How can we compare styles of implementing and applying enterprise performance management methodologies embedded with business analytics between East and West cultures?
First, some clarification is needed. Examples of enterprise performance management methodologies are a strategy map and its companion balanced scorecard, dashboards, customer profitability and value management reporting, and driver-based financial rolling forecasts. Next, an example of embedding business analytics is applying correlation analysis to measure the contributory effects of influencing and influenced key performance indicators (KPIs) of a strategy map. Finally, by East versus West, I do not mean New York City or Boston versus Los Angeles or San Francisco. (But I may write about them in the future. It would be fun. New York City’s style: abrasive; slammed-in; ruthless; exorbitant, unjustified bonuses. Los Angeles’ style: carefree; creative; flair; colorful; a basis for the next job with next employer.)
By East versus West, I mean our Earth’s Eastern culture (Asia-Pacific) and Western culture (Europe, North and South America).
What does academic research reveal about risk attitudes?
Jorgen Ellingson, Manager of Risk Management for TECOM, a major real estate development and management firm in Dubai, exposed me to some provocative research about Eastern versus Western culture’s attitudes toward risk. In an article Jorgen authored in the December 2009 issue of Risk Management (pages 50-53), he references a study by Geert Hofstede about multi-cultural differences with risk appetite. I believe some of the observations from the study can be applied to implementing enterprise performance management and business analytics.
In Hofstede’s study he developed an Uncertainty Avoidance Index (UAI) that measures a nation’s (or a society’s) tolerance for uncertainty and ambiguity – its appetite for risk.
To abbreviate the details of the study’s findings, it is convenient to describe the two countries with cultures representing opposite and extreme ends of the UAI continuum. By better understanding these contrasting behavioral differences, project champions striving to successfully implement and integrate performance management methodologies and business analytics may better succeed.
The cultural UAI continuum
In Hofstede’s study, UAI scores can range from 0 (pure risk takers – such as gamblers) to 100 (pure risk avoiders – very cautious and conservative). Of all the nations, Americans ranked lowest implying fewer rules, less attempts to control outcomes, and greater tolerance for a variety of ideas, thoughts, and beliefs. In contrast, Japan ranked highest in its UAI score implying high levels of control in order to eliminate or avoid the unexpected. A type of culture such as Japan does not readily accept change and is risk averse.
Is your organization an Eastern or Western type?
Categorizing an organization with a low (USA) or high (Japan) UAI score requires context for what risk is being scored.
Let’s apply UAI to pursuing enterprise performance management methodologies, and start with the popularly discussed one (but not often implemented) of a strategy map and its companion balanced scorecard. This can get a little complicated unless you understand “What is being balanced in a balanced scorecard[GC1] ?” There are several dimensions that can be balanced, such as x versus y or b versus c.
A dimension that can be viewed for balanced performance reporting is a short-term versus long-term planning and outcome horizon. If your organization is USA-like, then you need to place more emphasis on longer-term viability KPIs to prevent macho rugged individualist executives (like western USA cowboys) from high speed crash and burn behavior. In contrast, if your organization is Japan-like, then you need to place more emphasis on short-term action-oriented KPIs so that someone can assess if anyone is actually turning the steering wheel as opposed to just holding an unwavering long-term line of direction route.
What is the relevance of UAI to enterprise performance management?
How can UAI apply to managing organizations? If in the last few years you have read the tone of my published articles and blogs, you will see that I keep pointing my finger at the big obstacle and barrier that is slowing the adoption rate of enterprise performance management methodologies. It is people, culture, and human nature’s resistance to change. I am not alone in this thinking as there is convergence in consensus with others I respect who also cover enterprise performance management and business analytics, such as James Taylor, Howard Dresner, Frank Buytendijk, David Axson, and Jonathan Schiff.
How would you personally assess the UAI of the organization you are employed by or one you keep an eye on or am involved with? Does it have a low UAI (USA-like)? This implies having self-concerned employees, less conformity, reliance on intuition and gut-feel to “wing-it”, avoiding rigid rules, low acceptance of authority, low trust levels, and reasonable tolerance for conflict, tension, and dissent.
In contrast, is your organization at the other extreme with a high UAI (Japan-like)? This implies being collectivist with needs for consensus, more conformity, very analytical, strict and enforced rules, high acceptance of authority, high levels of trust, and little tolerance for conflict.
Implications for success
Regardless of an organization’s type of culture, what this all means is we must elevate the importance of organizational change management and behavior modification. A problem with this is that few of us were trained in this field. We all tend to be specialists in IT or line management roles. We will need to learn change management as “on the job” training.
“What is being balanced in a balanced scorecard?”
http://www.information-management.com/news/balanced_scorecard_dashboard-10015373-1.html
