Mighty Is the Mongrel

What does it take to win in the global economy? A commitment to mixing people, experiences, and ideas. Companies and countries that embrace diversity to stimulate creativity will be the ones that own the future.

Diversity defines the health and wealth of nations -- as well as of companies and the people inside them. The mixing of races, ethnic groups, and nationalities -- at home and abroad -- is at a record level. In a world of deepening connections, individuals, organizations, and entire countries draw strength and personality from places as near as their local neighborhood and as far away as a distant continent. Mixing is the new norm. The hybrid is hip. Mighty is the mongrel.

This is no passing fashion. Rather, it is a deep change. Say good-bye to the pure, the straight, the smooth. Forget the original, the primordial, the one. Mixing trumps isolation. It spawns creativity, nourishes the human spirit, spurs economic growth, empowers nations. Racial, ethnic, and national categories no longer impose fixed barriers or unbending traditions. These categories do not vanish. Instead, they join the many pieces inside a kaleidoscope, presenting a different image from one instant to the next.

Nothing can stop the rise of mongrels -- of people who mock the very idea that union requires homogeneity or that victory depends on smothering dissent in a blanket of uniformity. Rich nations will go mongrel because it is right and good. They will go mongrel because it is the only antidote to stagnation, the only durable source of innovation, the only viable way to preserve their traditions while embracing change.

And what goes for countries goes for companies as well. The conditions for creating wealth have changed in ways that play to the strengths of hybrid individuals, organizations, and nations. And those who wish to profit from changing economic conditions must view hybridity as their first and best option.

The ability to apply knowledge to new situations is the most valued currency in today's economy. More than ever, creativity rewards those who exercise it, so curiosity about the source of creativity has never been higher. How creativity comes about is a riddle, but a few things seem clear. Highly creative people don't necessarily excel in raw brainpower. They are misfits on some level. They tend to question accepted views and to consider contradictory ones. Not coincidentally, such an appreciation for paradox defines the mongrel mentality.

The implications of this asynchrony are plain to see: Divergent thinking is an essential ingredient of creativity. Diverse groups produce diverse thinking. Ergo, diversity promotes creativity. This logic applies to corporations, research teams, think tanks, and other groups of creators. Those who rely on diverse people are more likely to innovate than those who rely on platoons of similar people.

To be sure, hybridity poses risks. A hybrid person may lose himself in a jumble of affiliations. A hybrid nation may botch the process of reinvention. Still, the price of such errors seems lower than the cost of circling the ethnic wagons and either shutting out people who are different or forcing them to become "one of us." Never before have so many people married across racial and ethnic lines. Never before have so many people left their homelands for work or pleasure. Never before have so many people touched or tasted the clothes, foods, musical styles, and ideas of cultures not available to them in their youth. These people are not becoming phantoms or dilettantes. Rather, they are part of an outpouring of human creativity that is being driven by radical mixing.

What follows, then, are portraits in the new power of hybrids, in the triumph of mongrels. In meeting these mongrels, we are meeting ourselves -- and our future. "You cannot spill a drop of American blood," Herman Melville wrote in 1849, "without spilling the blood of the whole world." More than ever, Melville's declaration applies not only to America, but to all nations.

Innovation: "I Feel Like I Belong Anywhere"

Radha Basu's job spans the world. Literally. From her base in Cupertino, California, she manages teams of Hewlett-Packard software writers who work in California and Colorado, in Australia, England, Germany, India, Japan, and Switzerland. Born and educated in India, she earned a computer-science degree in the United States, became a naturalized U.S. citizen, and notched her first experience as an international manager in Germany. "I feel like a global person," she says. "I feel like I belong anywhere."

Her feeling is appropriate, given the realities of business today. In many industries, gone are the days when a single location produced an entire project or product. The need to finish products and services quickly -- and in forms varied enough to satisfy local differences -- means that designers often must work around the clock. This "following the sun" approach works best when tasks are split between continents. And, as the search for talent gets more heated, global managers must be technically adept but culturally sensitive, familiar with corporate rules but flexible enough to bend those rules when necessary. Above all, they must get their message across to people who are working across many time zones -- 15 time zones, in Basu's case.

Basu has thrived at Hewlett-Packard. In 1985, after two years in Germany, she was sent to India to set up a software unit in that country. Hewlett-Packard was among the first multinationals to tap Indian software prowess by setting up local operations, and Basu would become a formative figure in India's now-booming code sector. The assignment thrilled her: She had long wanted to give something back to her homeland.

Basu's four years in India were rocky. Her Anglo and European colleagues at Hewlett-Packard considered her to be ideal for the job, but local Indians resented her for leaving their country and returning as the standard-bearer of a U.S. company. But by the time she left India, in 1989, Hewlett-Packard's India offices employed 400 people and comprised one of the company's most successful offshore units. Basu's husband, meanwhile, launched one of India's first public computer networks.

A decade later, Basu maintains close ties to India. Besides helping to hire local software developers, she came up with a plan to help found a half-dozen companies in Bangalore and Madras by having Hewlett-Packard contract with them for services. Some of those companies even set up shop in Hewlett-Packard's facilities in order to save money and to obtain proper support from the very start.

To be sure, Hewlett-Packard could have hired people from those companies directly, but Basu has long felt that "you don't have to own all of the organization in order to succeed." The idea of a big company serving as a seedbed for local entrepreneurs appeals to her -- especially since, in many places, people with good ideas but no track record can't get funding. "This is a new way of empowering people," says Basu. "And not just in India. The idea applies just as well to Brazil, China, the Czech Republic, and other developing countries with lots of technical talent."

The interconnectedness of hybridity, innovation, and growth still eludes most Americans. In the new economy, ideas and innovation -- the chief currency of hybrids -- are at the heart of commercial success. The costs of assembling the minds required to develop a conceptual product are small compared with the potential rewards of setting a standard or creating a "killer" application. So canny employers are often willing to pay the finest foreign talent even more than they pay local talent -- not underbidding for foreign talent, as nativists fear, but often overbidding.

That is a principle by which Basu has worked for 17 years. "We use our diversity to great advantage," she says. The mathematics of creativity means that casting a wide net for key people is a necessity. But the value of diversity involves more than just numbers. Strangers instinctively question things that natives take for granted. They are in a position to stimulate new perspectives because, to put it simply, many things strike them as odd or stupid. That's why it's great for any tribe to have a smart stranger injected into it. Under the right conditions, the newcomer aids the group -- an effect that is increased if the group is already mongrelized, because then resistance to the outsider will be lower.

Identity: Roots Are Not a Zero-Sum Game

The shiny steel machine bellows like a whale. Donald Jagau, his long hair wrapped in a net, leans over the belly of the machine and shifts the position of a small circuit board that is inching along a conveyor belt. Holding a gas torch in his gloved hand, he burns some excess solder off the machine's scrubber. Sweat runs down his forehead, gathering in a pool above his plastic goggles. It is 90 degrees in the sealed, brightly lit "hot-air" room. But Jagau steps lightly. He's used to the heat. He grew up in the jungles of Borneo, where the heat is worse.

One day in the summer of 1995, while cutting down a tree in the thick forest surrounding his village, Jagau heard an announcement on his portable radio. A U.S. company was looking for workers to hire and train for skilled jobs in one of the first high-tech factories in Kuching, Malaysia. The only requirement was a knowledge of basic English and a high-school degree. Jagau had both. He also had a desire to earn more than he could by cutting down trees and growing rice in nearby paddy fields.

The U.S. company, Hadco, makes printed circuit boards. It already had a factory in Silicon Valley, but it needed a foreign location to cut costs. It chose Kuching, which is an hour's flight from Penang, Malaysia's high-tech center. The move meant lower costs, but it also meant recruiting an entire workforce from scratch. To guarantee that new employees understood how to run an advanced electronics plant, the company planned to send about 100 of them to its factory in the United States for an 11-month apprenticeship.

It took Jagau three hours, traveling by riverboat, van, and bus, to reach Kuching. He got the job.

In California, Jagau thrived. His easy manner and infectious laugh won over Americans -- and put at ease, too, the many Mexican immigrants who worked in Hadco's factory. He had a knack for understanding the way machines work. In training classes, he said little but understood a lot. After work, in a bungalow that he shared with five other Malaysians, he made detailed drawings of the arcane machines that were used in the factory. He pored over manuals written in dry English; he memorized daily routines.

Jagau was about to begin living simultaneously in two worlds. In California, he could pretend that he wasn't a Bidayuh, plucked out of the jungle by some mysterious American corporation and transported to Disneyland. He could imagine himself as a member of any of the dozen nationalities that were represented in the factory. He belonged there, as much as the Mexicans or the Vietnamese belonged there. His English was even better than that of most of the other immigrants. But back in Kuching, he could not escape his past -- his ties to the Bidayuh, to his parents, and, most of all, to his wife, Lucy. "I am modern; she is not," he told me as we made the short walk from the factory to his bungalow. He had an email account, and the person he cared most about had never heard a dial tone.

Returning to Malaysia, Jagau resumed work at Hadco, whose factory was ready to launch. He and Lucy lived in a tiny shack. But at the factory, he ate breakfast -- often pancakes, which he had grown to like in the United States. After breakfast, he put on his work clothes, and the fun started. He was good at his job. His machine enveloped his mind; it was no surprise that he often dreamed about it. After six months, Hadco asked him to begin training others. The company even began hiring people on his say-so -- people from his village or from neighboring villages.

It is easy to paint Jagau as an Asian Horatio Alger, a creature of a U.S. multinational. Cynics paint such corporate behemoths as bloodsuckers, but I have seen countless examples of how they can transform the material and psychological lives of their employees. And not just in developing countries: The best multinationals are agents of change that create insurgents within the societies that they invade or, at the very least, that foster centers of excellence. Those insurgents then fan out across a society, carrying a greater sense of professionalism and more powerful technical skills than people who operate in a strictly local economy.

Jagau is my favorite example of this phenomenon, if only because he has traveled further -- from his childhood until now -- than anyone I know. He is a multinational corporate asset. And, as that asset, he has not only seen California but also traveled to London and Edinburgh for training on new machinery. Jagau has moved into the world of achievement, where his sense of self derives from what he has accomplished and what he owns.

The trappings of modern life, though, do not diminish Jagau. His experiences in America, his mastery over one aspect of a bewildering technological jungle, his rising material life in Kuching, his growing sense of self-worth -- all of these factors make Jagau more, not less, than he was before. To him, affiliations can be piled up like chips on a card table. They are not enemies of his inherited identity. Even as his horizons broaden, he retains his passion for his village, his parents, and his Bidayuh past.

Roots are not a zero-sum game. One attachment does not lessen another. Indeed, people can have both roots and wings. They can be proud of their background but unafraid of adding to their identity. By having both roots and wings, they help to preserve the groups to which they belong while at the same time realizing their individual freedom and exposing their groups to nourishing outside influences. Hybrid lives, therefore, are good for individuals and good for the groups to which they belong. In short, hybridity pays. And, in the present economic moment, hybridity pays well.

Strategy: The Cosmopolitan Corporation

Hybrids are everywhere, but multinational corporations are hybrid hothouses. The best corporations set the pace in diversity. Their mission is to match people and needs, regardless of nationality, race, or ethnicity. And the best managers want employees to retain their differences in order to make the most of their uniqueness and the most of the creative tension spawned by those differences. Employers don't want hollow harmony. They want a cosmopolitan corporation.

Hybrid teams are the new corporate ideal. Indeed, careers are now made or broken over diversity. The triumph of English as the language of business has made it easier for corporations to hire the best and brightest from around the world and then to mix those people together. International mergers have also spurred the trade in managers, which in turn promotes mixing. The mongrelization of management goes all the way to the top. An unprecedented number of foreign-born CEOs run major companies in the United States, Britain, and several other countries, according to a study by Denis Lyons, an executive recruiter in New York City. "The dawn of the millennium is ushering in a true global marketplace for CEOs," he writes.

As chief executives circulate, they form a global fraternity not unlike the aristocracy of the Middle Ages, whose members followed booty and glory regardless of national borders. To be sure, CEOs are a special case, but they are also the model for the business hybrid. In technical fields already, borders are becoming less and less meaningful. In engineering, physics, code writing, and all types of design, people carry their roots with them like the 16th-century explorers who sailed ships on behalf of wealthy patrons. U.S. corporations get their pick. The Chinese or Indian engineer who works in the United States is a cliché, but less is known about the American architects, salespeople, and shopping-mall developers who serve foreign corporations. Some live abroad; others shuttle back and forth. For these folks, a "day at the office" can mean a trip to another continent.

At the best companies, building diverse teams has become a routine part of business and a central piece of strategy. McKinsey & Co., the global consultancy, illustrates this trend. In the 1970s, most of its consultants were American, and its foreign contingent came from about 20 countries. By the mid-1980s, Americans still accounted for more than half of all McKinsey consultants, although the company drew from a wider range of foreign countries -- perhaps 30 in all. In the 1990s, the trend accelerated. By 1999, McKinsey's chief partner was a foreign national (he hails from India); only 40% of its 4,800 consultants were American; and its foreign-born consultants came from more than 40 countries.

The diversity at McKinsey means that there's no dominant group -- no identity mold. And the company's "United Nations" profile isn't merely a reflection of where its customers are. The idea isn't to assign Indians to Indian customers, say, or French nationals to French customers. That's old thinking. New thinking presents the hybrid team as a positive agent. The members of McKinsey's 40-odd nationalities aren't necessarily where they "should" be. "If you let a meritocracy prevail, you're bound to get a lot of diversity," says Rajat Gupta, McKinsey's chief partner.

McKinsey encourages an appreciation for difference by having each of its offices evaluated annually by a consultant from somewhere else in the world. The head of its San Francisco office may review Düsseldorf. Paris may review Mexico City. This process acts as a check and balance by preventing too much coziness from forming between partners in a country or region. But a side benefit of such evaluations is that they raise cultural sensitivity and promote the intermingling of traits. "There's an obligation to see things from other points of view," says one McKinsey partner. "That's hardwired into this place."

Cosmopolitan corporations don't localize overseas operations; they seek a dynamic blend among strangers. That's quite different from what passes for diversity at some U.S. companies that practice "ethnic" marketing -- such as hiring a black to manage accounts in Harlem, or a Hispanic to handle the south-Texas region. Ethnic marketing is blithely presented as a form of multiculturalism, but it smacks of tokenism and is based on a dubious business model.

Rather than try to pigeonhole customers, the hybrid enterprise acts as if they are all mongrels. Hybrid marketers don't seek one-dimensional terms to describe customers. Their approach contradicts the premise of ethnic marketing, which is to put people in boxes. Ethnic marketing may work for a time, but it won't endure. It will end up chasing the shifting borders of identity and alienating potential customers. Market researchers will end up talking about the specific buying habits of, say, "second-generation Bolivian-Japanese males married to fourth-generation Russian-Arab women who have a university degree and fewer than two children."

Hybridization also takes place at lower corporate levels, as the experience of Donald Jagau suggests. In the new corporate ethos, not only are employees entitled to their differences -- they should revel in them. By pouring their authentic identities into their jobs, employees become more creative and effective. Corporations are discarding the old assumption that all employees must think and act the same -- that they must bring the same tools, attitudes, and values, or even the same language, to work.

A modem factory in Morton Grove, Illinois is typical. The factory's 1,200 workers speak 20 different languages, forming an industrial Tower of Babel. It's a miracle that the plant runs at all. Pragmatism rules. The owner of the plant, 3Com, takes a simple approach. "Managers don't even try to accommodate cultural quirks -- probably an impossibility anyway," notes one observer. "They just make it clear that they expect newcomers to adapt to the factory's methods." On the plant floor, employees must mingle and cooperate, but in the lunchroom, they can cluster in their ethnic and linguistic groups if they wish.

Often, a team requires such specialized talents that it can be assembled only virtually, or by drawing members from locations around the world. Speed is another factor. Scattering members of a team across time zones makes around-the-clock progress possible. One set of team members can write code during the day, and while those workers sleep, colleagues on the other side of the planet can test the code. When members of the first group arrive at work the next morning, they can see a list of their mistakes -- and that hastens the process of improvement.

Such global teams are on the rise -- and not only because of time pressures and skill shortages. Corporations find that the line between "local" and "global" blurs when they are designing many products and services. No master recipe controls the balance between local and global elements. Since the balance constantly shifts, many companies hybridize their teams.

Consider Philips, the world's largest consumer-electronics company outside of Japan. In the 1990s, the Amsterdam-based company transformed its approach to design under the leadership of Stefan Marzano, an Italian who believes that creativity is stimulated by unusual combinations of people. He hybridized a Dutch-heavy team and built an operation with offices in 20 countries, including France, India, Singapore, Taiwan, and the United States. Among his staff of 500, he counted 33 nationalities.

Marzano didn't just look for a mix of ethnicities and nationalities. An architect by training and a professor at a design school in Milan, he also expanded the definition of "designer" and moved beyond the traditional boundaries of industrial engineering. He hired anthropologists, psychologists, sociologists, and architects. He loaded up on young people -- another means of achieving fresh thinking -- and drove down to 33 years the median age of the people in his division. Finally, he added another creative dimension to his staff by increasing the number of women on it to 40%.

By the late 1990s, Marzano's retooling had turned Philips into a trendsetter for consumer-product design. The company introduced splashy colors and aerodynamic styling to its line of traditionally black, boxy products. Philips didn't stop at aesthetics: Relying on original field research on how people around the world brush their teeth, take their coffee, and even chop their vegetables, company designers now influence how appliances work -- and how consumers behave.

Change: Get the Best People, Wherever They Are

The benefits of hybridization can be great, but conversion takes practice. It isn't easy for a mature corporation, with scant diversity, to go hybrid quickly. Because national identification seeps into the crevices of all corporations, many of them behave more like "national champions" than like global competitors. Headquarters retains its national character and is largely cut off from outsiders. Such corporations don't even realize that they need to hybridize. Some leaders of U.S.-based companies, because they rely on a diverse workforce or because their founders are foreign, hybridize organically. Others, like the managers at McKinsey, pragmatically pursue that end, gearing their training, tactics, and strategies toward it. But many corporate leaders believe that it's just too daunting to mongrelize their talent.

It is not. A company can consciously strive to raise the level of mixing among its employees -- and in a way that creates not more opportunities for assimilation into a dominant style but a kaleidoscope of styles and interests. Yet the ideal of hybridity has been misunderstood even by people who decry the limitations of a national approach to business culture. Kenichi Ohmae, the longtime chief of McKinsey's Japanese consulting practice, advised companies in a 1990 book to "create a system of values shared by company managers around the globe to replace the glue a nation-based orientation once provided." He added, "Country of origin does not matter."

If naively followed, such advice diminishes people. A person's origins matter. Rather than promote creativity, a complete identification of an employee with his employer's transnational network robs him of what local identities have to offer. Indeed, many executives are leery of abandoning national identity -- because the alternative seems worse: an empty globalization that produces a workforce without soul. Surely, it is better to embrace both roots and wings and to craft ways for the local and the global to drive performance together. But how?

The German pharmaceuticals company Schering AG is wrestling with this very question. Schering employs 56% of its 22,000 workers outside its home country -- chiefly in the United States and Japan, where its subsidiaries have traditionally operated quite independently of one another. A major difficulty is that few American or Japanese employees work in Schering's sprawling Berlin headquarters, and just a handful of non-Germans rank among its top 100 executives. By contrast, hundreds of Germans work in foreign units. To be sure, some Americans and Japanese visit Berlin frequently, but the company's core remains dominated by Germans who shape its priorities, from research to marketing.

Enter Dieter Schmeier, a 29-year veteran of Schering and a native German. As top managers wrestled with the company's lack of diversity in its main operations, Schmeier, an organizational psychologist, stepped back from the problem. He enrolled in a management program at Harvard. For four months, he lived in a dorm with eight other executives, and he and they were expected to tackle class assignments together. Two of them were from the United States, and one each came from Australia, Canada, China, India, the Philippines, and South Africa.

Schmeier had never been part of such a diverse team and was skeptical of the value of mixing people so thoroughly. The routine seemed hard -- and not only because he had to work in English, the native language of nearly everyone else in his group. He also found that the Americans (and, to a surprising degree, the Australian, Canadian, and Indian participants) reached decisions very quickly -- even too quickly. "They are hip shooters," he says. "We [Germans] are more analytical. We're more logical and systematic."

As the months went by, Schmeier began to realize that Harvard was "very clever to bring together people with very different backgrounds." His outlook on mixing began to shift -- from disbelief that mere cohabitation could do much to promote understanding to positive attraction to the ideal of mixing. He understood what many Americans take for granted: the power of diversity.

Schmeier's insight fired his imagination: Could Schering do, on a grander scale, what Harvard had done? When he returned to Germany, he was a man possessed: Mixing matters, he told people.

They started to listen. Schering's board asked Schmeier to draw up a plan for hybridizing the company. He made a radical proposal that boiled down to this: Get the best people, wherever they are and no matter what country they are from. This idea represented a dramatic change from company practice. Schering limits job contests by country. Thus, when a marketing post in Berlin comes open, only Germans learn of it. Similarly, only Japanese employees would be up for a Tokyo job. The system effectively makes mixing impossible.

Schmeier wanted that system scrapped. He argued that Schering should not only open up competition for its jobs but also circulate more of its foreign talent. Nearly 95% of its executives working outside their home country were German. As a result, not only couldn't Americans win rotations into Germany; they couldn't win rotations anywhere. "We have to change this imbalance," Schmeier urged. "It's absolutely necessary."

Schmeier made another key point: Employees should circulate more frequently, despite the extra cost. Drawing on his Harvard experience, he insisted that it was through a critical mass of associations with strangers that people really grow -- that reaching a threshold of experience in several places is more important than simply getting to know one new place. "If they stay too long in one country," he says, "then the idea to make a person multicultural gets lost. Then we will be helping a German become an American or a Frenchman. That's not the idea."

The board approved Schmeier's plan. Yet many barriers remain. Employees must be encouraged to move. Their new jobs must be attractive. Middle managers must grow enthusiastic about the vision, because, in the end, they make most hiring decisions. They are the ones who must work alongside strangers after decades of working only with their own kind. Schmeier cannot predict how quickly this change will happen, although he believes that his company's future depends on it.

So he remains possessed of a vision of tomorrow caught in the claws of the present. "Today, if we have a vacancy," he says, "we maybe think of three names: Muller, Schmidt, Lagenstein. What we have in mind in future is to have a different set of names: Smith, Lee Ping, Rodriguez. That is the idea."*

G. Pascal Zachary (gregg.zachary@wsj.com) is a London-based senior writer for the "Wall Street Journal." This article is drawn from his forthcoming book, "The Global Me" (Public Affairs, July 2000). (Radha Basu left Hewlett-Packard in 1999 to become CEO of Support.com, an Internet-solutions company in Redwood City, California.)

From the forthcoming book "The Global Me: New Cosmopolitans and the Competetive Edge -- Picking Globalisms Winners and Losers," by G. Pascal Zachary, to be published this month by Public Affairs. Copyright by G. Pascal Zachary. All rights reserved.

Sidebar: United States of Diversity

People can argue about what makes a 50-mile stretch of northern California so successful. But certainly no one can argue that Silicon Valley is a monoculture. It has become a poster child for the power of mongrelization; the mixing of people is central to its success. "If you subtracted that," says Anna Eschoo, a member of Congress who represents the area, "the Valley would collapse." Indeed, at least one-third of the Valley's scientists and engineers are immigrants. They come from Europe, Latin America, the Middle East, and, in particular, Asia. Since 1980, Chinese and Indian immigrants alone have founded 2,700 companies, which in turn employ 58,000 people.

Silicon Valley is not an aberration. Throughout the United States, hybridity pays off in higher-quality ideas, in greater flexibility, and in closer ties to places and people around the world. The United States offers the best example of what happens economically when an entire business class exploits hybridity. The new economic paradigm turns hybrids into a signal economic weapon. And, because the United States has more hybrids than anywhere else, it gets a bigger bang from hybridity than any other country.

But the idea is spreading. Edgar van Ommen, managing director of Sony's unit in Berlin, believes in the "principle of United Nations." His prime directive is to recruit the best people for his team, regardless of their nationality. Sure, that makes life tougher for managers. But what's the alternative? For the most idea-driven enterprises, a focus on one nationality is too limiting. Ommen grew up in Austria, married a German, holds a Dutch passport, and keeps a second home in Bangkok. Two-thirds of the 60 people on his team come from outside Germany; they represent more than a dozen nationalities. "The engineering of a concept is a lot easier because each person shows a different emotion as to what's being presented," Ommen says. "Maybe the Turkish lady likes it, but the Sri Lankan doesn't." To think great thoughts, he says, employees must contribute their "whole being," not just their mind. Heated argument may spur fresh ideas. Passion matters.

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