The Importance of Lunch - IEDP
  • Behaviour

The Importance of Lunch

"it's not what you know but who you know"


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The November issue of Harvard Business Review carried an article by Mauro Guillen, a professor at Wharton, and Esteban Garcia-Canal of Oviedo University in Spain. The core theme of the article was that Spanish companies have managed to expand at unusually quick rates in the emerging markets that they have targeted - and that they have done so due to an ability to essentially schmooz the right people in government.

The point is made that this is not code for saying that they are better at paying "backhanders" than other countries. But nor is it explicitly stated that senior Spanish businessmen over the last two decades all grew-up in a regime where the State was all-powerful (under the Franco dictatorship) - and understood that to do a deal of any significance it was critical to get approval from the local apparatchik. This instinctive understanding of how to seek out the gate-keepers to project approval is however clearly identified - and is an important observation. Today, in a world where business success is often sought in better tools or analysis the highlighting that in plenty, probably most, countries in the world that the old adage of "it's not what you know but who you know" still remains a powerful lever for achieving goals.

The Anglo-Saxon approach is much more clinical, basing sales on the ability to achieve greater efficiency - where ultimately it all comes down to price, either cheaper upfront or cheaper over project life. But in most emerging markets, from the Spanish natural stamping ground of Latin America to the Asian powerhouses of India and China, and certainly in the rich but culturally more reserved parts of the Gulf, the ability to build genuinely mutual relationships with your business partners is hugely valuable - and the results are there to be seen, as the article shows, in Spain's expansion in Latin America and China.

The authors also imply that this expansion and relationship building has been a carefully thought-through strategy. This is less plausible - it is much more likely to have been a serendipitous result of Spanish businesspeoples' natural approach to doing business - which just happens to strike a chord in these more relationship based societies. Spaniards, and it is a generalisation, like long lunches with plenty of cognac and story-telling. It is no co-incidence that the Cranfield professor Andrew Kakabadse who has studied senior management interactions, particularly in the public sector, for the last decade, wrote a book last year entitled "Rice Wine with the Minister" which is a business culture manual of greater sophistication than most - but starts with the story of Kakabadse having to drink 21 shots of Maotai, which did his decision-making faculties no favours but clearly enhanced his standing with the Chinese Minister. This experience was remarkable enough for him to write a book with it as its title; in Spain it would be far less tale-worthy.

Freek Vermeulen, the London Business School professor has recently written a book where he takes modern chief executives to task. "Business Exposed" reveals the truth, that at heart we probably all know exists but do not have the research to back-up, that most strategy is carefully designed and developed - and then either ignored or carelessly executed. Vermeulen has the research to show that in the majority of instances managers are working in a noisy, confusing, fast-moving race where careful attention to the corporate strategy detail is not possible. There is an opportunity; let's pitch for it; hey- it's worked!

I suspect that this is a more likely approach to Spanish business's success in these regulated economies, because they have been better at doing the pitch or at least the lunch before or after the pitch. And not that the Board sitting in corporate HQ on the Castellaña in Madrid identified that relationship building was something that had to be done in a carefully strategic fashion.

But Guillen and Garcia-Canal should be applauded for identifying the fact that that relationship building is a crucial skill.

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