Chrysler & the PT Cruiser: A Cross-Cultural Case Study

A French office is like a royal court; a German office is a well-oiled machine.

As we’ve discussed over the past few weeks, analogies are simple mental models that can aid cross-cultural understanding.

While behavioral changes are inevitable when working a new culture, it can be impractical to completely alter your cultural identity. Analogies provide a rough blueprint so you can play by the rules.

They show you how another system works by transposing that system onto a concept that’s relatable to you.

Analogies aren’t perfect, but they do enable you to better comply with behavior in another culture which will make you more effective as a colleague or manager.

Instead of making decisions from the bias of your own cultural anchor, by understanding the structure of the workplace, you better understand its mechanics and are able to intuit decisions that more appropriately align.

If you don’t have a zookeeper to come up with an analogy for you – like an expat or local who’s worked in a similar cross-cultural capacity – observe the nuances of the culture and create your own simple but clear analogy to use as a mental model.

Here’s one example of how author and professor, Clotaire Rapaille, did just that.

The Culture Code

Having been exposed to numerous cultures in childhood, it was natural for Rapaille to dedicate his life to researching the differences of cultures around the world.

In doing so, he became a personal advisor for CEOs of top global companies and is on retainer for many Fortune 100 companies.

By applying basic analogies in his book, The Culture Code, his concise observations of other cultures make cross-cultural understanding more efficient.

Chrysler Case Study

One case study Rapaille presented in The Culture Code involved the development of Chrysler’s PT Cruiser.

Data from focus groups helped Chrysler analyze and understand the “code” of American car consumers.

What did they find?

  • A car means family: For Americans, the family car is made important during primary socialization. Therefore, the nostalgia of childhood and family are aspects entering into this code.
  • A car means freedom: As with most things American, owning a car in one’s youth means owning freedom in more ways than one. It was found that 80 percent of Americans have their first sexual experience in the backseat of a car.
  • A car means identity: There is a strong correlation between a person’s car and their identity in the U.S. In some ways, you are what you drive.

Considering this data, it’s clear that there’s a powerful emotional relationship between Americans and their cars.

As production planning for the PT Cruiser went into effect, German car manufacturer Daimler-Benz (Mercedes) took over Chrysler.

The German culture’s relationship with their vehicles is much different.

The legal driving age in Germany is 18, so the correlation between youthful freedom (and the nostalgia of a first sexual experience in a car) isn’t as common.

Moreover, German cars are ubiquitous with quality engineering. The focus is on advanced technology rather than on the powerful emotional relationship a consumer might have with their car.

Due to these differences in culture, the PT Cruiser project was not as successful as it could have been.

While the retro and individualistic design of the Cruiser pushed the right buttons for the American consumer, the German executives ignored this, instead focusing on the vehicle’s modest quality engineering.

They assumed the PT Cruiser would be a marketing disaster and consigned its production to a small plant in Mexico.

Because of this decision, supply couldn’t keep up with demand, when the car became a big hit with Americans.

The company could have sold much more in the first year had Daimler-Benz better understood and catered to the culture of the American car market.

This is one example where exploiting a cultural analogy (one shaped by family, freedom, and identity) could have guided decision-making and led a company to greater commercial success.

Insightful Cross-Cultural Analogies: How Hofstede’s Power Distance & Uncertainty Avoidance Aid Understanding

Power distance. Uncertainty avoidance.

We’ve discussed these two dimensions at length in previous posts.

Not only are they stand-alone aspects that aid cross-cultural understanding, but social psychologist, Geert Hofstede, has applied these two dimensions to create cultural analogies that help simplify foreign workplace environments.

Power Distance and Uncertainty Avoidance Review

These two dimensions relate to workplace behaviors.

Power distance is the degree to which cultures accept and expect the unequal distribution of power amongst members of organizations and institutions.

For instance, those employees in cultures of high power distance will not directly confront a superior; those employees and superiors in cultures of low power distance rely on communication and the consultation of each other, which de-emphasizes the hierarchical nature of status.

Uncertainty avoidance is the measure of acceptance and expectation for unpredictability and chaos in society.

Those cultures with high levels of uncertainty avoidance have a low tolerance for unpredictability and ambiguity, resulting in rule-oriented, law-abiding societies.

Those cultures with low levels of uncertainty avoidance have a high tolerance for the same, resulting in societies willing to take more risks, tolerate a wider variety of opinions, and not follow rules so strictly.

The Analogies

Arranging these two dimensions on the axes of a matrix, Hofstede produced a set of helpful analogies to better understand the work cultures of the United Kingdom, China, Germany, and France.

monkey_charts_CMYK-14

With its low uncertainty avoidance and low power distance, a typical English company is like a village market, in that it combines risk-taking with flat hierarchies, resulting in the classic entrepreneurial spirit.

Germany also shares the flat workplace hierarchies (low power distance) with the British; however, German culture has a high uncertainty avoidance, making typical German companies efficient and inflexible, more like a “well-oiled machine” or a clock. Rules are strictly followed, with decentralized decision-making and each equally important wheel working together.

The typical French company is described as a “royal court” or “pyramid of people.” The culture is one of high power distance, where everyone knows their place and decision-making is centralized. They also share high uncertainty avoidance with the Germans, meaning rules are strictly followed, resulting in a complex network of relationships across the levels of hierarchy. Power and authority are highly valued.

The best analogy for a Chinese company is that of a family with a head patriarch. Like France, China values high power distance and, like England, low uncertainty avoidance. This means that, despite having a typical hierarchical society that values company loyalty, risks and rule-bending are embraced, which has helped to position China as an economic superpower.

Although I can’t stress enough that analogies are never perfect and nothing is one-size-fits-all, they do allow managers to form mental models, aiding understanding in the workplace environments of foreign countries.

3 Mechanisms That Bias Our Decision-Making: Representativeness Bias

Every single person has a mental model.

When assessing the likelihood of an event, the individual bases the event’s probability upon its similarity to that model.

This is called representativeness bias.

Last week, we talked about availability bias, one of the three mechanisms that bias our decision-making.

Availability bias involves one’s perception of an event’s frequency based upon its vividness and frequency in the forefront of one’s mind.

Now, let’s take a look at how this second mechanism – representativeness bias – distorts judgment and decision-making.

Marriage & Divorce

One example of representativeness bias involves marriage.

Many people’s mental model of marriage is that of a lifelong partnership. Not often does a couple enter into a marriage with a view of divorce.

Due to their mental model of eternal love, only around 5 percent of couples in the U.S. sign a prenup, despite around 50 percent of marriages ending in divorce, according to research by Harvard Law.

Somehow, most don’t consider they’ll be part of the statistic and, so, don’t plan for it.

In this way, the power of representativeness bias is stronger than the logic of probability.

Representativeness Bias in Business Decisions

Culture, of course, influences our mental models, and so representativeness biases are grounded in culture.

Let’s look at another example of how a business decision revealed representativeness bias, likely to the detriment of the business.

The global insurance company, Allianz, had built business in eleven African countries. Although profitable, the business was small and, in March 2014, Allianz reviewed their strategy on the continent.

They narrowed their way forward down to two roads: 1) apply aggressive growth through acquisition, or 2) wholly sell off the business.

The board of Allianz was presented with a growth strategy. They rejected it.

Their view was that Africa’s corruption was too extensive and might put the insurance company at reputational risk.

However, Allianz continued to do business throughout Eastern Europe.

According to the Transparency International list – an index of worldwide national corruption – several countries in Eastern Europe, in which the insurance group remained, rated equally corrupt as their African counterparts.

The West’s mental model of Africa considers the entire continent as one monolith of extreme corruption, thereby biasing judgment in lieu of logical probability.

In dismissing growth based on representativeness bias, the company may have lost out on a successful business venture and the profitability that accompanied it.

Tune in next week for anchoring bias.