In 1999, when Renault and Nissan formed their alliance, the automotive industry watched closely.
Here were two companies from vastly different cultural backgrounds. Renault, a French automaker with a hierarchical and formal corporate culture, and Nissan, a Japanese company deeply rooted in consensus-driven decision-making and respect for seniority.
At first, the partnership seemed fraught with challenges. Communication styles clashed, decision-making processes stalled, and misunderstandings were frequent. But instead of letting these differences derail the alliance, Carlos Ghosn, the CEO at the time, demonstrated the transformative power of cultural intelligence.
He accepted the distinctions between the two companies and encouraged both sides to learn from each other.
“When you have a very diverse team – people of different backgrounds, different culture, different gender, different age, you are going to get a more creative team – probably getting better solutions, and enforcing them in a very innovative way and with a very limited number of preconceived ideas,” he said.
Renault adopted Nissan’s focus on efficiency and continuous improvement, while Nissan embraced Renault’s innovative design thinking. The result? A partnership that not only survived but thrived, becoming one of the most successful cross-border alliances in automotive history.
What exactly is cultural intelligence?
Defining Cultural Intelligence
Simply put, cultural intelligence or CQ is the ability to understand the ways of another culture.
The Harvard Business Review defines it as “an outsider’s seemingly natural ability to interpret someone’s unfamiliar and ambiguous gestures the way that person’s compatriots would.”
It’s the ability of an individual to navigate the invisible lines that separate us—cultural lines.
Think about it: you could be in New York managing a team in Mumbai, while coordinating with partners in Berlin. Each of these locations comes with its own set of unspoken rules—how decisions are made, how feedback is given, how trust is built. A leader who doesn’t understand these nuances might as well be speaking a different language. And yet, there are many who still try to lead with a one-size-fits-all approach, only to wonder why their teams feel disconnected or why projects stall.
Ghosn recognized the importance of CQ, acknowledging it as a key trait of good leadership. “One of the most important attributes for becoming an efficient global leader is a sense of empathy. Having the capacity to connect with, to understand, and to be curious about another person’s culture is a fundamental element of the business.”
Building Cross-Cultural Competence
That curiosity leads to cross-cultural competence—the ability to recognize, understand, and adapt to different cultural perspectives.
Take the example of IKEA’s expansion into China. When the Swedish furniture giant first entered the Chinese market, it struggled. The company’s DIY model, which worked well in Europe and North America, didn’t resonate with Chinese consumers, who preferred pre-assembled furniture. And in a country where labor was cheap, the Chinese didn’t want to pay more for assembling furniture themselves.
Instead of doubling down on its existing approach, IKEA listened. It adapted its business model to align with local preferences, offering assembly services and redesigning products to fit smaller Chinese apartments. Plus, China was highly price-sensitive.
But IKEA did its research, understood their customers’ lifestyles, and made many tweaks to its product lines. This cultural adaptability turned China into one of IKEA’s fastest-growing markets.
Cross-cultural competence requires you to find ways to meet in the middle, where collaboration thrives, even across vast cultural divides. Investing in diversity and inclusion training programs can further equip leaders with the skills to navigate these challenges effectively.
Building Resilient Organizations
Leadership plays a critical role in fostering CQ.
Culturally intelligent leaders actively seek out diversity and leverage it to drive innovation and resilience.
Consider the case of Unilever. Former CEO Paul Polman understood that to succeed in such a diverse global market, the company needed to navigate cultural complexities with empathy and acceptance.
He championed initiatives to develop collaboration across the borders and formed partnerships with different entities from NGOs to governments. Within the organization, he invested in employee success through diversity and inclusion training for leaders and set up the Unilever Global Diversity Board.
The impact was profound. These steps enabled the company to adapt quickly to local market needs, whether it was developing affordable products for emerging markets or addressing sustainability concerns in Europe.
Polman’s belief in empowering employees everywhere, listening to diverse perspectives, created a value-based culture.
The ability to reframe differences as strengths is key to being culturally intelligent.
A great example of this is Procter & Gamble’s “Connect + Develop” program. Recognizing that innovation often comes from unexpected places, P&G opened its doors to external collaborators from around the world. By tapping into diverse cultural perspectives, the company was able to develop groundbreaking products, like Olay Regenerist, which was based on a formula developed by a French firm and Mr Clean Magic Eraser, which originated in Japan.
Embedding Cultural Intelligence in your Organization
So, how can organizations cultivate cultural intelligence?
It starts with a commitment to learning and growth. This might involve DEI training, cross-cultural training, mentorship programs, or opportunities for employees to work on global projects.
Beyond formal programs, though, it involves creating a culture where curiosity and empathy are valued. A culture which encourages employees to ask questions, share their experiences, and learn from one another.
The stories of Renault-Nissan, IKEA, Unilever, and P&G show us what’s possible when diversity is embraced and people are included with deep empathy. As Ghosn said, “Empathy is hard to find in a book. We have to have a mindset of empathy and look for how diversity can enrich us and become an inspiration.”
Now, isn’t that a goal worth striving for?
