Reconciling cultural differences: Baltic strategy for high growth

  • 2004-05-13
  • By David Dickerson and Julija Bulatova
In today's Baltic states, reconciling cultural differences is more important than ever as a critical success factor for gaining a competitive advantage. Crafting a reconcilable business strategy means mapping out cultural differences that exist between two parties and creatively synthesizing those differences into one unified strategy.

Now that the Baltic states are proud members of the European Union, government and industry will need to move swiftly in formulating and implementing a value-added strategy that reconciles the value differences between Baltics and the EU, the Baltics and Russia and between the Baltic states themselves.It is now, during this period of prosperity, that organizational change is required to sustain growth. It is no secret that there are many ethnic Russians in the Baltics, and this needs to be seen as a strength rather than a weakness. The EU countries will be looking to the Baltics to foster wisdom and direction as to how to work with Russia, but if there is no demonstrated advantage then they will work directly with Russia and bypass the Baltics.
While Ireland is labeled as the benchmark for the Baltics, few recall that their time difference with the United States is only five hours, and English is their mother tongue. Ireland never had to reconcile cultural differences between Latvians and Russians within their educational system. The venture capital or private equity investor is frightened of a market that fails to reconcile cultural differences, so the sooner the Baltic citizens seek harmony with each other the better.
It would serve the interest of the Baltic business and government leadership to concentrate on investing in creating local human capital that possesses the expertise needed to build a knowledge-based economy. Herb Simon, a Nobel Laureate, calls expertise a "network of possible wanderings" which would be the intellectual space that is used to explore and solve problems.
The 2nd Annual Baltic Management Development Association conference was held in Riga last week, and the theme was Enhancing Baltic Managerial Competitiveness. Educating Baltic managers on how to think creatively will be part of the strategic reconciliation when approaching the problems and solutions associated with dealing with Western and Russian management styles. Why would a German, American, Russian or Japanese want to study for his M.B.A. in Riga? The foreign students' interest would be to gain knowledge of cultures other than their own which will inherently teach creativity and the ability to reconcile. The success of Baltic business schools has been generated from the students' willingness to reconcile their need to learn Western management techniques offered by Swedish, American and British. But have the Baltic academics reconciled that Western managers would be interested in learning the Eastern European and Russian management style?
Two young men - one an American, J.P. Morgan, and one a German, Georg Siemens - put together the French theory of entrepreneurial banking and the English theory of commercial banking to create the first successful modern banks, J.P. Morgan & Company in New York and the Deutsche Bank in Berlin. These individuals did not channel their energy into looking for a business model to copy but rather created their own through an emergent unified strategy of differences. The best Baltic business model will not be a carbon copy of Ireland or Holland but one formulated through creative thinking that will take existing ideas in new combinations.
The Baltic leaders of tomorrow will need to be trans-culturally competent, so it is imperative for students to have an understanding of how to reconcile cultural differences by being creative. Creativity is undermined each day because of business imperatives such as coordination, production and control, and Baltic management may be inadvertently designing organizations that destroy creativity. Teresa Amabile's research shows that it is possible to develop the best of both worlds: organizations in which business imperatives are attended to and creativity that flourishes, and this is a reconciliation of differences.
Researching and teaching creativity is an essential part of crafting a reconcilable strategy for growth in the Baltics, so it is recommended that government and industry fund these types of scholarly endeavor. The talented artists of the Baltics would serve as an inspiration for leadership by inspiring business and government leaders to be more creative in their approaches to exploring harmonious relationships with business alliances to the West and East. It could be suggested that creating a leadership center or a European-Russian think tank in the Baltics could be a first step in creating an atmosphere for cooperation in political and management research. The creativity of management and employees will greatly enhance economic growth provided that they can solve problems and combine knowledge from seemingly disparate fields. o

Dr. David Dickerson is a New York-based consultant and Julija Bulatova is a lecturer at RISEBA in Riga.