The 2013 World Economic Forum in Davos, Switzerland, brought together over one thousand corporate executives, fifty heads of state, and three hundred cabinet ministers to discuss world challenges ranging from deficits to competitiveness to deadly diseases. At the conclusion of the conference, an observer from The Economist characterized the meeting as having one overriding theme: the importance of developing global leaders—in corporations, nation states, and NGOs. “The two most popular words in the business lexicon today are ‘global’ and ‘leadership.’ Put them together and people in suits start to salivate.” Indeed, global leadership is both an important topic and a topic about which we understand far less than we pretend.
More has been written about leadership than any other topic in the field of management. Books and articles espouse various theories about how best to lead, while anecdotal experiences by recognized leaders offer personal advice and to-do lists for success. The goal of these efforts, apparently, is to discover the secrets to good leadership and then pass them along to others. While this endeavor may be both challenging and problematic within a single country or region, imagine how much more complicated it can become when we cross national or regional boundaries.
Part of this challenge is conceptual. That is, what is a good leader? U.S. leadership expert Warren Bennis observed that leadership is like beauty; it is difficult to define but people recognize it when they see it. By contrast, Chinese philosopher Lao Tzu observed that good leadership is often both silent and invisible; it succeeds when followers conclude that they, in fact, completed the work themselves. Both of these observations cannot be correct unless we admit to cultural differences at work that help define and shape the nature and quality of successful leadership.
Simply put, what do we really know about leadership as it is operationalized and implemented across cultures? Can we assume, for example, that successful leaders in one country would be equally successful in another? Can successful leadership be exported—or imported? If so, what are the key qualities that constitute these ‘global’ leaders? If not, what are the contextual, institutional, or situational constraints that might influence their success or failure? This is an empirical issue more than a philosophical one. Hence the question: What can organizational research tell us about systematic variations in national cultures and contexts as they relate to leadership style and the creation of high performance work cultures? In short, does culture make a difference in leadership success?
The present study explores this relationship by comparing leadership style and the creation of supportive organizational cultures in two competitors in the global automobile industry: Toyota Motor Corporation (Japan) and Hyundai Motor Group (South Korea). Results are not intended to be representative of this industry in general. It can easily be argued that leadership practices and organizational cultures in other automobile companies in other countries could be significantly different than the two companies studied here. Such countries have their own unique national cultures to contend with. Still, we believe the access we were provided to these two companies provides a unique perspective and point of comparison of the interrelationships between national and organizational cultures as they relate to leadership effectiveness in two of the world's leading manufacturers. What we discovered is that both companies have discovered distinct but equally successful ways to succeed in the same hostile environment.
This comparative study suggests that global automobile companies manage their operations in very different ways from one another that are not necessarily associated with industry type, and that commonly assumed east–west distinctions for purposes of organizational analysis are not necessarily accurate. In the present study, two ‘Asian’ companies, one in Japan and one in Korea, were found to approach both leadership and organizational cultures in very different ways. While these differences may be based to some degree on cultural differences, the most pronounced finding is that different leadership styles (steady-state and entrepreneurial) led to the creation, development, and reinforcement of two distinct, although equally successful, organizational cultures (symmetric and asymmetric).
While these conclusions are illustrated and discussed throughout the paper, five key differences between the cultures of the two companies can be highlighted by way of summary:
1.
Leadership style
The results of this study can be interpreted as identifying apparent contradictions in what constitutes effective leadership in the industry. Toyota's top leadership encourages stability, predictability, planning, and risk minimization through both symbolic leadership and a global management system that emphasizes standardized global operating procedures and control systems. There is a Toyota Way of doing things that applies to everyone up and down the line. Leaders are expected to develop system-wide solutions that anticipate and mitigate against potential problems. They encourage routine compliance with organizational plans and policies that are reinforced by the company's Japanese cultural roots of strong collectivism. We refer to this approach as steady-state leadership in view of its unswerving commitment to standardization and continuity.
By contrast, Hyundai's leadership style is seen as being more entrepreneurial in nature. This is not to suggest that the entrepreneurial spirit is not found in both companies; indeed, it is. Rather, this distinction is based on our findings that, compared to its competitor, the role of Hyundai leaders emphasizes creative problem solving and reasoned risk-taking over stability and predictability. In view of their smaller size, this may be done out of necessity. In any case, the role of the leader at Hyundai places greater emphasis on monitoring environmental changes and quickly capitalizing on opportunities as they emerge. Changes and adaptations must occur swiftly. This requires operating policies and management systems that are flexible and agile. We suggest that while Korean cultural roots can be seen as a factor in this approach to leadership—the role of leaders throughout Korean history has been different from that of Japan's—in our view the characteristics and motivations of corporate leaders played a more decisive role.
From a comparative standpoint, each leadership style appears to be consistent with company objectives and operating principles. Both appear to be successful in their own cultures. This finding is consistent with prevailing contingency research on leadership processes in general, and suggests that a principal reason both companies have succeeded in today's market is that each has discovered a practical way to build organizational cultures that are supportive of both employee and corporate performance. In other words, the key here is not which leadership style is preferable; rather, it is to achieve a match between prevailing leadership styles, organizational cultures, and employees.
2.
Uncertainty and opportunity
As discussed in this paper, Toyota's approach to uncertainty includes thoroughly understanding situations, considering various possible options, and making decisions slowly by consensus. This philosophy is based on a belief that the best possible results can be obtained by minimizing uncertainty in advance which, in turn, promotes a management practice of deliberately analyzing the environment and planning future courses of action. Such management practices work well in a relatively stable environment where future events and challenges can be forecasted and uncertainty is reasonably manageable. In this regard, the Toyota Way is a relatively slow process that is expected to yield results gradually, requiring time before large-scale effects emerge.
An alternative model can be found at the Hyundai. Executives and managers at Hyundai widely believe that living with uncertainty is normal part of work life, and that consistently working in an uncertain environment promotes alertness, flexibility, and managerial agility. When an unanticipated event occurs, a philosophy of immediate action is embedded throughout much of the company. Uncertainty is seen as a challenge that, in turn, creates opportunities. This belief is apparently deeply rooted in the company's culture.
For example, in 2012 when the U.S. Environmental Protection Agency determined that mileage estimates for several Hyundai and Kia models were overstated, the company immediately offered a public apology, corrected the error, and offered current owners annual cash rebates as long as they owned their cars. Hyundai Motor Group's Chairman Chung visited the U.S. operations the same week to address the issue. Several managers involved in the problem were shuffled as a part of corrective action. As a result, an independent survey subsequently found that most car owners involved were by and large pleased with the way the company had expeditiously handled the matter, although this response was not universal. A potential crisis was turned largely into an opportunity, and all of this was accomplished in just ten days.
Another way to view this difference is that, being the largest automobile company in the world, Toyota can more easily create opportunities (as it did with the successful introduction of the Prius hybrid model), while Hyundai must focus on capitalizing on opportunities where they can be found. Part of this difference can be attributed to size differences; part can be attributed to management philosophies and organizational cultures.
3.
Strategy development and implementation
At Toyota, consistency is a key word that helps explain the company's management practices and strategic orientation. Predicting future environmental conditions and reducing uncertainty through system-wide deliberate planning makes consistent management practices possible. When performance gaps or failures are identified, they are typically treated as problems in need to correction and monitoring. The finely tuned machine, or steady state behavior, is seen as the idealized norm. As a result, as noted above, emphasis is placed on considered and broad-based strategic decision-making, evolutionary changes, and a relatively stable personnel base. Such actions are typical of a symmetric organizational culture.
By contrast, at Hyundai we see more of an asymmetric organizational culture in which some key decisions are made based on what at least appears to outsiders as a more ad hoc basis. Strategies appear to shift often, and overseas business partners and some employees who are unfamiliar with the Hyundai culture often express frustration with the company's lack of stability or predictability regarding its strategy formulation and implementation. Such seemingly inconsistent changes can appear to represent uncertain and perhaps less reliable ways of doing business. Hyundai executives, however, see this not so much as deliberate uncertainty as a desired level of flexibility and experimentation. In this regard, strategic implementation is less consistent and more experimental than that seen in the case of Toyota.
Two additional differences are also worthy of note. First, personnel changes at the executive and managerial levels are commonplace at Hyundai, as are changes in work processes. The management hierarchy is more organic and, as a result, often more difficult to pin down for outside observers. Second, Hyundai's extensive use of dual management hierarchies, in which Korean managers often work along side local managers but report to company headquarters in Seoul instead of locally, often adds an additional layer of frustration and uncertainty for local employees. While Toyota initially relied heavily on a similar dual hierarchy, its global experience has increased its confidence in delegating more control to local operations. Hyundai's heavy reliance on such control models is most likely explained by its relative newness in the field.
Indeed, many of Hyundai's management and strategic practices such as these can be explained in part by the company's on-going search to identify the best management practices that are consistent with its leadership, organizational culture, and strategic objectives. As a latecomer to the global automobile market, Hyundai has more limited managerial experience than many of its competitors. As a result, experimentation, flexibility, and risk-taking should be considered strategic assets, not liabilities.
4.
Planning and doing
Toyota is widely recognized for its PDCA (planning-doing-checking-acting) principle. PDCA is the process through which the company applies its kaizen principles across the organization. In a typical PDCA cycle at Toyota, however, more time is spent on ‘planning’ than on doing, checking, or acting. This process is evolutionary and can sometimes be very time consuming. This management practice is based on the belief that minimizing uncertainty can maximize the probability of success, and that such uncertainty in the environment can and should be minimized by careful analysis and very deliberate planning.
Again, an alternative planning model can be found at Hyundai. As noted above, the external environment of the automobile industry is increasingly becoming more complex and is changing more rapidly than before. Companies in the industry are becoming more like R&D or technology firms than traditional manufacturing ones. Crises are now commonplace, not exceptions. Rapid decision-making and action is now a requirement, not an option. In this regard, while Hyundai also uses management practices similar to Toyota's PDCA, it places greater emphasis on ‘doing’ than on the other functions. That is, action is more important than planning. This practice is based on the belief that uncertainty and crises are neither predictable nor controllable. As an emerging global player with limited experience that is eager to catch up with its larger leading competitors, management believes that performance depends more on a strong and sometimes relentless drive to achieve goals. They believe further that intensive strategic implementation (that is, ‘doing’) even without the best strategic formulation (‘planning’) can secure business success, and that the best strategy formulation (‘planning’) without a focused strategic implementation (‘doing’) can at times become an elusive hope.
Thus, as a late entrant into the global market, Hyundai has less experience and know-how than leading companies. To obtain competitive know-how over its competitors, it realizes that it has to learn from its experiences. Thus, a philosophy of ‘learning by doing,’ as opposed to Toyota's philosophy of ‘planning and doing,’ has motivated Hyundai to experiment in domestic and global operations in production, marketing, R&D, and management. Inconsistent practices and abrupt changes, that often seem to be less rational and more impromptu, are strategically important in this learning process.
