Dear Tarun, dear all, thanks for you expressing your views. I would like to share with you a practical example of how one's own expectations, rooted knowledge, experience and so on can be put into issue when it is about "encountering" individuals who come from somewhere else than our place of origin. This is the video-translation of what Tarun wrote in his article, especially when the person in this video speaks about what he thought after "landing" in China to do business. Please, have a look: https://www.youtube.com/wat.... The gap between what he thought before doing business in China and what he found out once there has been filled by his willing - and need - to tailor his mindset to his hosts' context: "...then I understood slowly that we shouldn't do the European way but we have to adapt ourselves to the Chinese way...".

I really apreciated the article. As an architect studying management, I reminded of a very important issue in architecture: what is called genius loci (spirit of the place). It talks about how buildings should relate and be connected with its context, being born from a phenomenological diagnosis from this context. Being used to approach challenges with a high complexity level, it has been surprising for me, during my MBA lectures, how simplistic are the answers of most of my colleagues. People tend to base their arguments in simple cause and effect explanations, disregarding strong influences and cultural features, one analysing a case.

very neat, always good to get insights from other disciplines. thanks for alerting me to genius loci

I love this article!!! I struggle everyday with this at work and I wish there was someone who could help me explain it to my bosses. Although they have the best intention to get the resources available, sometimes they fail to recognize that there are contextual differences and what might work here in USA doesn't work for our clients in LATAM. Thanks Tarun for giving me one more argument to present.

Very nice article. This holds true in medicine and particularly anesthesia. A physician who has been successful in a particular location dreads to go out to another place and start all over again.
In this context trying out new locations for a period of time may make the transition less stressful.

indeed, the medical literature has been a source of many ideas for me. if you read Eugene Braunwald and the Rise of Modern Medicine, you'll see what i mean (and what you probably already know!)

Hi Tarun
A very nice article and I liked the concept of contextual intelligence- its very apt to today's scenario as most organisations lookh towards different markets than their home markets- not only true of organisations in the western world but true of organisations in countries like China and India!
I have a first hand experience of working in a major Chinese CV major - and the company wanted to enter India( first time to enter any new market outside of China)-the thought process was that whatever worked in China would work in India given that Indian market is behind China by a decade in terms of development.
Only after the company recruited a few Indian managers did it dawn on them that they could not "cut and Paste" their strategies in a new geography.
The entire strategy- had to be re-done. It took a while to shatter the myth that markets are not common and they are unique in their own right and the local " nuances " needed ti be fitted in for a strategy that works for all.
Tarun - once again a brilliant piece! Kudos to you....

shankar, thanks, in 2008, i wrote a book Billions of
Entrepreneurs, a 'big tent' comparison of business in china and india,
motivated by fifteen odd years of travel off the beaten path in both countries,
you might find it fun given your background! all the best,

Dear Tarun, You
are a power writer and power thinker, and not many can combine these two skills
as efficiently as you do. Nobody is more qualified than you to turn this article
into a full length book to do justice to this important topic.

Just
three comments. The first is to consider both supply and demand sides. Supply
side matters a lot, as your excellent cement industry example has shown – corrupted
material competitors, unions, distributors and retailers. Indeed most of time
business CI is dealing with other (local) suppliers. Demand side kicks in both
from other suppliers and from end consumers. Secondly, not all contexts are equal
as you have eloquently pointed out. One way to differentiate is to divide
contexts into two types: those differing in macro as well as micro institutions
versus those only differing in micro institutions (like Porter's five forces).
Business managers tend to focus on the latter due to its direct impacts on
business. In the long run, macro institutional environment, such as those at
the constitution or foundation level of rule of laws, matters more than micro
level. Finally, contexts are not limited to geographies but over time as well.
My favorite words are from Heraclitus: we cannot step into the same river
twice. These may have already been addressed in your whole article (I
cannot get the full article) and they are minor points anyway, comparing with
the things you talked about.

Thank
you for drawing our attention to your recent piece in the HBR.
Institutional scholars will be in full agreement with your arguments. I
recall a fellow colleague (an organisational institutionalist) being
taken aback by my opening line in a conference presentation: 'IB is in
need of paying greater heed to context and history'. He found it ironic
that IB could be studied in a universalistic manner. Your article would,
perhaps, be found provocative by the mainstream IB scholars, but
certainly not by comparative management scholars and the
institutionalists. What we need to do is to increase awareness of other
theoretical perspectives and encourage a healthy exchange across.

thanks. Within the social sciences, i guess we have the full spectrum of 'rigidities.' economists don't contextualize enough perhaps while, in my view, historians perhaps do such much that they end up resisting general 'models' or pay less attention than they should to identifying general patterns.

Am I the only one finding the graphic only half complete? Where is the other half? If there is no other half, how come only Venezuela and Argentina merit a full comparison to the other countries (odd choices)? Given the line of comparison is exactly straight, it seems this was planned from the onset to compare these countries to each other in such a way (or the data was rather "convenient" in making this).... Can somebody explain?

Empiricism. Old story.

Situational conditioning is one of the parameter to
implement collective intelligence. It is the only factor that allows customizing
established norms of best management practices. Certainly this article insight
is valuable.

nikhil, agree, and how does one achieve situational conditioning? good to hear your thoughts .. tarun

Tarun, thank you! Components of continent, country, region,
and indigenous perceptions are insightful to create pockets of synergy in
implementing collective intelligence. The best management methodology within
institutes are developed & established by researching on subject matter in
particular segment of industries and business environment. These is in tune
with mostly advance observations, developed environment, and open concept
approach physiognomies, which is not the case in developing or under developed
situations. The fragmented conditioning
of organizational or economic growth in developing or under developed
situations sometimes creates the misconception for proven business practices.
It is essential to understand these components before customizing collective
intelligence. Eventually every organization is nothing but emerging evidences
of perceived philosophy itself. Therefore situational conditioning is part of perceived
philosophy of organization!

Really fascinating piece. Importance of the non-market environment in contextual intelligence (e.g. Metro’s expansion into China and India) really resonated. Reminded me of another example/quote where contextual intelligence was key for success (i.e. Western mining firms’ outcomes in emerging markets):

“It used to be the case that the value of a gold mine was based on three variables: the amount of gold in the ground, the cost of extraction, and the world price of gold. Today, I can show you two mines identical on these three variables that differ in their valuation by an order of magnitude. Why? Because one has local support and the other doesn’t.” (Yani Roditis, former COO of Gabriel Resources-- from Henisz, Dorobantu, Nartey, SMJ 2014)

Agree with the comments discussion regarding potential for more precise proxies (than country) in terms of contextual differences. For example, military and non-military hospitals in the U.S. seem to operate under completely different contexts, resulting in different challenges and outcomes. This recent NYT article ( http://www.nytimes.com/2014... ) illustrates how smaller military hospitals in the US are greatly constrained by their contexts in offering care (i.e. very low patient flow, lack of experience for doctors), which in turn shape practices and outcomes. This differs starkly from the contexts that shape the major U.S. civilian hospitals (as well as the Narayana India example, where large patient flow was one of the strengths of its context that facilitated its success.)

Definitely agree with article’s emphasis on needing to move beyond institutional analysis to consider soft (but hard to measure) factors such as culture, beliefs, preferences. One notable international business trend is large Chinese firms trying to grow by entering the US market. Contextual intelligence will be key for their success. Challenge for these firms will be trying to figure out and adapt to everything ranging from U.S. demand-side tastes, to cultural norms, to navigating “the constellation” of political and economic players in the U.S. (i.e. CIFIUS). Agree with Raj regarding the importance of “how” questions, which can yield powerful frameworks and mental schemas that guide strategy formulation and execution.

I
fully agree with Tarun’s argument in the article and it holds true for an OECD
country like Japan, too. It is not difficult to find many failures of MNCs to
make a successful entry in the Japanese market. In the retail sector, for
example, French Carrefour entered Japan in 2000 but withdrew in 2010. UK Boots
entered Japan in 1998 with JV with Mitsubishi Corp with a target to open 300
stores but withdrew in 2012 after opening only four stores. Wal-Mart took as
long as 10 years to turn around Seiyu operations they acquired because Everyday
Low Price strategy was not easily accepted by Japanese consumers who have a
different purchasing behavior. There are some successful cases such as IKEA and
Costco as well, not to mention success of many fast fashion and luxury brands
and thus we cannot blame the deflationary economic environment for those
failures.

Good timely article on Contextual Intelligence and Case study explanation will give clarity to Researchers and Academicians and Global Managers also.

Very timely article with great relevance for both academic researchers and managers.

From an academic research point of view, this article goes beyond the prior 'integration-responsiveness' framework and even the paradigms of 'stickiness' of knowledge transfer and CAGE distance between nations in at least three ways - (1)while the prior work on distance and the stickiness of knowledge transfer stress on the dimension geography; 'context' could be a much broader construct than geography alone; (ii) the author brings in the dimension of time in developing contextual intelligence (future work should develop a robust dynamic framework for how to do so); (iii)implicit in the article is the insight that contextual intelligence matters to both firms and individual managers, in possibly different ways.

Future work could stress on several themes - (1)develop a dynamic framework for 'how' to build contextual intelligence (building on the ideas of iterative experimentation, generating primary data, etc. that the author seeds); (2)creating scales for measuring contextual intelligence for firms, managers; (3) stressing on differences in how to build and measure contextual intelligence based on where the firm/manager comes from (e.g. developed country vs. emerging market) and where the firm/manager is going to; (4)Thinking beyond geography in thinking about building contextual intelligence.

this is a full agenda!
Grist for the mill for academics no doubt, but let's be guided by usefulness and practice (primarily).

Let us denote profitability of firms in an industry by p.

p = f( F(i), t, g, I. theta)
where F(i) is the profitability of the ith firm in the industry, t is time, g is government, I is the level of innovation in the industry and theta is other factors.

Note that the profitability of firms vary enormously even within an industry.

No economist would discount the effect of government on the profitability of firms within an industry. Government is always there and is "the sixth force" (although I hate putting it that way given how flimsy the Five Forces is as a model).

Why are we even debating this - in this very stylized fashion? Why not simply say that profitability varies? Certainly from firm to firm, but also over time.

This is what Raj Choudhury -should- be saying and is not saying.

Simplify, man. Simplify.

Interesting article. I found the title "Contextual Intelligence" to be somewhat of an oxymoron. Isn't all intelligence contextual? If not, then it is not intelligence but stupidity.

The author has limited the context to countries in a global context but in real life the concept is infinitely extensible even from a business/marketing perspective - regions within countries, cities within regions, localities within cities and so on. One size/shape does not fit all. Most successful corporations/businesses have allowed variations in their "uniform" strategies to support/leverage these contextual nuances.

I am surprised by the assertion : "Robust research shows that countries take decades, on average, to adopt new technologies invented elsewhere." I would think the underlying research even if robust is likely to be outdated. Cellphones are just the tip of the iceberg as far as disruptive technologies which have exhibited explosive growth and acceptance much beyond the shores where they were invented. That seems to be the norm rather than the exception for most modern technologies. I was surprised to see a newspaper image from India showing a cop readying a drone to go airborne to monitor a riot when similar use of that technology is still being debated in the US. I also hear about drones being used to photograph weddings and cultural events in India. Just an example of how the absence of rules or legislation in some cases helps the proliferation of a new technology rather than hinder it.

I would like the author to revisit some of his assertions in light of emerging trends from within the last decade (given the fast pace of change even a decade could be too long a horizon) rather than basing it on research from an earlier time-frame.

hi Deepak

thanks for this. on the first point, i couldn't agree more; country is merely a (n imperfect) proxy for context. finer-grained geographic subdivisions, social communities, differing industry contexts, might all be relevant proxies for context in the sense of this article.

On the speed of diffusion, the assertion is a large sample, statistical one, spanning multiple decades and multiple countries and multiple technologies (for example, as analyzed rigorously by the econometrician Diego Comin at Dartmouth in recent years). No one disputes that cellphones diffuse fast, as do other easy-to-spot technologies, but there are numerous others (again, over past decades) whose diffusion has been super-slow.

ultimately though its an empirical point. you might be proven right that diffusion has sped up (when someone analyzes it rigorously) and will continue to do so. never say never, i say to myself! :)

Thanks Tarun! Appreciate the feedback.

Contextual Intelligence reminds me of the premise of the ancient Indian Jain doctrine of “Anekāntavāda” – doctrine of non-absolutism or non-one sidedness or non-exclusivity . A classical elaboration of the doctrine has been the parable of the Six Blind Men and the Elephant where each man depending on where they touched the elephant described it as a spear (tusk), snake (trunk), wall (side), fan (ear), rope (tail) and tree (leg), with none of them able to visualize the animal itself.
Similarly depending on the context ("country") the same elephant ("cement industry") may have many different manifestations - highly efficient/inefficient , consolidated/ fragmented etc. Maybe a stretch of the logic but that's what I was reminded of.

agreed!

I was drawing analogy of what I understood from your
article to my experience while I was working as a BD manager. What I realized
is that despite the product/service offering being the same sometimes you
cannot sell to a particular customer no matter how hard you try. To borrow your
words sometimes the ecosystem(like culture at that company ) at a particular
customer might not be conducive for our business to succeed. May be it is quite
an oversimplification of comparing a nation with a B2B customer but I felt your
idea was transportable and true in my simple case

Localization has been the name used in the tech industry for adapting products to different countries and regions. Till about 15 years ago (e.g. since the mass adoption of Internet) most parts of the world were effectively disconnected from each other. It is not surprising that business model evolved independently in different regions. However , going forward better cheaper communications ( and possibly transportation ) will likely bring business models and social norms ( political and regulatory situation is another matter) in different parts of the world towards convergence. Hence there will likely be less need for business model localization.

Subrata
such convergence has been argued about and studied for some decades. the argument is surely conceptually correct. indeed in this article i point out that in some areas convergence has surely occurred. but in many others, it takes decades for such similarity to occur, if it ever occurs! i think it will be a long while before we get to the point where localization is not needed. tarun

> i think it will be a long while before we get to the
> point where localization is not needed.
To say that it will be a long while is understating the case. The right answer is that the time it will take to get to the point where localization is not needed is infinity. In other words, we will always need localization.

Hi everyone, thanks for contributing to the conversation around this article. Please remember to keep your comments on the topic at hand. Comments that contain personal attacks will be deleted.

Josh Olejarz, HBR

Loius Van Gaal needs to read this article...... on a more serious note. Great article, a company i consulted for faced similar challenges entering west sub sahara africa. It took us longer than we thought to stabilize how much more breaking even. Insightful article

I think that the fundamental of management should be globally acceptable but the practise itself shall depend on the geography/ local conditions. This is parallel 2 that the formula of maths are prevalent globally but application that is calculations performed depend on the question at hand. I hope this example is clear / lucid

Thank you for opening up this discussion, the graphic is awesome! Over the years, we hear importance of learning from others via benchmark study, etc. Next, innovation and creativity to adapt-adopt models, frameworks from successful businesses. CI adds clarity to the purpose and its ultimate goal for individuals, organisations and community at large. Great reading for all.

Interesting paper that has broad implications for "personalization" of how we build and run a business, that ultimately translated into how we deliver product or services to the consumers. The "one size fits all" models have been challenged throughout all industries and we continue to see the business operation models changing, by country, region, industry and in many cases down to the individual contributor to the business, and the consumer. Those companies that find ways to optimize how to do this will grow and prosper, those that do not will cease to exist.

A very insightful and valuable paper. Its thesis is intuitive: businesses are operated by people and create value for the people. People in different organizations, locals, or countries have different value systems and cultures, speak different languages, have different legal/regulatory framework and business customs. How could a business expect the same business and operating models to perform equally well in different operating contexts?

And yet a context, as a source of potentially detrimental variances, is still more often than not an afterthought rather then a key element of a go-to-market strategy.

The game changer is in the business's ability to perform the right front-end analysis and to engage local talent early on in order appropriately tailor and localize global strategies to a local context.

This article is just in line with my research and public symposium at the Lagos Int' trade fair 2012 which I tagged 'Doing business in Nigeria- The Unique marketing strategy and brand management perspective'(As stated in my profile).

Over the years, I studied the application of business administration and management strategies peculiarly in Nigeria while juxtaposing with 'learned technical knowledge'.

The differences were quite alarming...Alot of foreign companies here, I observed folded up due to this ignorance.

Thanks Tarun. Keep it up!

This note is to Ikenna and Funzo (latter commented around same time as the comment to which I'm replying) I wonder if either of you would give us your views, from some relevant part of the African continent, regarding the display, or lack thereof, of what I call contextual intelligence on the part of different non-African investors and entrepreneurs trying to participate in the emerging Africa story? (eg Western investors, Chinese, Indian, etcetera).

The importance of local context and the need for modifications to take into account this context can never be over emphasized. I witnessed this first hand whilst working in a financial institution that had subsidiaries in other African countries. Perhaps the challenges experienced by some of the subsidiaries in replicating the success being recorded by the parent in its domain country, was partly due to issues relating to appropriate contextual intelligence necessary to navigate their markets.

Very insightful article and contributions thereafter. How high an organisation contextual intelligence quotient is determines their success especially as they pursue expansion in emerging markets/ developing countries. The lack thereof results in the perplexity on how continents like Africa seem so open and replete with opportunities yet market penetration is not as expedient as expected. Coca Cola has a high contextual iq which we can learn from and emulate

I really feel honored to be part of this high level discussion forum and I must say I am enjoying this high quality articles and I think my small business will do good if applying knowledge acquired here appropriately. Thank you very much Tarun for the great article.

Agree with the article that is why certain MNCs make a mistake by imposing what is followed in Europe in India and they do not see the same results

To reach a high Multicultural Intelligence level you need time, much time in some countries. Ex-pats usually think that Multicultural Intelligence is learning the local language and jokes.

Have witnessed this first hand in the organisation within which I work. Overseas colleagues on secondment often develop an excellent sense of humour and take English names whilst immersing themselves in local culture and social activities. It generates trust and enriches communication and stimulates creative ideas/brainstorming. Works a treat.

Very good article!
Multicultural Intelligence and amiable skill of managers together with a good governance business are key factors for the business success in elsewhere.

Hi Tarun - I thoroughly enjoyed the article and am sharing it with my colleagues first thing tomorrow. Could you please advise the title of the 1996 Isaiah Berlin essay you were refering to? Many thanks!

I think that's "On
Political Judgment," from the New York Review of Books, October 1996.

Contingency school of management thought ...anyone

Sometimes contextual is even more basic. In the 1970's a delegation of agricultural experts from the (then) Soviet Union came to the US to study our feeding programs for various animals. One of their stops was a major cat food producer. During a 2 hour tour they were shown the production of both canned moist and dry kibble feed. Their were explanations of the ratio of protein to vegetable matter and differences between adult and kitten foods.
At the end of the tour the visitors were asked if they had any questions. After conferring among themselves they asked "What do you do with the pelts?"
They could not conceive why all of this effort went to feeding these animals unless they had some monetary use. Pelts was the only thing they could think of spending that much time and money to produce.
Knowing where the other party is coming from culturally as well as educationally is vital.

Really liked the article. Brings together a lot of interesting ideas and messages to think about.

I have seen the importance of contextual intelligence in innovation management. In my research I have come across R&D centers and entrepreneurs designing novel experimentation and testing practices based on local institutional context. This allowed rapid and cheap reduction of uncertainties critical for problem solving and design thinking. Interestingly many of these experimentation and testing approaches will not travel successfully to other locations given institutional differences. As organizations and entrepreneurs become deeply aware of the context at different locations and potential implications on R&D work, the way they think about locating and managing innovation efforts will change dramatically (instead of traditional thinking based on resource availability, market proximity etc.).

There is much to be understood and studied when it comes to implications of contextual intelligence on organizational practices and performance.