SPEAKER_03 0:01

Well, hello there. Hello and welcome.

SPEAKER_00 0:04

Hi, welcome. We'd like to welcome you very warmly to our brand new podcast, German American Cross-Cultural Business Training.

SPEAKER_03 0:12

I'm Daniel Donahe.

SPEAKER_00 0:14

And I'm Kalina Jimmy.

SPEAKER_03 0:16

And this is episode two of our first season. And as always, we're here to help Germans and Americans work together better and more successfully. We want our guests to succeed where so many others have failed, at least failed to reach their true potential. And we're very committed to making that happen.

SPEAKER_00 0:35

Yes, we absolutely are. So where would you like to start today?

SPEAKER_03 0:40

Well, I was hoping to just pick up where we left off in our uh first episode. We were on a very good path, I thought, uh, with that. So uh I promised while we were speaking there to bring a few statistics and show a little bit of proof and talk about uh a couple of success or failure stories. And I'd like to just continue with that if that works for you.

SPEAKER_00 1:03

Yeah, perfect. That sounds good. Um, do you want to show us some slides again? Or where would you like to start?

SPEAKER_03 1:10

Well, yeah, yeah. Yeah, yeah. No, I think I'd like to show some slides again. I've prepared a couple of things today. Uh we'll speak a little bit first, and once we've uh got to the flow of it, I'll bring up those slides then.

SPEAKER_00 1:25

All right then. The floor is yours.

SPEAKER_03 1:27

All right, very good. Well, when we were speaking last time, um I I shared a couple of ideas uh with you and the and the guests, and uh I thought those led to a very good place. So let me review those really shortly and then get into some new things for the day. Okay, excellent. Well, first of all, I talked about how culture is a story, a cultural narrative, and this cultural narrative consists of many things, but three that interest people in my business are a description of the world, a moral compass, which really determines meaning and a code of conduct. And then I moved on to talk about the cultural system and how the cultural system is where the cultural issues really show up. And the example I used was how every rule in the cultural code of conduct connects to a set of expectations, and culturally those expectations are different. And that leads to the issue that uh if I'm not understanding or meeting your expectations and you're not understanding or meeting mine, we learn to not trust each other. And the problem with that is trust determines how much we're willing to risk on working successfully with each other. So I use the term advanced payment for that, and not meaning a financial, yeah, not meaning a financial payment, but any kind of thing you would do in advance uh before being compensated for it in any way. And kind of where I left off with that idea was that this trust in advanced payment that determines really the performance that any organization or team can achieve. That's pretty much where we got to last time. And uh I'm going to stick with that basic idea, but I I said two other things last time too. I said that I'd share some stories. That's what I'd like to do next. And I said I'd okay, great. And I'll also said I'd bring some proof, and I'll bring some proof. So let me excited for that. Okay, very good, very good. Me too, me too. I I tried my best to get ready for a good one today. So we'll see. First of all, I'd I'd like to share three stories because I think that's given the time we have, that's probably appropriate. I want to start with Walmart, the big American retailer. Uh, Walmart came to Germany in the late 1990s. And for people who don't know the retail market in Germany, and please, I don't want anyone to take offense to this, but I'm just making a one-to-one comparison between retailing in Germany and retailing in the United States, and I will leave it with one sentence. There's plenty of room for improvement in Germany. There's room for improvement in the United States as well. Don't get me wrong, but there's more room for improvement in Germany, especially when it comes to uh thinking and behavior on customer service and things like that. We don't live in the same universe.

SPEAKER_00 4:19

Absolutely.

SPEAKER_03 4:20

Yeah, you know what I mean. You know what I mean. And I don't need to get into that any deeper. But I want you to understand the situation that Walmart was in when they came to Germany. Before they came here, they were the most successful retailer in the history of the world, in the history of retail. Walmart was the most successful. Um, they were at the same time, at that time, the largest private corporation in the world. They're still the largest private employer in the world, and they were back in those days as well. Walmart was bigger than Norway economically. Walmart would have been part of the G20 when they came to Germany. They're not anymore, and probably that has something to do with coming to Germany. And they came into a market that had plenty of room for improvement in retail, so they should have succeeded here beyond anyone's wildest expectations. They should have. There's no reason why they couldn't have. But Walmart came to Germany by they they bought two uh retail chains in Germany and they converted them into Walmart superstores. And they did some things that German consumers don't like. I'm going to give one main example and maybe some others will come up too. But it's very common in in the United States, uh, especially for a store like Walmart, to put someone in front of the store to greet the guests walking in. That's that's pretty common. Hello, sir. Hello, ma'am. Welcome to Walmart. That's not a big deal. Turns out the German consumers don't like to be greeted, they felt harassed by the greeter. So a lot of people wouldn't go into a store because they were afraid to be greeted. Yeah, annoyed is the better word. Yeah, that's absolutely right. They that felt like harassment and not greeting. And that was one thing among many, but it it I believe it's the best anecdote that I could bring to this story because Walmart they understood very early that Germans don't like to be greeted walking into a store. But instead of changing that practice, they decided they're going to educate German consumers about you know how retailing is to be done and so forth. And uh I mean, to cut to the chase, Germany's still here, Walmart's not anymore.

SPEAKER_01 6:31

Yeah, that's Germany.

SPEAKER_03 6:34

Yeah, yeah. Because Germany didn't change to meet Walmart's expectations. Walmart should have changed to meet German expectations, but they didn't, and they left here, they lost a fortune, they embarrassed themselves, they basically got run out of the country. And the shame of all of that, they should have succeeded, and they could have succeeded, but they took the wrong approach. They decided they were going to teach Germans how to consume like Americans instead of matching German uh consumer expectations, and they paid the price for it, a high price. Uh, so that's where I always like to start. Now I'm going to take a German example in the United States, and this was something it was kind of interesting because when this was brewing, when it was starting, I was already working with a company called uh Daza, which was Daimler Aerospace. It was a division of the Daimler uh car company, which is the parent company of Mercedes. So I was I was in pretty thick already with Daimler. So I knew the Daimler-Chrysler merger that later happened. I knew it was coming. And I um asked my contacts at Daza if they could make a connection to the car company for me because I was very close to Chrysler. In fact, I worked for Chrysler in a management capacity as a young person. Uh and I had been working in Germany for Daza pretty pretty closely. So I knew both company cultures really well, and I knew they wouldn't be able to work together. So I asked for the reference and I got the reference, and I spoke to a very senior person at uh the Daimler company, and I told him uh that you know, I know both companies, and I don't think this is going to work well, they're going to need training like I offer. And his answer to me was, uh, thank you very much, Mr. Donahe. You come with the best references somebody could have, but we've already solved that. We hired McKenzie already uh to handle the integration, and I knew that they would be coming to me in a couple of years because not anything against McKenzie. McKenzie's a fine company, but they work at the strategic level, and that's not where this problem, these cultural problems would show up. These cultural problems show up in the operative level, in other words, within the teams.

SPEAKER_00 8:47

Okay, so you already saw it coming. I knew it was going to come.

SPEAKER_03 8:50

I said it was going to well, I didn't, I wasn't too uh aggressive or arrogant about it, but I made it clear that we'd be seeing each other sooner or later, and we have. I've done a lot of work for them uh after the merger blew up. But that's that's the rest of the story because Daimler and Chrysler they decided to uh in fact to uh to go together. Uh it was billed to be a merger of equals, but that's never what it was because of the need for security in Germany, and security leads to a need for control. It was clear that Daimler would get a controlling interest, and they did. They got 50 point something percent of the integrated company, which meant also, though, that they had the ability to put up the management team, they were the one determining the policies and and rules of the road and things like that. So basically, Daimler took over Chrysler. Now, what you have to understand is when Daimler took over, Chrysler was the most successful car maker in the United States by far. Um, Chrysler was the smallest of the so-called big three, which is General Motors, Ford, and Chrysler Motor Company. But they were the most uh profitable, they were more profitable than Ford and General Motors put together. They're one of the most innovative companies in the United States, beloved, a beloved company. Their brand was just worth a fortune, and Americans really love that company. And the CEO of Daimler at the time, that's one of the things he wanted to tap into. He called it cowboy mentality, but he wanted to get a little bit of that spirit into Daimler as well. But what really happened is Daimler took over, they started uh applying German management practices, German planning, German uh communications style, and whatever. And inside of a few months, uh Chrysler went from being the most successful car maker in the United States to an empty shell. All the talent left Chrysler, everybody who could leave Chrysler left Chrysler. They went to Toyota. Now Toyota's the rock and roll star in American car making, even though it's a Japanese company. Toyota's bigger than every other American car company, bigger than all the German companies, more than twice as big as every German car maker put together in the United States. So Toyota really profited grandly from uh the German-American relationship at Daimler and Chrysler. But the thing is, Daimler-Chrysler, just like Walmart, could have been a very, very successful story. There's no reason why it couldn't have been. Industry analysts looked at those two companies and they came to the conclusion my goodness, these two companies belong together. They were perfectly suited to each other. When nobody looked at or considered those, these people have to work with each other. And they don't know how to work with each other. Germans don't know how to work with Americans, Americans don't know how to work with Germans, and that's that's simple. And because we don't know, we try to use this is something we spoke about the first episode, but because we don't know, we try to use our own expectations as our guide in working with the others, and it always goes wrong because it couldn't work. Yeah, we're just too far apart on certain key things. There's no way it could.

SPEAKER_01 11:58

I think you made that clear last time, right?

SPEAKER_03 12:01

Absolutely. Now imagine that. Walmart, the largest retailer in the history of the world, and Daimler, the the let's say the king of car makers in Germany, they couldn't Daimler didn't succeed in changing American expectations or the way Americans do things. Walmart didn't succeed in changing the way German consumers like to go to a store and buy things because it can't happen. Disney tried the same thing with Euro Disney. Uh they built a big theme park outside of Paris and uh called it Euro Disney, and immediately they got into a big fight with the French because Disney is a family brand, they don't sell alcohol in their parks. Well, it turns out 67 million French people want to have alcohol when they go to a park. So Disney got into it with the French right away. So the French boycotted the Disney park. Okay, now they do sell wine, but but they had to close the park down and relaunch it as Disney Paris, and Disney Paris sells wine because you're not going to overcome the the cultural context. Nobody can. Disney couldn't do it, uh Walmart couldn't do it, Daimler couldn't do it. Now, I want to tell a final story that I was involved in. I had a smaller role in it. I'm not saying I was the key piece in all of this, but I was involved in it. Have you heard of a company called T-Mobile?

SPEAKER_00 13:20

Yes, sure.

SPEAKER_03 13:21

The big I know you probably have. T-Mobile, the big telecommunications company. Let me say right now, it's one of the most beloved companies in the United States. They're very highly, highly successful. A beloved company, but that is not how they started. They went to the United States and they were losing billions and billions of dollars on the American market. They were just getting slaughtered. The Americans didn't like their products, didn't like their contracts, didn't like their service, didn't like anything about them because they were trying to run T-Mobile uh like they'd run a German telecommunications company, and American consumers won't put up with it. It's it's that simple. So they after a few years, they lost. Uh I mean, really, uh nobody knows for sure. Well, somebody knows, but it's not public information how much they actually lost. But when I got involved, they were in a multi-billion dollar hole, and I was involved on the telecom side, which is their parent in Germany. But when I got involved, they were faced with a decision. Do we stop uh working in the United States, just exit the American market, or do we reorganize the company so it has a chance to succeed in the American market? But they the smart people got involved, and smart people decided no, we're going to try to reorganize this company. So they made it a little bigger, they took over one of their competitors, and everything market-facing became American. So their customer service, the way they handle contracts, the way they deal with American customer suppliers, and whatever. They did that the American way. Everything back office was done uh the German way. Planning, logistics, finances, technology, stacks, things like that. That all came from the German side. They align that company just right. Let me tell you, I'll again I'll cut to the chase. T-Mobile right now is the 67th most successful company in the world if you go by market capital. And this gets me to the point that we finished with last time, which is success is a choice. You can go into as a German company, you can go into America believing you're going to educate the consumers and and you know get your way. You're not going to change the cultural context. You can do the same thing as an American company, come into Germany and believe you're going to educate the Germans, you're not going to get your way. Yeah, it's numbers. 85 million against whatever, a couple of hundred, couple of thousand. It's the 85 million is going to win, like Disney. 67 million French, couple of hundred Disney employees, the French are going to win that.

SPEAKER_01 15:59

It's simple.

SPEAKER_03 16:00

It's not rocket science at all. So I just wanted to say this is a real thing. Now I've got I've got I was going to say dozens, but it's more like hundreds, if not thousands, of stories and anecdotes. They all go in the same direction. But let me summarize them all in a very simple way. Germans and Americans can succeed together in a very big way, but not if Germans work like Germans and Americans work like Americans. That's going to end up in a bad place. It always does. Performance deficits, uh lost opportunities, and whatever. But you can choose to succeed. And choosing to succeed means choosing to adjust, just like we finished off with last time. Now, um, as long as this fits your schedule as well, I'll grab the slides. Sure, and I'll show you a little proof of what I'm talking about. Okay, so the slides should be up now. Do you see those?

SPEAKER_00 16:51

Yeah, I can see them.

SPEAKER_03 16:52

All right, very good. Let me go right away to bringing a little bit of evidence, some documentation of what I've been saying. I want to start with the effects of culture on organizational performance. Now, you could take these same statistics and put them in the context of teams, just working teams, a project team or something like that, or a complete organization. The numbers seem to be very consistent one way or the other. Now, what you're seeing here first, this came from uh Deloitte. Deloitte's a big international company, and they put out a lot of these studies. They're known to be very credible and reliable. So Deloitte did a large-scale survey of 26,800 people. All of these people were embedded in international teams. And they were asked a very simple question how successful is the international team that you belong to? That's it. That's all it was. 82% of the respondees uh said that their team did not achieve its stated goals. So you know, four out of five, roughly, said that their team was not succeeding. 67% that's a lot, but I'll tell you what, that number doesn't scare me as much as the next one. The next one scares me because that takes money out of everybody's pocket. Sixty-seven percent of them uh do not uh meet their customers' expectations. Remember, it's the customers paying the bills. So if more than two-thirds are not meeting the customer expectations, that's even worse than the first number. And one third of them describe their team as failed. Those are terrible numbers. Those are terrible numbers. And a lot of people who hear this, you know, the this is one of these statistics that I show in a lot of the seminars I do. A lot of people who hear this said, Well, that can't be right. If if international business got that bad, you couldn't even do it. And I said, Well, it is that bad. That's fully in line with why I've been doing this for so long. Now I want to back that study up with a it's an older KPMG study. This KPMG study goes back uh is what 2014-15 in that time frame where this came out. And what they did, they looked at 700 real cases. They were looking at mergers and acquisitions on an international scale. So they wanted to know, did the and it was again another simple question, but they just wanted to know did the merger or acquisition did it result in a positive outcome? Was in other words, was value created, or was it neutral in terms of value, or was actually was value destroyed? And what they found uh was very much in line with the Deloitte study. 83% of international mergers and acquisitions, the term people always use is MA's. Anytime you hear that, that's what they're talking about. Okay, uh companies fusing together. So 83% of MA's failed to create any value in the combined company. Okay, so right in line with the Deloitte study. 55% of them destroyed value in the combined company.

SPEAKER_01 19:48

Yeah, it's terrible, it's horrible.

SPEAKER_03 19:52

It is, it's horrible, it's unbelievable. And the vast majority of those who do manage to create some value, they do it through economies of scale. What that means is they get bigger so they can buy stuff cheaper. Okay, but they're not doing it by tapping into the expected synergies. You know, when they do an MA, uh a merger and acquisition, you've got really smart people working on that. And there's a couple of things they do. First of all, they do something called due diligence, which means they really check the books, they make sure what the company's claiming is really true, that's in line with what they've been claiming on their taxes, and it's in line with everything else. That's the one thing. And they also they look at comparable cases and they create three likely cases. One is the best case outcome, one is the worst acceptable case, and one is the expected case. They don't get any of that. They do all that work, they know it should work, but every time they get results like this. You know, uh, four out of five uh don't get any value, more than half of them destroy value, and the few of them get some value, the one out of five essentially, mostly do it by uh by getting bigger. And that means they can save money and redundancies. Now, that's just two studies. There are hundreds, if not thousands, of academic studies. They all show the same thing. But if you wanted to summarize why those results are so bad, it comes back to what I was saying just a few minutes ago. Germans and Americans are international people generally, so people who come from different cultures do not know how to work together. It's not incompetence, it's not ill will, it's none of that. They just don't know how to work together, they don't understand each other's expectations, so they're missing them. And when they're missing them, that's affecting the performance badly. Now, I want to show the other side of this argument because it's just as true. In your business, you're an expert in in uh cultural diversity within teams and things like that. So you're very well aware that there are plenty of studies that show culturally diverse teams are able to outperform culturally homogeneous teams, and that is true. In my experience, that that's just as true as what I showed with the first two studies. But here's the difference. This body of research shows that although culturally homogeneous teams usually significantly outperform culturally diverse teams, that depends on whether they're aligned or not, whether people take time to do the uh cultural alignment, in other words, align on their expectations. Because if they do the cultural alignment steps, a multicultural team will outperform a culturally homogeneous team by far. The number that you see all the time is 43%. I don't want to say it's always 43%, but that's the number that keeps popping up. So if you align a team, a multicultural team, uh, so they understand each other's expectations, they're going to outperform a culturally homogenous team every time. And not only that, they're better decision makers, they're more profitable, and they're more creative too.

SPEAKER_00 22:56

Yeah.

SPEAKER_03 22:57

That's exactly go ahead. Because that's your feeling.

SPEAKER_00 23:00

I think it's so interesting, and people never believe that. You know, they never believe how important it is actually to be aware of these differences, and it's not like it's not a bad thing to have these differences and just to work differently and everything, but you have to be aware of it and you have to try to align, you know, your different maybe working styles or the way you or your expectations, or I don't know. So I always think it's so interesting, and people never believe that.

SPEAKER_03 23:31

No, I'm I'm glad you pick up on that point because that's my experience too. People get almost violent about it, they don't want those differences to be real, but they are real. It doesn't matter.

SPEAKER_00 23:42

It's not even a bad thing, it's not bad to have these differences, but you just have to, you know, you have to be aware of it.

SPEAKER_03 23:49

You have yeah, you be aware of it and then try to steps to manage it. It's not rocket science, and and in other words, you can't ignore this, but people try to, and then they just don't want it to be true quite often. And even if they accept that it is true, they often don't want to take the steps that are necessary to manage it. But but that's foolish. That that's uh it's a foolish way to react because there's so much more we can do together if we just take that step of aligning to each other. It's not hard. It's people want to get along, they want to succeed together. We just have to give them a platform to do that. It's not hard to do at all. So, I guess what this whole slide leads to is the conclusion: if you do not make a conscious choice to adapt to one another, you will not achieve your true potential together. And that it that's that's the whole issue. We can succeed together in a big way, but we've got to choose to do it. And choosing to do it means also choosing to take some alignment steps to adjust to each other. And and I always like to come back to the main point. So, success is truly a choice. How's that in your experience, by the way?

SPEAKER_00 24:57

I think it's so interesting because I you know, I hadn't seen these statistics, but it really aligns with my experiences working with you know different teams or whatever. It's it's the same. It's for me, it's yeah, yeah, so it really aligns with that.

SPEAKER_03 25:13

That's that's really good to hear, and I'm not surprised to hear it because this is what I see, and it doesn't matter the company, the industry, the level. It always comes back to numbers that break out about like this. That makes it obvious that there's a challenge, but the choice to succeed is also there. Yes, and and uh why more people don't choose to succeed is is the great puzzle in my life to understand why, because it's not like it's hard to do.

SPEAKER_00 25:44

Yeah, but I think maybe it really is that people don't understand how much these cultural maybe differences or how much they influence you know, your whole I don't know, really like the success of your product, your company, or you know, they do whatever you you are doing.

SPEAKER_03 26:07

Yeah, you're you're absolutely right. Uh uh give me a moment if you would, please. I'm going to click these slides away and we'll talk a little bit and then finish this episode up. All right, very good. All right. Looks like we're back again. The slides are gone. Okay, I didn't kick us out of the meeting. That's that's all good stuff. Yeah, it is. It is. I really like today. I hope that my stories didn't get too long. I I didn't mean for them to, but I I like to back things up with evidence. I just wanted to say real quickly, I wanted to show a cultural study today, but because I did uh spend a little more time on the stories, we're going to have to pick up that point on the next episode. Yeah, we'll put that into episode three then. I guess where we finished off while the slides were still there is what I'd like to uh conclude with on my side today, too. It is quite possible uh to succeed with each other. The reason we're not succeeding, it's again, it's not the ill will or anything else. We just don't know how to work with each other, uh, which is why we're doing what we do to help make expectations clear and show where a middle ground truly exists. But you've got to choose to do it because it's not going to happen by itself. And and the you know, hiding from it or trying to act like it doesn't exist, that's not helping anyone, that's doing a disservice to everyone involved. And you've been doing you mentioned that you've been uh doing a lot of diversity seminars, team building, and things like that, and you're seeing the same kinds of things, even though the work you do is not primarily German American, but you're seeing exactly the same stuff, right?

SPEAKER_00 27:46

But it's always the same, it's exactly the same. Yeah, and I think it's so interesting, you know. You said that success is a choice, yes, and I really agree with that, and now you know, seeing these um statistics or hearing your stories, it just makes so much sense to me. And I think you know, we could work together if we really, you know, try if we're aware of it, if we try to adapt and you know, align our maybe working styles if we know what the other person expects maybe from us, and uh so it is really a choice.

SPEAKER_03 28:22

That's something that really Yeah, it is, and anybody who doubts that should just look at T Mobile. Yeah, and anybody could do the same thing. Uh if you've got products or services that succeed in Germany, they can also succeed in the US. And if you got products or services that succeed in the US, they can also succeed in Germany, but not in the same way.

SPEAKER_00 28:44

Yeah, many I think that's clear now. Yeah, that's yeah, excellent.

SPEAKER_03 28:49

Excellent. Well, when we talk next time, uh, I'll bring a little bit more proof and then I'll get into some more cool stuff and we'll change directions to looking at what the potential solutions are. Oh, and note for everyone uh I'll be traveling to the United States and and uh doing a seminar tour there, which means I'll be out of the loop here for a few weeks. So this will be the last episode for a few weeks, but when we come back, we'll come back ready to go and excited. And after that, uh we expect to put out one of these episodes every week. So we're looking forward to doing this. It's fun, and we hope we're helping. And uh join us again, please do. Kelly, would you like to finish with the last words today?

SPEAKER_00 29:35

Okay, so I'm excited for next episode. Have fun in the US, and thank you very much. See you in a few weeks.

SPEAKER_03 29:44

Can't wait. And for everybody else, remember choose right, choose to succeed. Thank you very much. Bye bye.

SPEAKER_01 29:50

Thank you. Bye.