Case Study 2 MBA - Silvio Napoli

Case Study 2: Silvio Napoli at Schindler India

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Case Study 2: Silvio Napoli at Schindler India Amber Amores-Villalobos Butler University

Case Study 2: Silvio Napoli at Schindler India

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Brief Introduction Silvio Napoli has been charged with creating a new division of Schindler in India. In addition to creating a new subsidiary and new low-cost elevator strategy in India, Napoli also has the added challenges of incorporating essentially three cultures (Italian, Swiss, and Indian) (Bartlett, C., Fagan, P., Yoshino, M. 2006). It is difficult to know Napoli’s level of adaptation to Swiss culture, so I will consider him to be Italian, and thus discuss his interactions with both Swiss and Indian culture. In the below case study analysis I will analyze various cultural assumptions within Italian, Swiss, and Indian cultures and provide Napoli with a specific action plan to incorporate the cultures successfully, gain true consensus among managers, provide insight on strategy deployment and advise him on whether he should share the situation with Luc Bonnard. Cause and Problem Analysis In the below section, I will analyze key assumptions of the three national cultures and discuss strategy deployment. These assumptions include the relationship with nature, nature of truth and reality, controlling vs. adapting strategy, relationships with people, time, language and communication. Assumption 1: Relationship with Nature Italy’s relationship with nature is very different from that of Switzerland and India. Italian culture lends the idea that situations can be controlled by regulations and rules, whereas Switzerland and India have a culture that denotes fewer rules and regulations (Barsoux, JL., Schneider, S. 2003). Additionally, Indian culture encompasses fatalism, thus they relinquish the notion that they have control on outcomes (World Trade Press, 2010). These differences in the importance of control are also displayed in Hofstede’s Cultural Dimensions. Both India and Switzerland have relatively low uncertainty avoidance indexes (40, 58), while Italy, has a

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relatively high uncertainty avoidance index (75). Since India’s uncertainty avoidance index is so low, Indians are more open to unstructured ideas and situations and have fewer rules and regulations (ITIM International 2010). This is evident in the case when the managers at Schindler India approve customized orders even though they have been instructed not to do so (Bartlett et al., 2006). India’s culture is more open to “breaking the rules” because they are seen as less important. Conversely, Napoli an Italian native has a relatively high uncertainty avoidance index. This is evident in the case when he hurriedly tries to obtain specifications and blue prints for the elevators from Schindler in Europe. He utilizes formal processes to obtain these documents and expects Switzerland to follow the “rules” and supply them in a timely manner (Bartlett et al., 2006). Further, the variances in the relationship with nature are seen by Napoli’s extensive planning. Napoli calculates all of the factors that will influence the price of the elevators, including transfer prices, import duties, etc. When these factors changed, Napoli was more apt to panic because of his desire for control over the environment. It seems as if Alfred Schindler understands the cultural variances and is providing Napoli with a valuable lesson when he remarks, “Mr. Napoli is feeling what it means to be in a hostile environment where nothing works as it should” (Bartlett et al., 2006 p. 710). Assumption 2: Nature of Truth and Reality and Controlling vs. Adapting Strategy In Italy/Switzerland, truth is defined as facts and figures and the controlling model of strategy is utilized. Throughout the case, Napoli discusses his swatch strategy of developing noncustomizable elevators near the low end of the market. Napoli calculated ROI and margins to tell him that this was the best place for Schindler to enter the elevator market in India (Bartlett et al., 2006). He is also under the impression that only he should be in charge of making decisions and deploying the strategy (Barsoux et al., 2003). However, in Indian culture truth is malleable based

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upon interpretation and reasoning. This is evident in the case when many of the Indian managers question Napoli about his strategy of selling elevators in the low-end market segment. Additionally, the way in which strategy is defined in India is different than Italy/Switzerland. In India, the adapting model of strategy is utilized (Barsoux et al., 2003). The Indian managers utilized their understanding of the elevator market as well as typical outsourcing strategy to determine how Schindler India should have targeted customers. They made the decision to customize across the managerial ranks, and it was based on qualitative, subjective, personal information. The Indian management team likely dismissed Napoli’s controlling, analytical approach regarding the low end market segment in favor of the customizable market segment based on interpretation and reasoning and the adapting strategy model that (Barsoux et al., 2003). Assumption 4: Relationships with People—Hierarchy and Individualism vs. Collectivism Although the case discusses the level of hierarchy as significant within Schindler Switzerland, (Napoli had an office on a reserved floor since he was an assistant to the executive team) both Italy and Switzerland have relatively low Power Distance Index (50, 34) compared to India (77) (ITIM International 2010). The importance of hierarchy in India traces back more than 2000 years with the development of the caste system, thus it is well rooted in Indian cultural interactions (Trinicenter, 2010). While the case does not discuss segregation of Indian castes, one could infer that some Schindler Indian managers may be dismissive of Napoli’s orders because his accommodations in their country are not consistent with how they see him in their caste system. The case notes that Napoli’s house has an empty living room, dark halls, and has flooded from a sewage backup. This type of house may be seen as proper accommodations for someone in a lower caste versus than a man who is in charge.

Case Study 2: Silvio Napoli at Schindler India

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Further, according to Hofstede, India is much more collective (48) compared with Italy (76) (ITIM International 2010). Being able to compromise and work within a group is highly valued in India. When Singh asked, “Who are your friends inside the company? Who doesn’t like you?” (Bartlett et al., 2006 p 700) he was showing that the collective interest is more important than individual interests, and thus Napoli should maintain good relationships within the company. Napoli, with his individualistic Italian culture, displayed his tendency toward individualism when he hired only two secretaries, and expected each person to do their own administrative work to survive (Bartlett et al., 2006). Assumption 6: Time In Switzerland and Italy, time is seen as limited, or monochromatic whereas in India, time is considered to be malleable and unlimited or polychronic (World Trade Press, 2010).This is evident when Jena says, “You can’t set your watch by the Indian trains” (Bartlett et al., 2006). Although the case does not discuss specific incidences where the differences in assumption of time are apparent, it is noteworthy that it has been eight months, and not a single elevator has been installed. In addition to other circumstances, the variance in assumption of time is likely contributing to the lengthy start-up period. In order to successfully start a business in India, Napoli would have to go through 13 procedures, with an average of 30 days. If Napoli had to obtain permits to build facilities to house elevator inventory, then he would also incur a 195 day wait (The World Bank Group, 2010). This compares to 6 procedures and 10 days to establish the start-up in Switzerland and 154 days to gain facilities permits. (The World Bank Group, 2010). Further it seems that Napoli is more time centric than even his Swiss colleagues. Several people noted that India was the perfect place to send Napoli because of the varying concepts of

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time. Napoli expected tasks to be completed prior to deadline, thus India’s culture may have provided a valuable lesson in patience for Napoli. Assumption 7: Language and Communication At a very basic level language between Switzerland and India will present challenges. Even if English is used as a corporate language, there will likely be discrepancies in comprehension level. Further, Switzerland and India have diverse language contexts in their cultures. Italy and Switzerland are relatively low-context, direct cultures, where one is expected to get to the point and the person speaking is irrelevant. Whereas India is an indirect high-context culture where much of what is communicated is not said (Barsoux et al., 2003). This is demonstrated in the case when Matthews noted that Singh came from the hotel industry where he could make even a no sound like a yes. This is typical of Indian culture, as Indians try to avoid confrontations (World Trade Press, 2010). This avoidance was displayed when Napoli thought there was a consensus in the business strategy during the early meetings in the New Delhi hotel. What Napoli interprets as their agreement through silence, or even “yes” may in fact be what India deems respectful silence or disagreement avoidance (Lewis, 2000). Ultimately, in many of Napoli’s interactions, he has tried to apply Swiss/Italian management in a one size fits all fashion, without considering Indian cultural differences (Barsoux et al., 2003). Without intense focus on understanding India’s national culture, Napoli will not succeed in preventing custom orders, or building Schindler India into a competitive business. Action Plan In order to break cultural barriers with his Indian managers, work on communications with his European counterparts, and begin installing elevators, Napoli will need to implement a specific action plan to increase his probability of success. In developing this action plan I considered

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multiple alternatives, such as cultural classes for Napoli to make him more aware of the differences in cultures (Culture Savvy, 2010), or provide Napoli with a concrete process to obtain the items he needs from Schindler in Europe. However, impulsiveness and quick action has furthered Napoli’s problems and would likely solve little. Instead, I have outlined an action plan that addresses multiple areas, thus is superior to the above recommendations. Maslow’s Hierarchy of Needs Before Napoli can successfully implement a strategy and handle cultural variances, he needs to satisfy the lowest levels of Maslow’s Hierarchy. Currently Napoli is living in a flooded house, where there are continuous barking dogs and security patrol whistles. Further, Napoli knows that his safety and the safety of his family are somewhat in question as neighbors have bribed the security patrol to not blow their whistles (Bartlett et al., 2006). Additionally, since Napoli is from Italy, his need for control over nature (flooding) and not breaking the rules (bribing patrol) are part of who he is as an Italian person. In order for Napoli to be able to focus on business, he will need to satisfy these security and cultural needs. These could be remedied by moving to a gated neighborhood, or purchasing an alarm system. Build Trust and a Relationship Napoli noted that the team really connected from their initial meetings at the New Delhi Hotel. However, these conversations were based solely on business, not on personal relationships. Since Indian culture is more collective, Napoli should put emphasis on group relationship building activities. Napoli could take his key managers to a lavish Indian meal, or a cricket match (World Trade Press, 2010). After a few group outings, Napoli can then discuss common goals and cultural variances. Discuss Cultural Differences

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Although it seems obvious to discuss cultural differences, until this point Napoli and his Indian managers have not. By openly discussing their basic assumptions of the relationship with nature, nature of truth and reality, relationships with people, time, language and communication Napoli and his Indian managers will be aware of the overall cultural challenge. Napoli could say “I realize that we come from very different cultures with diverse assumptions and beliefs on how business is conducted. In a few moments I would like you to write down your culture as you see it, and then describe your culture as other people see it (Johari Window) (Barsoux et al., 2003). This will open up our communication lines and provide a point of discussion, so we can be aware of how our cultures vary. Ultimately, by doing this exercise we can more readily align our views so we can make Schindler India a success. I know this conversation may be out of your comfort zone, because it is your culture’s tendency to avoid confrontations whereas my culture denotes discussing problems openly. For instance when we discussed the initial strategy in the New Delhi hotel, I thought we were all in consensus because no one openly objected. I now understand that is not necessarily correct. I also understand that when customized orders were approved, you did not do this as a violation of the established hierarchy, rather it was a method of voicing that perhaps you were not in consensus with the defined strategy. Additionally, when I built this strategy, I did this on the basis of what the numbers told me, because that is how Italian and Swiss culture base truth. After looking into your culture, I understand that Indian culture makes decisions based on interpretation and reasoning. I would really like for us to find a way to make out cultural differences an advantage instead of a disadvantage.” This “long-winded” discussion is likely less direct and of higher context than Napoli is used to, considering the last time he “reminded” the Indian managers not to accept custom orders, he did it through an impersonal email (Bartlett et al., 2006). However, this discussion provides the

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Indian managers with background information that is vital for their understanding. However, equally important with what Napoli says, are his behaviors and actions. Since India is an indirecthigh context culture, it is imperative that Napoli utilize body language to convey his message. Further, if there is a language barrier, a translator should be on-staff at all times. Having this conversation, adapting to the high-context culture by utilizing body language and conducting this small exercise with the Indian managers will improve Napoli’s chances for success. Refine Napoli’s Management Style Although Napoli created the business plan for the expansion in India, he has little to no "real world" international experience. Napoli was very successful in Switzerland however, his high warrior and low monk attributes and brash, impatient, and impulsive management style has not been well received in India (Bartlett et al., 2006). Before Schindler allowed Napoli to spearhead this Indian start-up he should have been given extensive training sessions on acceptable management tactics in India. Since Napoli is already in India, he should work with Singh, and develop this more patient, yet tough (perfect monk/warrior) combination. In order to do this, Napoli could run various situations through Singh prior to making any large decisions. Hire a Consultant Napoli is at a disadvantage as a global manager because Schindler did not provide him with cultural training and tools that are vital to his success. Since Napoli was not provided these trainings, he should hire an expert. Having a cultural consultant facilitate cultural seminars where Napoli and the Indian managers can learn about the importance of different cultures and understand their own culture’s weaknesses and disadvantages would be a valuable asset. Not only should the Indian managers discuss their culture on a regular basis, but Napoli needs to convey

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differences in his culture, so the cultural consultant can help Napoli and his Indian managers build a common culture. Implementing Change in India Once the cultural consultant has provided valuable training and tools, Napoli will need to implement the change to the new Schindler India culture. In researching applicable change models that would work in India, I found an article that discussed a change model that India instituted to change the country’s economic policy. I have significantly simplified this model to scale it down from a country-wide change model to a model that would work within Schindler India. In applying this change model to Napoli’s situation, there are five categories utilized to develop change capacity. The categories are framing, participation, pacing and sequencing, routine and recruiting expert personnel (Bezboruah, K. 2008). Napoli will also have to adapt his controlling strategy method to that of a more adapting strategy method (Barsoux et al., 2003). Napoli will need to convey to the Indian managers why it is necessary to have a common culture with common goals and processes. In order for the change to work, Napoli also needs to convince the group that their participation is required. Since India is a collective society, if Napoli can get a few of the managers to participate, it is likely that the remaining managers will also participate from the pressure of the collective group. Napoli can combat resistance to change through implementing cultural and process changes at a slow pace, with the most important outstanding items (possibly customized orders, or their supply chain strategy) first. In order to make this change permanent, Napoli will need to make the idea of change an everyday discussion, or routine. Finally, if Napoli is unsuccessful or encounters problems, he should hire an expert change management team to increase his potential of success. Ultimately, having a change model

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will assist Napoli in explaining any changes that are implemented within Schindler India in a more simplified manner. Tell Luc Bonnard the Truth As discussed earlier, both Switzerland and Italy base truth on facts and figures. Additionally, in contrast to India, bad news is not avoided, thus Napoli should tell Bonnard the truth. In addition to telling Bonnard the negative setbacks, he could also tell him the positive progress. Napoli could say the following, “Wow Luc, I was so naive when I took this position. I thought since I had worked with you, Schindler, and Spoerri I had seen it all. I have had a few setbacks like changes to my margins because of increased transfer prices and Indian tariffs. I have also figured out that my outsourcing strategy may not be feasible. But, I have learned some interesting things about Indian culture, like their concept of time, which will really help me with my management style and the implementation of the project. I also have a really experienced Indian management team that will prove to be very valuable in this start-up. Say Luc, how do you think I could get Schindler in Europe to be more responsive to my requests so that I can modify my sourcing strategy?” Having this conversation with Bonnard is imperative. It lets him know that he Napoli realizes that things are not going as planned, so there are no surprises when he has to meet with Bonnard, Schindler, and Spoerri to discuss revised first year and break-even expectations. This conversation also shows Bonnard that Napoli is developing and learning, not staying stagnant in his management skills. Finally, by asking the last question about Schindler Europe it shows Napoli’s desire for a process to get information (even though process is less important in Swiss culture than Italian culture) and allows Bonnard to know that he is getting a non-response from

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engineers. Additionally, requesting advice from a superior also follows the Schindler hierarchy, which shows respect for Bonnard. Potential Pitfalls of the Designated Action Plan Below are potential pitfalls to the action plan that may halt Napoli’s progress in breaking cultural barriers. Maslow’s Hierarchy of Needs Satisfying Napoli’s safety needs may take significant time. Although time is more relaxed in India, European Schindler is looking for results. Napoli, by his own admission, is behind schedule and has yet to install a single elevator. Additionally, Napoli may not be able to find a location that is more secure and does not flood. However, satisfying these safety needs will allow Napoli to go to the next level on Maslow’s Hierarchy. Building Trust and a Relationship There is no guarantee that socializing with his Indian managers will build trust. Without established trust, Napoli’s Indian managers will be less open to discussing common goals and cultural variances. Discussing Cultural Differences Because Napoli is the boss, and the above recommendations rely on him discussing business with lower level colleagues, he may be dismissed for violation of the hierarchy. This could result in his Indian managers further dismissing his strategy and continuing to accept customized elevator orders.

Refining Napoli’s Management Style

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Schindler may have made a miss-step in assigning this role to Napoli. A more appropriate person to develop Schindler India would have been Singh, with Napoli by his side helping him with Schindler strategy. However, since Napoli is in charge, requesting Singh’s help may be seen as a weakness and a violation of the hierarchy. Implementing Change in India Since I have modified the change model that India utilized to change economic policy, it may not work at all. I found it hard to find additional change models that had been tested in India. An alternative to the adaptation of the Indian economic policy model may be found in Singh since he has previous cross cultural experience in hotel start-ups. Tell Luc Bonnard the Truth This may not be well received since India is such an attractive market to enter. Bonnard may go back to Switzerland and tell the executive team that Napoli needs to be replaced. Bonnard may consider Napoli’s progress as unimportant, due to culture being seen as less important than achieving objectives. Conclusions Since Napoli is charged with implementing his developed strategy, he must find a way to take India’s culture and create a competitive advantage. The above action plan gives Napoli a starting point to manage cultural differences and gaps between Italian/Swiss and Indian cultures. The goal for Napoli is not one of forcing divergence upon India, the goal is to take positive aspects of Italian/Swiss and Indian cultures and tie them together in such a way that change is not forced, rather welcomed. While this may entail instituting some Italian/Swiss management techniques (implementing processes, utilizing numbers etc.) he will need to be diligent in remembering that he is not in Italy or Switzerland, he is managing in India. If Napoli is not fully

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willing to understand and learn Indian culture much of the action plan will not work, and Napoli will not be successful in reaching his defined objectives.

References

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1. Bartlett, C., Fagan, P., Yoshino, M. (2006). Silvio Napoli at Schindler India (A) (pp.695710). New York: Harvard Business Publishing. 2. Barsoux, JL., Schneider, S. (2003). Managing Across Cultures (2nd ed, pp. 38, 40, 5, 9, 16). England: Pearson Education Limited. 3. World Trade Press. (2010). India: Business Ethic and Framework. The Global Road Warrior. Retrieved (2/25/2010) from: http://www.globalroadwarrior.com/ContentInfo.asp? nid=13.03&cid=66&next_nid=13.04&ctry=India&parent=Business%20Culture 4. ITIM International. (2010). Geert Hofstede™ Cultural Dimensions. Retrieved 1/24/2010 http://www.geert-hofstede.com/hofstede_dimensions.php?culture1=23&culture2=70 5. Trinicenter. (2010). History of Ancient Indian Conquest. Retrieved 3/1/2010 from: http://www.trinicenter.com/WorldNews/castesystem.htm 6. The World Bank Group. (2010). Doing Business 2010: India. International Finance Corporation. Retrieved from: http://www.doingbusiness.org/ExploreEconomies /? economyid=89#StartingBusiness 7. The World Bank Group. (2010). Doing Business 2010: Switzerland. International Finance Corporation. Retrieved from: http://www.doingbusiness.org/ExploreEconomies /?economyid=182 8. Lewis, R. (2000). When Cultures Collide, (p.7). London: Nicholas Brealey Publishing. 9. Culture Savvy. (2010) Culture Savvy: India. Retrieved 2/25/2010 from http://www.culturalsavvy.com/india.htm 10. World Trade Press. (2010). India: Business Entertaining. The Global Road Warrior. Retrieved (3/1/2010) from: http://www.globalroadwarrior.com/ContentInfo.asp? nid=13.06&cid=66&next_nid=13.07&ctry=India&parent=Business%20Culture 11. Bezboruah, K. (2008), Applying the congruence model of organizational change in explaining the change in the Indian economic policies. Journal of Organizational Transformation and Social Change, Vol. 5: 2, (pp. 129–140) Dallas: University of Texas.