Anyone who has ever worked in Mexico realizes that one of the biggest differences between doing business in this country and its two Nafta partners concerns information. Whereas in the U.S. and Canada information about most business issues is widely available, and often free, Mexican managers have to face the reality that information is both scarce and often full of errors.
There are several reasons why Mexico has not yet developed an information-rich environment. One is the lack of respect for intellectual ownership, which makes development of for-profit information more difficult. A second important reason is that capitalism in Mexico is developed on the basis of privileged access to information, such as which government actions will be taken or which suppliers will be awarded contracts. The development of the family business tradition was often based on the fact that families held those “business secrets” to themselves. From a business perspective, keeping information away from competitors is an advantage, although the system as a whole suffers.
This is one reason why it is a common practice for professional or business associations to have incomplete information about their own activities. Over the years, I have wondered why few statistics are offered by official associations in their own sectors, and the answer they give me is that their own membership fails to provide them with such figures.
A final reason is the size of the informal economy, which by definition is unrecorded in official statistics. While no one knows exactly what percentage of the economy is informal, estimates usually put the figure anywhere between 20 and 40 percent of the total economy! Some companies that require information engage in primary marketing research, but this is the most expensive of all data. The vast majority of smaller companies simply find the cost too high. One of my clients is a traditional, highly successful family enterprise in Mexico. The company was contemplating introducing a new product in the market. After analyzing the costs involved in a marketing study, it decided to table the study. “We have been very successful without expensive studies,” explained one of its partners to me. “We rely on our common sense and our feeling for the business.”
Without a rich supply of information, management in Mexico often has to be “intuitive.” Now that “intuition” and “emotional intelligence” have become the new buzzwords of U.S. management, I cannot but laugh at the fact that in Mexico this has been a very old tradition. Mexican managers have to fill in those information holes with their intuition, their so-called business “smell.” Without adequate information, we must rely on our emotional intelligence, sometimes called intuition, sometimes called common sense, or else we’d simply go crazy.
And managers trained in modern MBA programs, based on rational decision-making models, do go insane when they are faced with the realities of Mexico. I recently had a conversation with a bright young Mexican manager, who was presenting to his U.S. boss a distribution plan for its marketing products. His boss asked him to explain the basis on which he was making his recommendations, to which the young manager replied: “It is based on our past experience and our ‘feeling’ for the market.” His U.S. boss canned the plan. Neither side is right or wrong. Their behavior simply reflects the rational versus the intuitive model of management. Undoubtedly, Mexican mangers would benefit greatly from fomenting a more information-rich environment, but equally true, U.S. managers may also have to learn that “feelings” and “intuition” may sometimes provide the best available solution.