I can almost hear you think: “Yeah, right…“, but let me explain.
Of course Price determines your bottom line. However Price is not the most important influencer when it comes to your bottom line, people are.
The reason is that people usually buy value first. Of course, price is important, but if and when people can afford a product or service, price tends to weigh in much less than other factors like:
- Does this product or service solve my problem?
- Do I like what I buy?
- Do I like who I buy from?
- Does it look/smell/feel nice?
- Will I get good service?
and that value is very much influenced by perception.
Emotion Only, No Reason
You see, human beings, from any culture, can only base their (buying) decisions on emotions. Some researchers claim that we are still 10% rational in our decision making, but I believe that we base 100% of our decisions on our emotions.
Why would we otherwise buy a $600 Smartphone, while there is a $300 phone from a different brand lying right next to it? It’s not that we really “need” the more expensive one, do we? Whatever the reason is, I bet you it is emotionally based.
So when it comes to buying anything it is very often about emotions. We make our decisions with our emotions, and we rationalize them with our brain.
Not only when we’re buying (luxury) products or services do we make our decisions based on our emotions, also when it comes to working with others. Here are a couple of examples where emotions usually are leading in our value judgments:
- Why do you like your most favorite colleague?
- Why do you dislike your least favorite colleague?
- Why do you prefer to work with Americans or Germans?
- Why do you dislike working with Dutch or Germans?
Also here goes: we base our likes and dislikes on our emotions, and we rationalize those decisions with our brain.
In addition to this, we tend to like those who are like us, and we tend to dislike those that differ from us. When working internationally we call those differences Cultural Differences.
Bottom Line Pitfalls
If you are working in an international environment or organization, then those cultural difference can be a decisive factor on how smooth your organization runs.
There are several things where cultural differences play an important role, and that are detrimental to your bottom line:
- A high staff turnover
- Exceeding international project timings and budget
- Innovative capacity
- Overall margin
- Management style
- Decision making
- Level of details of projects
It is not the cultural differences themselves that cause these potential problems. It is the fact that too many organizations don’t pay enough attention to handling these in an appropriate way – or even better, to getting leverage from them, which in turn leads to the above-mentioned pitfalls.
Which of the above pitfalls do you recognize? How much attention are you paying to cultural differences in your organization?
I have a Master's Degree in Organisational Psychology and have lived in the USA, the Netherlands and, currently, in Belgium.