Global business in emerging markets: Transformational partnerships

At a recent corporate presentation in the Maghreb on the potential transformational effect of foreign direct investment (FDI), I focused on two points: the notion of impact investing and the corollary dynamic of how FDI impacts human development beyond the benefits of economic growth.

The discussants were company leaders and employees discussing how to build a globally competitive company culture integrating local sensibilities and priorities with technologies and industrial know-how developed abroad.  The initial discussions, following the usual pattern of strategic planning sessions, concentrated on building a common vision and purpose among the participants. The vision that coalesced was then defined in a series of core values and principles that would become the “brand” of the emerging company culture.

As I listened to insightful and well-presented points of view, it became apparent that as the new company drills down from values and principles to behaviors, it is critical that both sides examine the scope of their assumptions and expectations. While there was a strong consensus around the vision and principles, agreement was not so clear on the behaviors that would then follow. It reminded me of the iceberg metaphor in cross-cultural communications, where the core values, principles, attitudes, and beliefs are unseen below the waterline, while the behaviors, which are visible above the surface, are subject to interpretation by the other party who cannot see below the waterline. The lesson: we make judgments about others based on what we see, rather than what we know lies beneath the surface.

Given this observation, I asked the group to consider a broader perspective, moving above their particular iceberg to consider the implications of the new partnership beyond the terms of the company’s goals and objectives. I began with what I know best—defining the mission of the new company and how training impacts its brand.

The Arab uprisings pointed out the need for rapid economic growth to stimulate broad and meaningful employment and drive education relevant to the marketplace. This is not a simple task; it is not merely about providing skills training to enhance work opportunities; it is about the core aspirations of people and what this means to their country. Employees and employers are not the only beneficiaries of FDI; all of the country benefits from a more capable and effective workforce.  The workforce that is emerging will have better technical capabilities, operational sensibilities, and soft skills that enable them to define options and make choices about their futures.

In the MENA countries that I have surveyed in terms of technical and vocational training needs, soft skills are defined as more than communications and teamwork; they include the capabilities to pursue a career and anticipate and grasp needed learning opportunities. This involves creativity, innovation, and judgment. Thus, these enhanced soft skills are more complex and encourage what is called “global dexterity,” blending awareness and knowledge that lead to effective behaviors in the workplace while securing one’s core values.

The Arab uprisings remind us that there is a related issue that needs attention: that what we are dealing with is more than better training, education, and employment; Arabs are redefining the social contract that existed between regimes and their people. At the heart of it all are the issues of identity and the basis of legitimacy of the governments: political, religious, ethnic, cultural, etc.

Historically, the social contract was an exchange between a government that provided order, stability, and a bit of prosperity to citizens who felt protected and secure enough to have sustainable livelihoods.  That balance has, in many countries, been shaken to a large degree by demographics, the global economy, technology, more gender equality, a reduction in social distance, and education, which are providing the ingredients and tools for reshaping and recalibrating social contracts. So it is this redefining of the social contract that is at the heart of the struggle for political legitimacy and national identity.

In this context, skills training and professional development enable employees to access careers and benefits that equip them to be part of a generational and transformational shift. These empowered employees become capable participants with tools to achieve aspirations for themselves, their families, and their children. This confluence of skills and knowledge has the capacity to impact the debate on the social contract, which has implications for the MENA region. This may sound a bit grandiose, but it is a historical lesson that economic development and human development go hand in hand. What was once considered a business relationship has the potential, in today’s highly connected and able public space, to be a link between global markets and local human development.

By raising the performance of employees to better engage the global economy, we build a platform for moving beyond issues of economic growth as both employees and employers seek growth opportunities that require more effective governance and use of human capital. People become internal change agents that provide the role models, mentors, and early adaptors missing from the broad business landscape in the MENA countries. These local transformation agents link with others throughout the region and larger markets to promote global dexterity – adaptive behaviors built around core values.

And what is the external partner’s role in this? The concept is “impact investing,” which focuses on projects that have social and environmental benefits and generate profits. At its core, impact investing reflects business models that are sustainable, advance human capital, provide opportunities for community development, and have results that are attractive to long term relationships with the private sector. The key consideration is to move beyond social and community outreach that is beneficial in the short-term but does not significantly alter the future prospects of the communities touched. By promoting an investment perspective that recognizes that broader and deeper FDI requires long-term returns, countries and companies make mutual cause for mutual benefit. Governments have their role to play but no more than is usually needed to attract serious FDI, ranging from needed infrastructure to incentives for training, use of local materials, and similar inputs.

There are several revolutions going on in the MENA and elsewhere, some messy and unwieldy while others are barely perceptible. The role of workforce development in crafting solutions should not be overlooked or minimized as simply giving people jobs. Companies exist for a purpose, to be profitable and grow. Employees share these goals, to profit from their employment by acquiring skills that free them to know and exploit opportunities for themselves and their families. Partnerships between local and international private sectors that are emerging will, in many respects, help governments in their mission to build a new social contract with their citizens by greatly reducing demands for counterproductive government intervention in the economy. Good business making better jobs and great citizens and governments is a goal worth pursuing.