE IN PROJ- ECT? It was the fact that European companies and especially SMEs find it difficult to do business and innovate outside the continent; especially in emerging economies with a huge market and economic growth. And this has largely to do with the cultural differences that exist between people living in very different parts of the world. WHY IS IT IMPORTANT THAT EURO- PEAN SME s GO ABROAD? The European Single Market and European countries in general present huge market opportunities for goods and services but the world is so much bigger – why not go for it? Companies that inter- nationalise also tend to be more innovative. Some reasons for that actions. To understand the entire cube (standing for the globe), you need to understand all sides of it, as you need to understand differ- ent cultures on this planet to better interact with your fellow human beings. In CUBE IN we focus on emerging economies to start with – countries with huge business and growth opportunities for European companies such as China, India, Mexico, Russia and South Africa. WHAT IS YOUR ROLE IN THE PROJ- ECT? I see myself as the good soul in the background and not the strict watchdog. I wish to support the team as much as possible so that they can fulfil the key performance indicators of the project. This in- cludes advice on the usability of the platform as well as additional distribution channels to increase traffic on the CUBE IN website. HOFSTEDE INSIGHTS HAS BEEN SELECTED FOR THE CUBE IN PROJ- ECT IN 2016. WHAT WAS THE MAIN REASON TO PICK HOFSTEDE IN- SIGHTS FROM ALL THE COMPANIES APPLYING FOR THE TENDER? Hofstede Insights’ heritage is in- comparable. It is clearly a leader in the market of explaining and understanding the different world cultures. HOW WOULD YOU EVALUATE THE PROJECT AND THE COLLABORA- TION WITH THE HOFSTEDE IN- SIGHTS TEAM AFTER 5 YEARS? Hofstede Insights participated in a competitive EU call for tenders procedure and the outcome led to selecting the best contractor for this project in 2016. Since then, Hofstede Insights has confirmed the trust we have placed in them. I am fully convinced that we have chosen the right contractor for this project. The webinars, quizzes and short business documents are CUBE IN Project teams at the EISMEA office in 20195 Copyright Hofstede Insights. All rights reserved of excellent quality. Trust means that we can discuss successes but also missteps in an honest and transparent way. If certain things need to change (e.g. increased user traffic), we talk about it and work on ways to tackle the issue. But trust also means that we can celebrate the successes together. I am also always available for sug- gestions. IT IS RATHER UNCOMMON FOR PROJECTS OF THAT TYPE TO BE RE- CONDUCTED SO MANY TIMES, ARE THERE SPECIFIC REASONS WHY THIS PROJECT HAS LASTED NEARLY 6 YEARS NOW? It is a topic that is crucially impor- tant as explained above but, par- adoxically, it is not a topic that is so much taken up and addressed by public services in Europe, neither at country/regional nor at Europe- an level. So, one important reason is surely that we are filling what appears to be a gap in the public service landscape. WHAT DO YOU THINK ARE THE BIGGEST IMPROVEMENTS MADE THROUGHOUT THE PROJECT? The user is of course at the centre of this project, which is the rea- son why we are collecting user feedback at various stages of the project. That is also why we have completely opened the website so users do not need to register to access it. We have also added a Map on the landing page to give readers the opportunity to quickly find relevant information for a giv- en country/culture. CAN YOU TELL US MORE ABOUT RE- VERSE INNOVATION? Reverse innovation goes a step fur- ther than just seeking innovations for foreign markets. The idea is that once an innovation has reached a foreign market it gets further devel- oped taking into account the local market and consumer specificities. A new product and service are thus created and adapted to the foreign market. Then, the innova- tion becomes so impactful that it can be introduced back in the European markets, hence the term “reverse”. WHY IS IT IMPORTANT TO HAVE CULTURAL KNOWLEDGE WHILE DO- ING REVERSE INNOVATION? Cultural knowledge is necessary for any kind of transaction or communication outside your own country or even your continent. This is because the way people think and behave is so different around the world. Ignoring this in the context of business affairs will certainly lead to failure at one point. The same holds true for re- verse innovation: when innovation e.g. for an emerging market intro- duced by a European company is introduced back in Europe, you need to anticipate whether the European customer will take it up. You never know for sure how a product/service will be received but the better you know the con- sumer’s culture (the way he/she ticks) the better you can adapt the product or estimate whether it is worth a try at all. WHAT ARE THE LEARNING CIRCLES OF CUBE IN? The learning circles were training programmes delivered to Euro- pean companies that wanted to go further and experience the cultural differences and learn Overview of the countries included in the CUBE IN platform (Via Google my map)6 Copyright Hofstede Insights. All rights reserved 300 PRACTICAL DOCUMENTS OVER 200 000 USERS 30 EVENTS20 QUIZZES how to address them in context. Hence we set up small groups of companies that spent a few days together in their target markets in the emerging economies like China, India and Mexico (‘in situ’) or learned about those countries in small groups in Europe before entering these markets (‘ex situ’). The impact was high as compa- nies were given the opportunity to learn from and discuss with experts and real business owners from the target countries. They also bene- fited from simply talking to each other from business to business. WHAT DO YOU SEE AS THE IMPACT OF THE CUBE IN PROJECT? There is certainly a rising aware- ness of cultural topics with the small businesses and intermediar- ies such as the Enterprise Europe Network (EEN) that have come across the platform. The topic has certainly also raised awareness within the European Commission. But we should not be complacent, and continue delivering excellent content as well as shouting it loud- ly. HOW DO YOU SEE THE FUTURE OF THE PROJECT? In an ideal world, the entire content will continue to be used by com- panies and business intermediaries after the end of the project. One way to do it is to let the Enterprise Europe Network take it up and use it in their daily business transactions with its customer base. This could certainly trigger an important leverage effect as the EEN is the biggest small business support net- work in the world. I also hope that Hofstede Insights will continue to invest in informing small businesses and their intermediaries about the importance of understanding cultural differences when doing business and innovating. IS THERE ANYTHING ELSE YOU WOULD LIKE TO SHARE? Keep the spirit and believe in the business and innovation oppor- tunities that cultural learning and mutual understanding can bring. The views presented in this interview are personal and do not necessarily reflect the opinions or views of the European Commission. For more go to CUBEIN.EU Follow CUBE IN7 Copyright Hofstede Insights. All rights reserved Malaysia is ranked 12th out of 190 global economies for ease of doing business in the World Bank Doing Business 2020 Report and is the second highest in Southeast Asia. It also ranked 12th among 169 countries for trade connectivity according to the DHL Global Connectedness Index 2018. Malaysia is a trading nation that offers access to emerging markets in Southeast Asia, as well as has resilient domestic demand. It has a highly developed infrastructure and offers a favourable climate to do business. When doing business in Malaysia, you will experience differences between the corporate cultures of government, government-linked companies, and local conglomer- ates versus the private sector and global multinationals operating in Malaysia, as well as cultural differ- ences among the various ethnic- ities that make up the majority of its population (Malays, Chinese, and Indians). To be successful, one must be able to pick up on these nuances and adapt to the situa- tion. MALAYSIAN CUSTOMERS Malaysia as a buyer is not lacking in awareness and exposure, hav- ing been courted for a long time by companies with products and technologies from all over the world. Unless you are absolutely confident that yours is a truly unique or exceptional offering, avoid positioning yourself as su- perior or assume that you will be able to command interest or a premium just because you are a Western company. It is prudent to approach potential customers or partners with humility and speak of how you compare with other global players in your industry or how you can be compatible with the existing ecosystem. THE IMPORTANCE OF TRUST In Malaysia, who you know can be more important than what you know. However, just because you manage to establish a relation- ship with the main buyer does not mean they will be willing to enter a relationship with you; they may val- ue their relationship with an inter- mediary more and choose to work through this valued intermediary instead. It is worth putting in the ef- fort to establish good relationships because once that is in place it will be for the long-term as trust, loyalty, and business continuity are highly valued. TOP CHALLENGES FOR DOING BUSINESS IN MALAYSIA The market tends to operate on a low value/low margin, high volume basis. This makes businesses highly cost and price sensitive, and they seek to minimise capital expendi- ture and cash flow utilisation. The right pricing strategy For government-linked companies or private sector companies that compete for government con- tracts, the lowest cost supplier has an advantage as that provides more allowance for the margin to be distributed among intermediar- ies in the value chain. Note that a tender process is often required for corporate governance to be on record. For SMEs in the private sector, man- aging cash flow and credit risk is an ongoing challenge. The prefer- ence is to make a small margin on a small, manageable transaction, then rollover the profits to fund the next transaction. Therefore, it is advisable to focus on a pricing strategy that can help you to build long-term business relationships and achieve business continuity, rather than trying to maximise profits purely on a per deal or transactional basis. Get ready for bureaucracy Despite ongoing reform efforts, sig- nificant amounts of administrative procedures still exist, e.g. licenses, permits, approvals, supporting documentation, etc. These are processed by various government agencies and may come with associated fees. Requirements and processes may be unclear, inconsistently applied, and subject CUBE IN DOING BUSINESS IN MALAYSIA Jaime Ong-Yeoh, Associate Partner of Hofstede Insights, and Erika Visser8 Copyright Hofstede Insights. All rights reserved to change at any time. Expect this to happen and plan for it both from a timeline and budgetary perspective. Politics plays a big influence in shaping the business landscape for government-linked compa- nies or private sector companies that compete for government contracts. The political situation has been extremely fluid in recent times; while this generally does not pose any threat to public order nor business operations, it does influence who is/is not in favour at the top of the food chain thus who may/may not benefit from business opportunities within the ecosystem. FINDING THE RIGHT PARTNER Things to look for in a reliable part- ner when working with the govern- ment sector or government-linked companies is someone who: • Understands the national and local political situation very well. • Is well connected but does not lean too far to either side and is on good terms with all parties as opportunities can change depending on who is in favour with the government of the day. • Has previous relevant expe- rience and is able to advise on or facilitate administrative requirements, e.g. licenses, permits, approvals, etc. Things to look for in a reliable part- ner when working with the private sector is someone who: • Has a regional presence in Southeast Asia and/or is willing to explore new markets, and is already exposed to products and technologies from other countries. • Is familiar with or can provide the support to navigate local administrative requirements, e.g. licenses, permits, approv- als, etc. It is always a good idea to have an independent third party contact on the ground to perform due diligence by checking the repu- tation and credentials of potential partners. An initial background check can be done by going to the Companies Commission of Malaysia website. BUSINESS MEETINGS AND IN- TRODUCTIONS Initial meetings are usually more formal and used for getting to know each other and building rap- port. You can expect a fair amount of small talk at the beginning of the meeting, and eventually, the most senior person on the host side will initiate the business conversation. Higher ranking people should be greeted first and introductions on your side should be the same. You may extend your hand and shake hands with both genders but a more conservative Muslim member of the opposite gender may not offer their hand in return. You can smile and nod your head slightly instead. A gesture that has been increasing in use recently is bringing one’s right hand up to one’s heart. Titles can be important especially if they are honorary titles be- stowed by the sultans or the king such as ‘Tun’, ‘Tan Sri’, ‘Puan Sri’, ‘Datuk/Dato’, and ‘Datin’, and not just salutations such as ‘Encik’ (Mr.), ‘Puan’ (Mrs.), or ‘Cik’ (Ms.). If titles are used when someone is introduced to you, you should refer to the person in the same way. For the government sector or government-linked companies, re- spect for and use of honorifics and titles are important and expected. In the private sector, titles matter less but best to use them initially until light-heartedly dismissed by the person. Meetings should be scheduled in advance. If the meeting is or- ganised by you, it is advisable to prepare and communicate an agenda in advance as attendees prefer not to be caught unawares and put in a difficult position or unable to answer questions. How- ever, agendas and timings are not strictly followed and can easily deviate if there are other matters to be discussed. To an external foreign party, meetings can seem like asyn- chronous affairs - there will be a meeting for presenting one’s ideas/approach, perhaps several BUSINESS IS BUILT UPON TRUST AND RELATIONSHIPS RATHER THAN MERELY THE EXCHANGE OF GOODS AND SERVICES. ARTICLENext >