Academic Exchange in South Africa

Here is the link to the blog post that I wrote for the IE Business School website about my short exchange experiences in South Africa earlier this year:

http://news.imba.ie.edu/2011/04/short-exchange-at-south-africa/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+InternationalMba+(International+MBA)

The Art of Coming Home

OK, I stole the title of this post from Craig Storti, the author of the book by the same title, which tackles the issues of coming back to places you lived in and loved, after you have been away for some period of time. There are a lot of studies written about how to expatriate people and what to do with them during expatriation, but do we really pay enough attention to those who are being repatriated back to their countries, companies, friends...?

I am writing this being in South Africa on a short exchange between IE and Wits business schools. I lived over two years in South Africa as an expat, so I came to know this country very well: it's traditions, people, food, cultures, and I even dabbled in two out of it 11 official languages (Afrikaans and Zulu). I moved to Madrid after that to do my MBA and now I am back - what a weird feeling! It is a mix of nostalgia with excitement and bewilderment. It feels great to be driving around the familiar routes, listening to my favorite radio stations and DJs, meeting old friends and colleagues, drinking gorgeous South African wine and enjoying the food that makes your mouth water the moment you look at the menu. Yet, it's not the same as I remember it 11 months ago. Same feeling as I had when I returned to Russia after a one-year academic exchange program in the USA (UGRAD 2002-2003): there has been so much change in my life that one year counts for five - but can you really convey this feeling? Massive photo albums and exciting (as you might think) stories do not help... nothing much has been happening here... As they would say in the corporate world, "business as usual".

How do you reintegrate back? Craig Storti suggests that self-awareness is the first step. It is critical to recognize that time, experiences, knowledge, places are perceived differently by different people and being in a foreign country for a long time accelerates the learning process and you might be well ahead of the curve compared to many friends and colleagues who have not had that opportunity. Patience and acceptance of that fact are the next important steps, in my opinion. Thirdly, take this chance to learn about your own culture - many things will not look the same to you after you have been away... and you learn to appreciate it better: we all know that you miss most what you do not have at the moment. Finally, preparation is best weapon: be ready to face the challenges of the inevitable culture shock and remember that it's always a W-curve, so it hits you twice - when you leave your country and when you come back.

I am not aware of any companies that would run reintegration workshops for their internationally mobile employees who return to their home countries after an international assignment, while most of them will have an induction of sorts before s/he leaves. So why are we underplaying the effects that coming back might have on people and their private as well as professional lives?

Where are Spanish companies heading?

Today I have seriously started exploring the job opportunities with Spanish companies. I have met with one of the headhunters on the local market, and his greatest sentiment is that Spanish people are not interested in leaving the country and go work overseas. This is all flattering news for me, of course, as I am as internationally mobile and flexible as ever, but not for the Spanish economy. As far as I understand, it is not a matter of educaiton or training. Well, partially, it is, but there are many Spaniards who speak good English and hence theoretically can do business living in other countries - it is Spain that they are so unwilling to leave.

I faced this problem once, trying to get people from Cape Town to move for work to Johannesburg or Durban in South Africa. There is something that the Table Mountain does to them that they become virtually untransferrable, and even if you manage to convince them to leave their beloved domicile close to the ocean (at a premium, make no mistake about it!), they will find a way to get back there in a couple of years.

Researching the topic, I have found this article published a few years ago, but it still holds true for many Spaniards:

Where Are Spanish Companies Headed?


Nowadays, Spanish companies like Zara (Inditex), Telefónica and Santander do not need any letters of introduction. It wasn’t always that way. Over the last decade, Spain has gone from being a net recipient of foreign investment to a country that has growing significance as an investor in foreign markets. Indeed, Spain has become the eighth-ranked investor in the world, behind only the U.S., the U.K., France, Germany, Hong Kong, the Netherlands and Switzerland. Over the past two years, Spain has overtaken Canada and Japan. The Circulo de Empresarios (Businessmen’s Circle) in Spain joined with the Wharton School to take the pulse of the Spanish enterprise in the global environment. The two organizations recently published the annual 2007 edition of “The Globalization of the Spanish Corporation.”
The report also provides results of a new survey about the most outstanding foreign investments made by Spanish companies in 2006. The award winners were Acciona’s investment in Australia, where it is constructing the Waubra wind power park; Ebro Puleva’s acquisition of the Minute Rice chain; the acquisition by Ferrovial of BAA, the British airport management firm; the arrival of Santander in the U.S., where it acquired Sovereign Bank; and Telefonica’s purchase of O2, the British cellular operator.
Universia-Knowledge@Wharton spoke with the report’s author, Mauro F. Guillén, a management professor and the director of the Lauder Institute at Wharton, and Belén Romana García, who heads the Circulo’s economics department. The goal was to explore the achievements and challenges presented by globalization in the past, present and future.
Universia-Knowledge@Wharton: What factors were responsible for transforming Spain from a net recipient of foreign investment into a country that has growing influence abroad?
Belén Romana: It is a logical consequence of the fact that Spain has undergone an almost unforeseeable economic and social transformation that has had enormous significance. In the realm of economics, the most important thing was the opening of foreign markets: The entry into the European Community (1986), the establishment of a single [European] market (1993) and the adoption of the euro (1999). All this led to a change in the country’s economic structure by quickly introducing a large dose of competition into Spanish markets. This process permitted Spanish companies to make experiments at home before going abroad. [This happened, for example,] in the financial sector … and also in the infrastructure sector. Over the years, Spanish companies have learned how to compete for managing, financing and constructing infrastructure projects. All of the changes in the Spanish economy are associated with opening its economy to the world. We Spaniards do not improve ourselves simply on our own. Instead, we are compelled to open ourselves to risks that come from outside Spain. And when we do that, the Spanish economy has a great capacity to react.
UK@W: What role has Latin America played in that change?
Belén Romana: Latin America has been a second testing ground. Spanish companies learned [their lessons] at home; Spain is a country which had undergone political and economic changes. But in Latin American countries, which have a similar culture and the same language [as Spain], those companies immediately began to undergo exactly the same processes of political as well as economic change as a result of the privatization process. They also promoted democratization and a market economy. Those Spanish companies that go to Latin America are quite capable of developing themselves because the environment there is quite similar to their own.
Mauro Guillén: The sequence of events is very important. First, there was competition in the Spanish market. Before that happened, Spanish companies could not jump into the European market for two reasons: their [small] scale of operations and the fact that Europe was very protectionist in every sector -- and continues to be so. Latin America was an opportunity that presented itself at the right moment because there were two completely separate and distinct processes, and they enabled companies to acquire experience and scale. Latin America was the last resort, the only hope …. Nowadays, we see the greater scale of operations, thanks to Latin America, and it enables Spanish companies to make acquisitions in Europe and the U.S.
UK@W: According to the report, in 1997, 50% of Spain’s foreign investments were in Latin America. In 2006, that figure was only 4%. Which regions are currently the targets of Spanish investment, and why?
Belén Romana: Nowadays, Spain’s outward investments are basically directed toward Europe; in 2006 the United Kingdom took in 56% of the total [value of Foreign Direct Investment from Spain]. The United States came next with 10.5% and Southeast Asia was somewhat lower. Spanish companies have tried to take advantage of the modest deregulation that has occurred in Western Europe. The United Kingdom is the European country that has taken market deregulation most seriously. When Spanish companies try to enter other European countries, they do it where they can. In Italy, for example, their attempts have failed to some extent.
Mauro Guillén: It should be emphasized that Spain’s four most important foreign operations took place in the United Kingdom -- Santander’s takeover of Abbey, which opened the doors; Telefónica’s takeover bid for O2; Ferrovial’s deal with BAA; and Iberdrola’s deal with Scottish Power, the utility, in 2007. In Europe, it might have been simpler to make acquisitions within the euro zone but it turned out to be much easier in the U.K. because of regulatory factors and issues of competitiveness.
UK@W: Is Spain missing the boat in the competition against the faster-growing BRIC economies – Brazil, Russia, India and China?
Belén Romana: There is the case of Brazil and then there are the others. In Brazil, Spanish companies do have a presence. However, Brazilians are also beginning to go abroad and, in some cases, they’re going to Spain. In Russia, there has been an effort but only with rare success. In China and India, Spanish companies face very complex challenges. I believe that you pay a high price for having a [strong] cultural tradition. All of the countries that have had colonies in Southeast Asia know how to operate in that region because they have had a presence there for 100 years. But the Spanish have not. In addition, there are some negative factors; it [Southeast Asia] is a part of the world whose culture is very foreign; that acts as a very clear constraint.
Mauro Guillén: Large Spanish companies have a presence in Brazil, such as Santander, Mapfre (insurance), Telefónica and some small companies that supply auto components and machinery. In China, smaller companies also have a presence. However, Spanish companies still have much ground to make up in the BRIC bloc, except for in Brazil. Moreover, these companies usually don’t have the managers they need in order to carry out the expansion process.
Something interesting is happening in China, although it has yet to bear fruit. When it comes to infrastructure development, the Chinese are interested in Spain’s role in Latin America. That’s because China depends on Latin America for its raw materials. Take, for example, the case of Telefónica, which purchased a minority interest in Netcom, China’s second-largest phone company. In return, the Chinese got their own board member in Telefónica Internacional S.A. in 2005. That deal was motivated by China’s desire to have an influence on infrastructure decisions in Latin America.
UK@W: In your latest report, you note that Spanish companies have yet to project themselves fully onto the global scene, even those companies that have high visibility and a strong image in the global financial press. How has the image of Spanish companies evolved in such influential publications as the Financial Times, Wall Street Journal Europe, and the Economist?
Mauro Guillén: A decade ago, they had very little visibility, which reflected the small size of the Spanish economy. Over the last 10 years, their image has grown considerably. In 2006, more than 3% of all the articles in those four publications mentioned at least one Spanish company. At the time, the Spanish GDP supplied something less than 2% [of the world economy’s GDP]. That means that we are over-represented. That’s a good thing. The companies that are mentioned a great deal are the big companies; it’s always Telefónica, Santander and so forth.
At first, when Spanish companies began to invest abroad, especially in the mid-1990s, the media couldn’t believe it. They thought that Spanish companies would “only last a short time” abroad and that they “were going to crash.” Later, confidence in Spanish companies took an upturn but that subsequently collapsed after the Brazilian crisis of 1999 and the Argentine crisis of 2001. People started to say things like, “We told you so.” Starting from that point, however, the image [of Spanish companies] has improved a great deal.
Belén Romana: In addition, there is a clear imbalance. Companies that have assets in the United Kingdom stand out from the rest. Nevertheless, [Spanish companies’] success in Latin America has helped send the message that these companies were staying for the duration. You prove that you really are a global company when you survive and when you demonstrate that what you’re doing is relevant. The press has recognized that.
UK@W: Spain’s foreign account deficit is one of the largest among developed countries. Does Spain have a competitiveness problem? In which sectors are Spanish companies most competitive on a global scale?
Belén Romana: Clearly, the fact that Spain has both a trade- and current-account deficit reflects the country’s competitiveness. Deficits cannot be attributed entirely to this, however, just as in the case of the United States. When it comes to Spain, some portion of the deficit results from its unusual position: The country trades above all with the European Union, but while Spain has been growing lately, the EU has not grown [much] for 10 years. When that sort of thing happens, you wind up buying more than you sell. That’s part of the problem. On the other hand, Spain is poorly positioned when it comes to trade because it sells to countries that are not expanding while other countries sell to faster-growing markets. We’re in a very complicated position because our trade pattern does not match up much with the trade patterns of China and India. There is very little to sell them that we produce here [in Spain].
Spain does, however, have a problem of competitiveness as a result of pricing differences. What can you sell when your prices grow continuously for a decade, and your prices wind up being no longer competitive? Traditionally, our approach to selling merchandise was based on this strength -- our labor was cheaper. Nowadays, that approach is impossible when it comes to Poland and ridiculous when it comes to China. Our trade pattern doesn’t work out for us because it is based on a factor where we are no longer the best. We have to change that pattern and, yes, that is a problem of competitiveness.
It’s quite natural that a lot of companies have noticed this change in global trade patterns and have globalized as a result. They realized that national markets defined by borders are dead nowadays and that you have to look at the world as a single market. The Spanish companies that have changed their perspective are the global companies. Many of them originated in the public sector, but others did not.
Mauro Guillén: Next, there are the midsize companies. Some of them continue to be competitive by exporting from Spain but manufacturing some kinds of products in other locations. The important thing is that there is a lot of variation; some have figured out how to respond to incentives but others have been left behind. This happens in every economy, not just in Spain. On the other hand, the headlines are always about the banks, telecom companies, utilities… There are perhaps 200 or 300 first-rank global manufacturers in Spain -- in machinery, food, optics and so forth. All of this changed because of deregulation and because opening the Spanish market to foreign companies has been a positive process, not only in those three sectors. In practically every sector, there is a Spanish company that has made progress. It’s not that there are just a handful of geniuses; these companies have created institutions and conditions that improve their competitiveness and the economy. This has enabled a very wide range of companies to move ahead. When and if they succeed ultimately depends on the dynamics of the market.
UK@W: What factors do you need to keep in mind when it’s time to make a foreign acquisition?
Belén Romana: First, you have to figure out where you can enter; which markets you can get into. Next, [you need to find out] whether you will have a competitive advantage in know-how if you decide to enter that market where you are better than your competition. Third, you have to identify what factors will help you acquire prestige, muscle, financing and global scale, and what factors will enable you to jump to the next stage.
Mauro Guillén: When you create a multinational company, you don’t become competitive right away, not in just one or two years. You have to look for new opportunities to do business and make investments that enable you to learn new things. The sequence that we were talking about is something very important -- going first into Latin America and then into Europe, and so forth. You need to have the mentality of going up the rungs of the ladder and opening one door at a time, identifying new choices to make. This is a very dynamic process, and you need to have a vision that looks ahead for five or 10 years.
UK@W: Some Spanish companies have stood out by making important acquisitions around the world. Is this a growing trend or are these just isolated cases?
Mauro Guillén: What we are seeing is just the beginning. My prediction is that Spanish companies are going to make important acquisitions in the U.S., partially as a result of the strength of the euro. Within a few years, we are also going to see the first significant acquisitions in Asia. Assuming that there is not a global recession, Spanish companies will continue to make headlines with these acquisitions. Nevertheless, there will be some Spanish companies that will also become targets, and they will be acquired. That is the case with Endesa, the electric utility that is now Italian-owned. There is also talk that Iberia [Airlines] might be acquired. There is going to be a process of give-and-take, and that isn’t a bad thing. It will be mostly European companies who come to Spain to make acquisitions.
UK@W: What challenges do Spanish companies face as a result of globalization?
Mauro Guillén: Spanish companies are going to face the same sorts of problems they have faced until now, but on a greater scale. You see that in the case of Ferrovial’s acquisition of BAA, a company that operates airports. The problem was that the deal was financed with debt and was leveraged. Secondly, the company’s prestige was at stake. BAA was a company that had a lot of problems, and it was poorly managed. If it fails now in the United Kingdom, it will be very hard for BAA to penetrate the U.S.
Belén Romana: In any globalization process, you have the problem of bringing together a distinctive market and business with another culture and another organization [that are quite different]. Some of these companies have more business activity outside Spain than they do inside it. In addition, personnel management is a very complicated issue.
Mauro Guillén: Regarding that final point, companies are very poorly prepared because programs for managing employee rotation have only recently begun to be implemented. Outside Spain, you have a pool of people who speak Chinese and Russian in Holland, Switzerland, Sweden and the U.K. Not so in Spain. The problem is that it takes decades to develop internal training programs for rotating employees in four or five countries and creating managerial cadres that have great operational skills. The big Spanish companies began to do that only four or five years ago. They haven’t had much time yet. This is the most important bottleneck that Spanish companies have, and you can’t resolve it overnight; you need to invest five to eight years.
Belén Romana: In Latin America, companies learned that they have to place a great deal of trust in local managers. After all, they are the ones who know all about the company you just bought as well as about the market and the regulators. In contrast, there is no natural reserve [of such people] in Spain. People don’t speak languages [in Spain], and they don’t have any special calling for global management. Everyone wants to live in Spain. It is a cultural problem that we will have to address.

Publish Date: Nov 14, 2007

Support Blood Red Monday 06 September 2010 – Say NO to CRIME in South Africa

Today is a Blood Red Monday in South Africa: an example of SYMBOLIC MANAGEMENT in public administration:

• sends a strong message: on a deep emotional level (reference to spilled blood)
• raises awareness
• creates a sense of belonging by using same symbolic attributes (color red)

Classical example often used in politics (best campaigns would have a kick-line, e.g. Obama for Change, a visual attribute, e.g. a clenched fist for ANC, and a mass outreach: make sure your message cascades all the way down through the organization).

**********************

 Support Blood Red Monday – Say NO to CRIME in South Africa

image source: www.younglions.co.za

Support Blood Red Monday – Say NO to CRIME in South Africa

• Are you a victim of crime?
• Do you know someone that is a victim of crime?
• Are you sick and tired about the crime in South Africa?
• Do you want to make a stand against crime?

Stand up united and  Support Blood Red Monday – Say NO to CRIME in South Africa campaign
Crime is getting out of hand in the country. Our streets are flowing of blood from all the victims of crime. Crime is something you can't see. All victims of crimes feel isolated.  If you wear red on a monday, it will make  CRIME visible and known
All you have to do is wear something RED on Monday.
You could wear :

• a red shirt,
• red tie,
• red ribbon,
• red arm band,
• red bracelet,
• red scarf,
• red hat,
• red tshirt,
• red dress,
• red shoes
• red clown nose.

Anything red. (we won't notice the undies though)
Enough is enough. We will not be oppressed by criminals in this country.
IF we stand together we can take back peace in our homes and  lives. We fought apartheid we can fight crime.
In reality there are only a small percentage of tsotsi's that are giving our country a bad name and putting fear in us.
Aims of  Blood Red Monday – Say NO to CRIME in South Africa:

1. Awareness that there is a crime problem
2. people to identify with each other that there is a crime problem
3. people to share their  crime problem with each other
4. To discuss and find out the root cause of the crime problem
5. Find the solution to the crime problem
6. Eventually combat and act against the crime problem

Maybe, just maybe, we all can stand united and fight crime together.
Let's take a stand against crime in our beautiful land.

In memory of all the lives lost to crime.

Larks Attack Owls

I could not pass by this beautiful Facebook comment exchange yesterday. Two of my classmates were clearly expressing their circadian cycle preferences using the modern social media platform.

There are mountains of research on phychophysiological differences in those who prefer to wake up early in the morning opposed to the lazy bags opening their eyes in time for brunch (by the way, I am pretty sure that the idea of "brunch" is attributed to an "owl"). Most often, in scientific and popular literature those types are referred to as "larks" and "owls", which quite accurately pins down the major characteristics of those who enjoy their 7 am breakfast with orange juice and croissants and those who can sleep through a nuclear explosion until it's time to wake up somewhere around lunch. If we try to summarize such differences, Harvard Business Review published a nice comparison table in their latest issue:

• Morning People: agreeable, optimistic, stable, proactive, conscientious, satisfied with life
• Evening People: creative, intelligent, humorous, extroverted, pessimistic, neurotic, depressed

I am not sure how much I am willing to believe that, after all, I am a very much an evening person, but anyone who tells me that I am pessimistic and depressed is getting spat at. One thing we cannot deny though, and it is that our bodily functions are to a large extent governed by the circadian rhythms, which are illustrated in the following picture:

It basically tells us what our body should (supposedly) do at different times of the day. There is a reason for siestas, believe me. That reason is a circadian cycle! Your body wants to rest after lunch, as your heart rate and blood pressure go down while sugar levels rise. Spaniards are wise people!

Now, what do you do if you like to sleep in, but your work requires you to come in early? Tough. Most likely you will have to shift your daily pattern. Good news - it is possible. Not optimal though. Optimal body functioning is following your circadian rhythm and it is highly individual. When I first arrived in South Africa, my boss informed me that the starting time at the office was 8 am and most people actually arrived at 7 am (in South Africa it is customary to get up with the sun, which is around 4.30-5 am in summer). The look of utter bewilderment on my face somewhat took him aback, so we were able to negotiate the 9.30 am starting time just for me.

Now, an intriguing part of the HBR article: morning people get promoted, while evening people are now the minority of the business world and as they put it "the next diversity frontier". That is indeed an interesting way to look at it, but to be fair, in the recent years it has become extremely popular to introduce flexible schedules and be more understanding towards those who hate the smell of morning latte. Thus, the issue of chronotypes is open and I am keen to find out what will come out of the studies next.

And while we are still on the topic, I would like to share a poem I learnt at school, which provides an alternative perspective on the entire subject:

If you are a bird, be an early bird,

And catch the worm for your breakfast plate.

If you are a bird, be and early, early bird,

But if you are a worm, sleep late!

Isn't it BEEutiful?

For those of you who do not know, BEE stands for Black Economic Empowerment, which is a South African program to ensure inclusion of previously disadvantaged categories of population of South Africa into the economy. One of the pillars of BEE (or BBBEE - Broad-Based Black Economic Empowerment, since the narrow approach was criticized for focusing only on equity ownership) is Employment Equity (EE). EE requires all companies to report annually on their progress in terms of hiring black employees (by "black" we mean Asian, Black, Colored and Indians), females and people with disabilities. The BBBEE rating affects your ability to do business with other companies and the government. It makes sense. If I have a low rating (e.g. Level 5), by dealing with me your rating will go down as well, while if you choose a Level 3 contributor (for example), you will gain points. Thus, companies are more interested in ABCs (Asians, Blacks, Coloreds + Indians) than in Whites or (God forbid) - foreigners. Foreigners are categorized under the category "Others" and are generally sneered at by the SA Department of Labor.

Having given this preamble, how do you think I felt today when His Excellency SA Ambassador for Spain invited all the International MBA students to come and work in South Africa? At first I wanted to ask him again whether that was what he actually meant. However, as he progressed through his presentation, he mentioned that crime in South Africa is no longer a major issue, and 95% of crimes are domestic, so there is nothing to worry about for foreign visitors. At that point I realized that any further discourse would be at least unproductive.

Never liked politicians.

2010 World Cup frenzy - what about the aftertaste?

Today I received these extra cool links with 360 views of the World Cup stadiums in South Africa (still can't believe that I left that beautiful country just one month ago for my MBA studies in Madrid).

While you are looking at the pictures (and you have to go to SA and check out the stadiums from the outside as well - they are some masterpieces, even though I am still not convinced about the locations - Greenpoint looked much better without that huge bowl), think about the following question:

what is going to happen with a couple of millions workforce engaged in construction, given that cashflows will drop dramatically after July 2010?

My thoughts on the matter to follow, in the meantime, here are the magnificent views:

Cape Town
Nelspruit how about that grass!!
Loftus
Ellis Park
Port Elizabeth
Polokwane from the pitch
Bloemfontein
Durban from below
Durban from the top