The world has never been more connected than it is today. Examples in our personal and professional lives are abundant. My four-year-old daughter, Lanah, practices saying her colors and numbers in Spanish with her grandparents, Ama and Tito, via video call to Ecuador (where my mom retired). I chat with an Amazon customer service representative in Huntington, West Virginia. We’re talking about an order that is delayed in a warehouse in Edison, New Jersey as I last-minute shop from my phone at the airport in Orlando, Florida for a birthday gift for my wife being delivered to our home in Connecticut. And just a few minutes ago, I was in a conversation from my desk on the East Coast of the U.S. with a member of our sales team in France and a member of our Professional Services team in Germany working on a cool, creative automation for a customer in Luxembourg.
Technology has brought us close together and enabled us to do things in real time regardless of location. To businesses this means that access to markets, resources, and employees is better than ever before. But sometimes there is still a noticeable, obvious distance.
Distance isn’t just about miles and kilometers – distance reflects everything that makes a location unique. Distance can include:
These differences are the source of both unique opportunities and challenges.
At DocuWare, we have staff, Partners and customers in the U.S., Europe, Latin America, and Africa. Our company was founded in Germany, so that’s one of the main business cultures that is represented here. Our German colleagues collaborate every day with our marketing, sales, quality assurance, professional services, training, and software support teams in the U.S., as well as with software developers in Bulgaria.
One of my first trips to Bulgaria to meet with some DocuWare team leaders was full of examples of differences in business culture I was not fully prepared for. One of the most frustrating was feeling like we had a hard time communicating. Even though my colleagues’ English was nearly flawless, it felt like we were not connecting on ideas. I later learned that I was picking up on non-verbal body language and interpreting it incorrectly.
In the U.S. we nod our heads up and down to indicate a “yes,” however in Bulgaria it’s completely opposite, where an up-and-down head nod is a “no.” A side-to-side (ear-to-shoulder) nod in Bulgaria is a “yes,” but the closest U.S. head nod (side to side, chin to shoulder) is a “no.” Of course, this is a small thing, but it’s always been a helpful reminder to me that even the smallest differences can have an impact on the way our intentions are interpreted. We have to be extremely careful about what we take for granted when working in other countries.
Creating international strategies and managing international teams doesn’t just mean, “Copy what works in Location A to Location B,” – that’s a recipe for disaster. Rather, you need to ensure that these plans are created in a location-specific context.
Walmart requires its sales clerks to smile at customers. It’s a way to show that employees are friendly and approachable, willing to help you and answer any questions you might have. Walmart’s American managers noticed that many of its employees in their German stores weren’t smiling and didn’t seem friendly or approachable. The American managers reinforced the policy and reminded clerks and greeters about their expectations. But Walmart’s German customers found these smiling employees to be strange and off-putting. Germans don’t usually smile at strangers. In fact, some shoppers interpreted this behavior as flirtatious. It wasn’t a cultural norm in Germany to do this, and the policy completely failed in its intent.
Another of Walmart’s cultural gaffes was asking its employees to bag groceries for customers. In the U.S. nearly every grocery store will have a clerk ringing up your purchases and another bagging your groceries (or a single clerk doing both). But in Germany (or if you have ever shopped at an Aldi in the U.S.) you are responsible for bagging your own groceries. A lot of shoppers felt uneasy watching a Walmart clerk manhandling their groceries. Again, great intention, but a failure in the cultural context.
Sure, these two things weren’t the only reasons that Walmart wasn’t successful in Germany. For instance, Aldi and Lidl dominate the grocery business in Germany. Even a company with the buying power of Walmart could not compete with the local behemoths. It’s a great example of how “What works in Location A” strategies can easily fail if you neglect thinking in terms of culture.
So how should we think about distance when we are developing strategies to open a new office, or go into a new market, or develop a new product?
The CAGE Distance Framework helps businesses and managers think about the factors that influence how a strategy is deployed in one geographic location vs. another. CAGE is an acronym – Cultural, Administrative, Geographic, and Economic – which helps us compare two countries and the differences that may impact a strategy.
Cultural Distance |
Administrative Distance |
Geographic Distance |
Economic Distance |
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Country Pairs (Bilateral) |
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Countries (Unilateral/ Multilateral) |
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Source: Wikipedia
Now DocuBeans specializes in some of the best European coffee available. We have shops all over Europe and the U.S., but now we are thinking about entering the Chinese market.
What distance differences might we encounter?
CAGE is simply a way of thinking about location-specific advantages and challenges in four important dimensions. By considering these factors up front, you can plan and strategize effectively and mitigate risks associated with addressing an opportunity in a new location.
Over the course of the last year I have successfully used the CAGE model at DocuWare when determining worldwide strategies for our Professional Services team. It seems simple enough – in general we are offering the same services around the globe, helping our customers implement DocuWare to streamline their business processes and gain every advantage of our office automation solution. We know how to do that in Americas and Europe, so can’t we just do that anywhere the same way? That answer, as you now know, is a very simple “no.”
Here is how DocuWare applies the CAGE model:
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