Application of PMBOK® in emerging markets

Alfred F.Andersen, Consultant

IntroductionWhile project managers are trained to focus on and manage hard deliverables, many times the source of failure for projects in emerging markets can be attributed to a failure to understand cultural differences. Understanding these differences and learning to manage them is critical to the success of any cross-cultural project.

This paper will provide a guide to eliminate omissions and ensure success for project managers who are setting up projects in emerging markets. As a project manager is setting up a project, it is easy to identify the hard items—typically called deliverables and identified in the contract (if it is an external client), or in the project scope document (for an internal project). Some common deliverables are project schedules, budgets, quality standards, specifications, and drawings. Most project managers are engineers or technical professionals: they manage and execute these hard deliverables and tasks well. This paper is focused on the “soft” people related issues; some examples are project communications, staffing and team development. These are the activities that often get ignored or eliminated when the schedule or the budget is tight, the project manager does not realize the importance of the activities, or the project manager is just too busy. When the project is being executed in an emerging market these are the activities that are absolutely critical and require the most attention from the project team to successfully accomplish the deliverables.

In our growing global economy, a significant portion of new projects will be executed in emerging markets, outside the U.S. and Europe. Project execution that simply duplicates standard systems and procedures currently used in the U.S. or Europe will not be successful. This is particularly true for those projects in which a significant degree of joint participation with in-country suppliers, partners or clients is required. This paper helps to identify and understand the specific cultural aspects that must be considered and examine how to incorporate these aspects into a project plan utilizing the PMBOK® Guide as the source document.

PMBOK® Guide is the premier work on project management and has been an excellent source to describe the key project management processes. This paper will focus on supplementing three of these processes in relation to emerging markets: time management, human resources management and, most important, communications. Resources, tools and techniques that are available will be presented and explained. These additional tools can make the difference between a successful project and a failure.

The following three steps are recommended:

Step one—Recognize that you have an emerging market project for your company

Step two—Identify cultural differences and gaps

Step three—Incorporate cultural considerations into the project plan

Outcome- Understanding = Success

Characteristics of Emerging Markets

For the purpose of this paper, emerging markets are defined as all countries outside of North America, Western Europe and Japan (the developed economies).

Naturally, for each organization, the definition of emerging market will vary based on its history and experience in a specific location. If an organization has five years experience and has executed a number of projects in Thailand, and they are familiar with the country, the people and the culture and how to get things done “in country,” it is not an emerging market to that company. To another company that has never worked in Thailand, it is an emerging market. Likewise, to a company based in South Africa, South Africa is not an emerging market. To emphasis the importance of emerging markets in our global economy, the Baring Guide to World Equity Markets, which tabulates market capitalization, shows that between 1983 and 1994, the capitalization of the world markets grew from 3.4 trillion U.S. dollars to 14.9 trillion U.S. dollars, and it is forecasted to grow to 21.2 trillion by 2010. During this same period, the emerging countries' market capitalization grew from 400 billion to 2.6 trillion, and is forecasted to grow to 10 trillion by 2010, constituting nearly 50% of total market capitalization. Today, the economies of the developed market are strong, and parts of the emerging markets are weak, specifically the former Soviet Union and Asia. It is anticipated that in the future these markets will expand as South America has, and will represent a significant opportunity for new business. The companies that know how to work in these emerging markets will be sharing the benefits of this growth.

Exhibit 1

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Exhibit 2

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Exhibit 3

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What is the bottom line? Potentially, one half of future business could come from emerging markets and the project manager responsible for these projects must be culturally aware to be successful. A project in an emerging market country should be evaluated to determine the amount of joint participation or interface with in-country clients, authorities, suppliers and partners that is required. On a typical engineering/construction project, interface and interdependence is very high and the project's success depends on understanding the culture. In contrast, a software development project may have a much lower dependency on cultural understanding, since the only interface may be training. If there is doubt that cultural understanding will be a factor, it is recommended that cultural awareness be included in the project planning. It can only be to your benefit. To summarize, in order to grow the business and ensure success for the company, the project manager must develop the tools and skills to successfully execute the project in these unfamiliar environments.

Cultural Awareness and the Project Manager

Culture is a set of shared and enduring meanings, values and beliefs that characterizes national, ethnic or other groups and orients their behavior (Faune & Rubin, 1993).

Should the project manager who has total responsibility for the project spend time understanding and dealing with cultural issues? Must the project manager become a sociologist, along with all the other hats he or she wears? The answer to both these questions is yes. Let us take a better look at culture and cultural awareness and then examine some basic dimensions of culture. This will emphasize the importance of culture to your project team. A key step is to identify those cultural characteristics or dimensions that are different from those in the home culture of your company. This means you must first understand your home culture: your country, the specific region of your country and your company. Then you must understand the emerging market culture in which you are working. The differences between the two, the cultural gaps, will be the focus of your cultural awareness.

Why is Culture so Important?

In order to effectively communicate, we must reach understanding with all key project participants including those outside our organization and/or country. The key to understanding is communication—written, verbal and nonverbal. Communication is the act of sending and receiving a message and the meaning behind that message. Unfortunately, in intercultural communication, those messages are not only sent through a cultural filter but also received through a cultural filter. This explains why many messages are misinterpreted during intercultural communications. Professor Oyvind Dahl, an expert in intercultural communication at the Center for International Communication in Stavanger, Norway, uses the illustration in Exhibit 3.

For example, an American from Texas might say, “This is quite important.” An African government official educated in London, wonders, “Why is he telling me if it's not very important?”

A second important consideration is the method of communication. When do you call, send a fax, send an e-mail, send a letter or make a visit? A Norwegian client might send an important message via fax to a Portuguese contractor. When he does not receive an answer, he calls the contractor on the telephone, and asks, “Why did you not respond to my fax?” The contractor will reply, “I knew that if it were important, you would call me.” This illustrates the point that to a northern European, an important message must be in writing but to a southern European, if a message is important, it requires a personal form of communication such as a visit or a phone call.

The last and often most neglected form of communication is nonverbal communication, or body language. Body cues must be understood to avoid destroying a relationship before it has a chance to develop by an inadvertent insult. For example, do not smile at a Russian during a discussion, or he will believe that you are not taking him seriously. It is important to note that nonverbal communication is often the most difficult to manage, since these actions are usually unconscious. For example, we usually don't consciously think about how close we stand to someone, although it can hinder communication by causing the other person discomfort.

The understanding of cultural dimensions was greatly advanced by the research and writings of Geert Hofstede. Richard Minor (1999), in his article in PM Network, provided an excellent overview of Hofstede's four dimensions:

• Power Distance—amount of dependence between supervisor and subordinates

• Individualism vs. Collectivism—tendency toward teamwork

• Masculinity vs. Femininity—amount of aggression

• Uncertainty Avoidance—threat of unknown situations

Hofstede has studied over 100,000 people in 50 cultures, so it is a substantial work. Richard Minor (1999), in his article, provided some excellent techniques for using Hofstede's cultural dimension.

John Mole, of Canning Associates, international business communication skill specialists, in London, has developed a Mole Map [Mole, John, 1996]. This is a two-dimensional graph, which measures a culture's style for doing business along two dimensions: organization and leadership.

The vertical axis is style of leadership, from group leadership at the bottom of the graph to individual leadership at the top of the axis. A dictator would be at the top—Russia is the highest country on this axis. The horizontal axis portrays how individuals view the organization. It ranges from organic, where order is based on personal relationships, to systematic, where the organization exists independent of its members. The United States is far to the systematic side. An example of how this tool might be used would be to recognize that an American company might be viewed as uncaring about its employees from the prospective of a Spanish employee, since the USA is very systematic and far to Spain's right on the organization scale.

Again, the important thing in using tools such as these is to understand the relative positions of the two cultures working together and to plan your project communications to close these cultural gaps.

Let us look at some examples of important cultural attributes for three cultures compared to the United States:

Exhibit 4

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AUTHORITY—How do project teams respond or react to authority in this culture?

TIME—How does this culture view time? Do they have a sense of urgency (i.e., “time is of the essence”) or do they have a more casual concept of time?

DECISION—What is the decision style? Is it autocratic or is developing consensus important? How long do decisions take to make?

CONFLICT MANAGEMENT—How is conflict handled? Is it avoided, or confronted head-on?

Below are listed several examples:

United States/Northern & Western Europe

AUTHORITY—is a function of position—the organization expects the boss to make the decision, perhaps consulting advisors.

TIME—time is money, commitments for start and finish are taken seriously.

DECISION—decision-making is fast, after the evaluation of alternatives.

CONFLICT MANAGEMENT—compromise and negotiation are used but conflict is often resolved by a good fight; verbal conflict is acceptable.

Former Soviet Union

AUTHORITY—is a function of position and is absolute.

TIME—history is important, time must be kept in perspective.

DECISION—the boss has all the power, but the bureaucracy must go through the motions.

CONFLICT MANAGEMENT—conflict is resolved by power.

South America

AUTHORITY—is a function of position, education is very important discussion and consultation are expected.

Exhibit 5

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TIME—is relative—both start and finish are secondary to relationships.

DECISION—will be reached when everyone is in agreement, but the boss must announce it.

CONFLICT MANAGEMENT—verbal conflict is avoided; conflict often escalates to action or a show of force.

Asia

AUTHORITY—is a function of age and position, but consultation and consensus are important.

TIME—History is important—punctuality is important—decisions should not be forced by time.

DECISION—takes a lot of time, everyone's views must be considered and consensus reached.

CONFLICT MANAGEMENT—maintaining face is critical, conflict is often ignored, conflict is often resolved thru an intermediary.

Practical Tools Available

Books

In order for a project manager to understand a culture, he must invest time studying what sociologists and anthropologists have learned about that culture and how it relates to business and communications. The following two authors have provided a scientific foundation for the understanding of cultures.

Edward T. Hall, an American anthropologist, has written a number of books on intercultural communications, including The Silent Language, The Hidden Dimension and Understanding Cultural Differences. Hall discusses a number of parameters in cultures, such as high and low context (i.e., how much information is transmitted and received); time and how it is perceived; space, including body language; and privacy and message flow. Hall introduces a number of concepts that are critical to the way a culture does business, such as action chains, which are defined as an established sequence of events in which two or more people participate to accomplish a goal. Hall points out that if you do not recognize the importance of how an action chain works in a culture, and you inadvertently break it, you may suffer the consequence of the whole process starting over again (Hall, 1990). Hall's books are excellent background works to enhance your understanding of culture.

The second major work on intercultural cooperation is Geert Hofstede's Cultures and Organizations—Software of the Mind. This book is a must read for a project manager. Hofstede, a Dutch sociologist, has studied, researched and written on cultural differences since the late '60s. Critical to any manager is the chapter titled “Organizational Cultures,” which explains how organizations relate to national cultures. The chapter titled “Intercultural Encounters” provides real life case studies of what can happen if we do not recognize cultural differences (Hofstede, 1997).

A number of books have been written in the last fifteen years to help American businesses “go global.” They are generally helpful, but do not provide the depth of understanding and background necessary to effectively establish the working relationship critical to long-term business success. Two books that provide a good general overview plus specific country by country do's and don'ts are Going International [Copeland & Griggs, 1985], and Do's and Taboos Around the World (Axtell, 1990). There are a number of books that consider specific aspects of intercultural relationships, such as Culture and Negotiations (Faure, 1993). There are also many books that deal with specific cultures, such as Korea—Etiquette and Ethics in Business (DeMente, 1998). Another source of information on an individual culture is a Culturegram, which provides a briefing on customs, lifestyle, the economy and travel. These are available for 140 countries from Brigham Young University. The U.S. Department of State also issues useful country summaries.

Websites

A number of web sites are available with information on intercultural relations and country-specific cultural data. A list of relevant web sites is included in the references.

Other Sources

Embassies and cultural associations are excellent resources for general cultural information. Most U.S. embassies and other countries' embassies have commercial attaches, whose job it is to assist businesses. They have a wealth of information and can provide valuable contacts. One practice that is particularly effective is to find other companies from your home culture or a similar culture that have business experience in the culture you are entering. Unless they are in direct competition, they are often willing to share their experiences, successes and failures with you. This is an invaluable but underused resource.

Another important contact should be your in-country accountant firm. In many cases, your company's public accountants or auditors will have either a branch office or an affiliate in the country with which you are working.

They are not only critical for legal and tax purposes, but can provide good insight regarding business practices and risk. The following exhibit is an example of a country-by-country business risk assessment provided by Arthur Andersen, from the Economist Intelligence Unit.

The last and perhaps most important resource is your interpreter or local representative. This individual must be carefully selected, because he will be the company in the eyes of the local businesses. As a new organization in the country, you are dependent on his judgment in handling many business aspects, including negotiations. Your trust in him and his trust in you is critical to your project success. The selection of this person is one of the most important decisions you will make on your project.

Exhibit 6

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Incorporating Cultural Awareness into the Project Plan

The project manager, as project leader, must take the responsibility to ensure that the existing cultural gaps are identified and recognized in the project plan. This will minimize the impact of those cultural gaps. The project manager's primary role is to increase awareness and sensitivity and ensure clarity of understanding for all team members. If he accomplishes this, he is more likely to have a successful project.

The PMBOK® Guide provides an excellent guideline for project managers in setting up and managing their projects. Section 2.5.3 states, “Every project must operate in the context of one or more cultural norms.” In a situation with more than one cultural norm, three areas of this guide are of particular importance: Time, Human Resources and Communications. They are highly interrelated and interdependent and will be the focus for incorporating what has been learned about cultures into the project plans. These recommendations assume that the project has a significant in-country or on-site component.

Time Management

During schedule development, it is important to annotate all time-related activities, which will influence work in the significant operating countries. This means that holidays such as Ramadan, planting and harvest seasons (if the work site is in an agricultural society), other national or cultural events such as Mardi Gras, and major meteorological events such as rainy season in tropical climates, must be designated and factored into the relevant project schedules. This accomplishes two objectives—it increases cultural awareness and allows the project team to make a reality check against all project influences. During a project in Thailand, the construction managers were surprised when a high percentage of the workforce returned to their home village for the rice harvest. Having recognized the importance of the harvest, a rice dinner was cooked in the world's largest frying pan for all 6,000 workers to celebrate a safe work period.

Project and progress reviews should be held, not only in the project management office, but also at the other significant operating centers and construction site. This conveys to the team members at the other operating centers and the local participants that they are important to the overall project success. Local participants have the opportunity to identify challenges that may have stayed dormant due to communication difficulties. This also allows the project management team to put their “hands on” the activities and progress. This face to face review, discussion and exchange of expectations over real deliverables is critical to overcoming cultural misunderstandings. If specific decisions must be reached prior to follow-on activities starting, it is important to specifically note the time allocated for that decision on the project schedule. The last recommendation regarding time management is the technique of building in the early production of deliverables, to allow adequate recovery time if there is a misunderstanding on scope or content.

Human Resource Management

The project manager on an emerging market project should place increased emphasis on the organizational planning and team development. Organizational planning should focus on the interfaces, for both the work product and between cultures. A clear understanding of roles, responsibilities and expectations will be greatly enhanced by face-to-face meetings between the parties directly involved. E-mail will not do the job. Team development is the project manager's most powerful tool in closing cultural gaps. An excellent starting point would be culture, customs and history presentations to the project team. These presentations and training should identify what is important in each project culture. Awareness and sensitivity to other cultures' customs and beliefs will go a long way toward breaking down cultural barriers. If a project has a long duration, a series of cultural awareness training sessions should be implemented at key points on the schedule. This will ensure that all key team members are included as the project goes through phases and helps to keep the cultural awareness refreshed. Team members should be encouraged to socialize with their counterparts and participate in local events to increase their understanding of the local culture.

Formal team building is an absolute necessity for a multicultural project. Taking the time to focus on roles, responsibilities, decision-making processes, risks and opportunities is critical for both the results and for the process of establishing a continuous and productive dialogue. Demonstrating that open communication is not only acceptable but also essential is a key to improved multicultural interaction. On a project with a long schedule, it is necessary to have multiple team building sessions scheduled before critical interfaces and including key team members from each phase. One focus of team building must be to increase awareness and address cultural gaps.

Communication Management

Understanding can only be enhanced by improved communication, particularly when unrecognized cultural filters are present. By recognizing and being sensitive to those filters, the project team will greatly improve communications. A helpful technique is to ask the person receiving the message to restate what they understood you to have said, in their own words. Using this technique regularly will improve communication and understanding.

Multicultural projects most often are multilanguage projects. The project team must determine what the project language is, and what documents (if any) must be produced in multiple languages. Another technique would be to produce a multi-language project glossary or dictionary.

The communication plan should address the appropriate form of communication. In many instances, a regularly scheduled conference call, or better yet, a videoconference, will improve communication across cultures and time zones. It is as close as you can get to a face to face meeting, our desired state, without expending the travel time and expense. However, a videoconference it is not a substitute for a face to face meeting.

More and more, the world is turning toward English as the common business language. As native English speakers, we have the significant advantage of using our native language, but we also have the responsibility to ensure that we are understood when we speak English to a person with another native language. If each one of us does that, we will have come a long way in closing the cultural gaps and will help ensure project success.

An understanding of cultural factors and their impact on how you plan, organize and manage projects in emerging markets can be the difference between a project success and failure. There is no greater satisfaction for a project manager than seeing a multicultural team work together and make his or her project a success.

References

Books and Articles

Axtell, Roger. (1990). Do's and Taboo's Around the World. New York: John Wiley & Sons, Inc.

Copeland, Lennie, & Griggs, Lewis. (1985). Going International. New York: New American Library.

Culturgrams. Kennedy Center for International Studies. Brigham Young University. Salt Lake City, UT.

Daht, Dr. Oyvind. (1998, Feb.). EPCI Intercultural Understanding Workshop: Oslo, Norway.

DeMente, Boye. (1988). Korean Etiquette and Ethics. Lincolnwood, IL: TC Business Books.

Faure, Guy Oliver, & Rubin, Jeffrey Z. (1993). Culture and Negotiation. Newbury Park, CA: Sage Publications.

Hall, Edward T., & Reed, Mildred. (1990). Understanding Cultural Differences. Yarmouth, ME: Intercultural Press, Inc.

Hofstede, Greet H. (1997). Cultures and Organizations. New York: McGraw Hill.

Minor, W. Richard. (1999, March). Stranger in a Strange Land. PM Network 13, 31–34.

Mole, John. (1996). Mind Your Manners: Managing Business Cultures in Europe. London, England: Nicolas Brealey Publishing, Ltd.

Websites

http://www.culturebank.com/cultref1.html

http://www.canning.co.uk/default.html

http://www.johnmole.com/

http://www.sietar-europa.org/ Society for Intercultural Education, Training and Research

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

Proceedings of the Project Management Institute Annual Seminars & Symposium
September 7–16, 2000 • Houston, Texas, USA

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