Russia is in the grip of a brain-drain. The smartest, wealthiest and most entrepreneurial are leaving. Russia has surged up the World Bank’s ease of ‘Doing Business’ rankings but decisions are made on substance, not style. Russia is certainly at the centre of an international political whirlwind sabotaging business confidence, but its chief problems are entirely self-inflicted.
Since emerging from the Soviet Union’s chaotic implosion into the free market Russian business culture has been plagued by a destructive double-headed eagle. The first ravenous beast has been short-termism. Making a killing and exiting before the famine sets back in might be understandable following the events of 1991, 1998, 2001 and 2008 but its no less corrosive for it. It seems there are few who see themselves in Russia long-term and it shows in their business decision making.
The second pestilence is defensive decision-making. Initiative may have been punished in Soviet times but modern Russian business is as equally unforgiving of failure. Business people will buy old and inferior as long as everyone else has bought it, for ‘no-one ever got fired for buying IBM’ is being taken to Kafka-esque level in Russia. Innovation may have been the country's buzzword since the crisis but faced with the novel business buyers (even senior ones) need to know others have risked it first - for not making a mistake is the front of the mind response. This destroys innovative capacity, meaning Russian business is always playing catch up.
Clearly, new paths through the quagmire of Russia’s current macro and micro uncertainty need to be found - for the current situation will be Russia's new normal for the foreseeable future. Business must adapt and respond and silver bullets don’t exist. The latest ‘guru’ is just peddling the same old snake oil in a different bottle. Yet the business response this year has been to batten down the hatches: no budgets, no room for mistakes, no future beyond the immediate.
Unless the flow of the departing becomes an reversible torrent Russian business must become serious about innovation. This does not mean building a Russian iPhone or an electric car, but is about unleashing the knowledge workers. It's time to let a million ideas flourish today and amplify the viable ones rather than sticking a plaster on a gaping wound and hoping it’ll be better in the morning.
The biggest challenge to doing this is re-setting business culture in Russia (expats as well as locals). Senior management can and must create space for people to learn from - not fear the consequences of - failure. Designing a safe-to-fail experimental process is simple and will protect the organisation from inevitable failure that occurs when people push the boundary of what’s possible but also kick start a genuine search for the new breakthroughs that can revolutionise a company or an industry.
In a culture and time when some ‘jam today’ to stave off immediate hunger is acutely felt, it's a potentially fatal paradox that organisations are not activating their biggest sunken resource - the knowledge of one of the most highly-educated and resourceful workforces in the world. Whilst successfully activating this brings the promise of unexpected rewards, continued negligence of it will only accelerate the brain drain and death spiral of Russian businesses and erode the country's ability to bounce back in future.
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