Just The Facts Ma’am, Or Will My Hunch Do?

articles Business

Ilya Adler

I get many inquiries from non-Mexicans interested in investing in or starting a new business in Mexico. The inquiries usually ask the normal “administrative” curiosities: What are the numbers for the industry? (Sales, outlets, what have you). How competitive is the market; how easy/difficult it is to get the legal permits, and so on?

The honest reality is that in Mexico good hard facts are difficult to find. Of course, there are numbers, if you really want them, but those numbers are often so far from reality that at best they can be used as one more indicator. This is, of course, a malaise suffered in the entire developing world. Therefore, business people in Mexico rely a great deal on their intuition, the opinion of others seen as “experts” in the field, hunches, and everything else that is not numbers.

The problem I find is that many foreign investors come from what is called an administrative-oriented culture, one in which objective facts, especially numbers, are the basis on which business decisions are made. Thus, when I tell them the weakness of many numbers in Mexico, they often back away. On the other hand, some people will pay no attention whatsoever to what I tell them, and go ahead and use whatever numbers they find. I suppose some never learn, that’s what I think.

It is true that Mexico as a country is making important progress regarding the census data, which while not perfect, the INEGI data (INEGI is the Mexican Census Bureau) does indicate some realities better than it used to when it was politically manipulated in order to provide “good” numbers. Still, important data issues of the economy remained unresolved. How many people are poor in Mexico? We really do not know. Some experts say it is 80% of the population, others say it is about half of that number. The reason why this simple fact is hard to find is that almost half of the economy (an educated guess) belongs to the informal economy, and thus, the wealth produced in this informal economy usually gets unreported. CEMEX, the giant Mexican cement company, made a comment a few years ago pointing out that while the official numbers of the economy were down, the sales of cement had actually gone up. As most economists acknowledge (at least in the administrative-oriented world), the construction industry is usually a good indicator for the economy as a whole, but in Mexico numbers do not correlate with each other as they “should” in an administrative sense. Whatever number you are looking for, from how many Mexican writers live off their royalties to how many pieces of furniture are produced, the numbers you may find will probably have errors that cannot be tolerated, if you follow good management practices. At least good administrative management practices.

Among my Mexican business customers, it is quite common to not know if the business is profitable – or not. Even within business organizations, the data that sophisticated information systems such as SAP (invented in Germany, and really not useful in cultures like Mexico), they are often unreliable, because other considerations are more important than inputting the “correct” information. Some may call it fraud; I call it an attitude toward concrete information. Let’s face it: The Mexican culture is vague for a lot of good reasons, and non-Mexicans need to understand this very simple fact before embarking on any business venture in this country.

Living with uncertainty

It is a fact that Mexico as a country carries intrinsically a lot more uncertainty than a country like the U.S. The uncertainty can be observed in travel time (in Mexico City a trip can take as long as 15 minutes or two hours), in the lack of punctuality of people (both professional and social gatherings), in economic expectations, in the water supply, and so on and on. In my interviews with non-Mexicans, dealing with uncertainty is one of the hardest things to deal with for people who come from a future-oriented, planning culture (i.e., Sweden, Canada, Germany, among many others). In the planning cultures, uncertainty is reduced as much as possible, and interestingly enough the concept of “closure” is one that originates in the field of psychology in countries/cultures with a strong administrative-orientation, such as Austria, Germany, and the United Sates. When conflicts take place, talking-things out is important in conflict-resolution. In these cultures, “closure” is often viewed as a universally needed or felt experiece for humans to be able to move forward.

In Mexico, as in various other cultures, living with uncertainty is much easier, or even more “logical.” Conflicts do not need a “closure,” because “closure” could mean the end of a relationship, so being vague is viewed (at least felt) as a positive choice of action. Often, non-Mexicans want to “clear things out,” but Mexicans on the whole will refuse to “deal with it.” Because Mexico, like Japan, Korea, China, is a culture that seeks harmony, rather than certainty, then as long as harmony exists the rest is not important.

In my opinion, this cultural trait, which has its own logic and functionality, is then expressed in how comfortable a businessperson is with “lack of hard data.” How do you deal with making decisions N not based on hard data? You implore something like higher mores, and then refer to the ” ni modo” mentality, which literally reflects the fact that nobody really controls the future.

Of course Mexico does have many business opportunities, but those opportunities have to be accepted as much as based on the use your gut feeling as much as on the basis of so-called hard-nose numbers. The trick is to use numbers as a starting guide, find the right experts for the right activity, and in the end, listen to your emotional intelligence as much as your rational one. At any rate, as many of us now know, it is the emotional intelligence that really makes most of our decisions. In Mexico, I would venture to say, it is even more important than ever.

Published or Updated on: January 1, 2004 by Ilya Adler © 2008


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