Gaining Cultural Intelligence

Cross-cultural negotiation for franchises.

By Fernando López de Castilla

The world exploded at Davos: This is how the founder of the Harvard International Negotiating Program, Daniel Shapiro, begins his book, "Negotiating the Non-Negotiable.” And in a way, it actually did.

The Experiment

In an experiment that Shapiro conducted a few years ago at the World Economic Forum in Switzerland, he brought together 45 world leaders, in the form of CEOs of the Fortune 50 list and heads of state, and seated them at six tables in a closed room. And, with the word “Tribes” on a giant screen, he began to talk about the power of identity and tribes to the confused audience.

Then he invited them to form their own tribes, with the other members of their tables, and gave them 50 minutes to answer a series of questions about the characteristics of these tribes. Every decision was to be taken in consensus among the members of each table, and for this, each individual should remain loyal to their own values and beliefs.

Thus, in only 50 minutes, each group had to achieve consensus regarding different topics and set the values of their newly created “tribes.” At the 50th minute, the lights went out and the room turned completely dark.

Alien, Rainbow, Explosion

Then suddenly, the lights came back and an alien appeared in the middle of the room – a person disguised as an alien, that is. Then, walking through the tables, the character said: “I have come to destroy the Earth!”

But he offered a chance to the six tribes: If, in a maximum of three rounds of negotiation, they all accepted to be led by only one of the tribes, the world would be saved. In other words, five tribes had to yield to one and their members had to assimilate the values and beliefs of this supreme tribe, without questionings of any kind. And so, the tribes, with names such as "Cosmopolitan,” "Happy" and "Rainbow," began to negotiate. Well, at the end of the third round of negotiation, as expected, the
world exploded.

So, if people that share a collective identity created in less than one hour didn't give in to the fictitious values and beliefs of another one, what makes you think that you have a chance to make someone, who has lived all his life in an environment and in the midst of relationships totally different from yours, give in to you?

Enlarging the Negotiation Table

Much is spoken of cross-cultural negotiation, both in boardrooms and in classrooms. However, it is odd to see that in papers of prestigious universities and in articles of popular business magazines, these kind of negotiations usually portray American and Chinese counterparts. That’s worrisome.What about a New Yorker, with a Jewish accent, negotiating with a third-generation Cuban from South Florida? Going further, what about a Texan from McAllen, negotiating with a Canadian from Quebec? And why does it always have to be the case of an American tycoon with a Chinese mogul? Perhaps, and only perhaps, these two have more in common than a geek from Silicon Valley or a hipster from San Francisco, with a truck driver from Columbus, even if the ancestors of the three came together on
the Mayflower!

And of course, we could also talk extensively about the challenges of coming to Latin America (south of Mexico). Because when global brands think about internationalization, they think of Canada and they think of Mexico. Or Brazil, maybe, because it’s big.

Cultural Intelligence

But what about the countries that grow the most in the region? What about the most stable economies with the lower entry barriers? What about the markets with great development potential? What about cultures where everything American is still highly aspirational? Did you know that the franchise sector in Peru, perhaps the most strategic country to enter South America, has half the development of the regional average? Or that Chile, despite having a less developed franchise sector, has four times more shopping malls than Peru? Did you know that Colombia, with more population than Argentina, has a franchise sector that is half developed? Did you know that Ecuador, with half the population of Peru, has 50 percent more KFCs?

In Latin America, the challenges are not minor. And I am not referring to a Chilean negotiating with a Panamanian, a Bolivian with a Brazilian or a Mexican with an Argentinean. I am referring to a high-class individual from Lima negotiating with a low-class individual from Arequipa, both Peruvian, and to a high-class individual from Bogota negotiating with a low-class individual from Barranquilla, both Colombian. Most likely, the one from Bogota and the one from Lima who each drive a Mercedes-Benz, have more in common and speak a more similar language than the one from Barranquilla and the one from Arequipa that use public transportation.

When experts talk about negotiation, they talk about the culture or cultures of the people involved in the process. Why? If negotiation is, in the end, a process of communication, isn’t the personal culture of each individual more relevant than the language, or national cultures?

It is time to destroy the myths surrounding the process of intercultural negotiation and begin to gain "cultural intelligence." Only then will we be better negotiators and better franchisors, and begin to build global and, above all, sustainable franchise systems. Because “franchising,” my friends, is “negotiating.”