“The main challenge for managers today is leading change and in future the importance of this will only grow. Changes in our life are happening ever quicker and becoming more complex. What can we say about Russia in light of these tendencies? I believe that Russian managers haven’t yet adapted to how things are now, let alone adapting to future changes. Leaders continue to study and try to implement theory taught in western business schools. But this is wrong, as those very same business schools, like any bureaucratic system, are evolving too slowly themselves. They’re not oriented on searching for the new, but instead analyse the old, only learning how companies used to be successful in a by-gone age.”
— Isaac Adizis
So, what must be done in Russia today to deliver superior results?
This blog is part of a series introducing Power Maps* an innovative low-tech / hi-impact technique enabling organisations to align around a common purpose, anticipate what’s coming next and develop superior plans to outcompete rivals. If you’d like to learn more visit narrativeinsights.com or email us to be notified of our free monthly webinars where we explain how Power Maps can help your organisation get ahead of the curve in the digital age.
* Based on Wardley Maps, released under creative commons 3.0 license
“The main trend” in Russia’s current economic development “is the absence of a trend.” Put simply, Russia’s past is an unreliable guide for its uncertain future. Yet, economic ‘solutions’ proposed by the federal government are the same ones, again. Will it be any different this time?
At the Sochi Investment Forum the prime minister announced a ‘new’ Economic Strategy 2030. To weary eyes it looks like previous grand diversification and modernisation strategies, going back to Sergei Witte and perhaps beyond.
Bright ideas are one thing, rigorous implementation another.
Announcing ambitious targets will convince few investors (whose ‘stimulation’ is the first priority of Strategy 2030) but will force regional governments - who have a key active role to play in facilitating investment at the local level - to scramble for compliance. It may be satisfying at the top level to mandate a policy for the entire country, but it’s misguided. As the Roman Stoic philosopher Seneca explained,
“The greatest loss of time is delay and expectation, which depend upon the future. We let go the present, which we have in our power, and look forward to that which depends upon chance, and so relinquish a certainty for an uncertainty.”
While Russia possess some of the greatest engineering talent in the world no-one is capable of engineering the future in a complex world. What is required are not grand outcomes - like import substitution, or an innovative economy - but realistic next steps. This means Russia should increase awareness of its present position, seek out higher ground nearby - then do more of the things that nudge it towards there and less of the things that move it away from there. It requires a very granular local focus, monitored but not directed from above.
Rather than taking months to create new strategy documents and years to ‘roll them out’ (by which time they become obsolete) Russia must start acting in the present to unlock a million ideas that will nudge the entire economy forwards, in any positive direction. Our own work with government agencies has been an early step in this process  - but it needs scaling up now.
As MGU economics associate professor Oleg Buklemishev has pointed out, whatever strategy you draw up it “falls apart if you do not pay attention to the real needs of people and reestablish a system of feedback between the government and the people.” In Russia these feedback loops must be free of delay and distortion so they help support local decision-making to impact meaningfully on lives in real-time.
‘In the absence of restoring some form of active feedback mechanisms, further economic momentum in Russia will be impossible.’Government’s economic role should be to get as many players as possible onto the field of play, referee disputes, and do the heavy lifting no-one else wants to (e.g. infrastructure investment, long-term education, pure scientific research). Its mission should be to stimulate a bottom up flowering of the economy, not impose a top down directive. Otherwise, the grand Strategy 2030 will go the same way as grand Strategy 2020.
This is part two of a series of posts looking at ‘what Russian businesses need to do next …’. Part one can be found here. For more information on the ideas and approaches included in this blog please contact firstname.lastname@example.org
Russia Direct recently ran an interview with Oleg Buklemishev, former assistant to the Finance Minister and Prime Minister of Russia, where he explained what needed to happen for the Russian economy to start growing again. Though the article contains great insights it fails to address the most critical questions of all - how can businesses can do anything about this at the local level?
Learning to see
“During a crisis" the article starts "it's possible to see clearly what one’s weaknesses are, and even at the current stage, Russia can actually turn itself into a new and successful economy”
Arguably, the biggest problem for Russia with the 2008 crises was that it was over too soon. The Russian economy this century was a ‘tornado’ and even turkeys fly in them. When the challenges of 2009 arrived it triggered many cold hard stares at the real (in)capabilities of Russian businesses (I spent the year at the heart of one large Russian business doing this). Yet, by 2010 ‘green shoots’ of recovery conned people back into the mindset that one only needed to ‘turn up and take the money lying on the table’ again (as one executive described it to me). So, the economy didn’t reform or diversify (again): Russia wasted its crisis.
However, the current L-shaped crisis engulfing Russia doesn’t appear to have an exit any time soon. Though no-one really knows where the oil price will be in 12 months the fundamentals clearly aren’t good  and, as this time last year showed, whither oil goes the Ruble follows. This uncertainty is placing immense pressure on businesses and while some - without the aid of 200kph winds - will go to the wall, others will learn how to adapt and prosper. The question is - which one will your business be?
For many business leaders the insurmountable challenge today is ‘how can we try something different when we don’t have any spare resources?’
Starvation of resources - like pressure - is a necessary but insufficient pre-condition for breakthrough growth. The status quo of incremental improvement is only challenged when the external environment makes that change non-negotiable. Further, it’s only a mis-match between ‘current’ and ‘required’ capabilities that triggers fresh ways of doing things. Without crises we would never need do anything differently, for we'd have enough resources to justify doing things the way we’d always done them.
Crises are nature's way of telling you it’s time to evolve
Russia has been hit by some of the biggest crisis to hit any country (outside of a war on its territory) in recent history (1991, 1998, 2008, 2014) and, while calls to diversify the economy have continually been made from the very top, it’s probably only from the bottom that the meaningful change that will turn Russia into a new and successful economy can happen. So, taking Mr. Buklemishev’s interview as a starting point, this blog over the next few issues will explore in more detail what businesses can do about the challenges they face today - not in spite of the pressure and absence of resources, but because of them.
If any of the ideas in this series interests you please contact me at email@example.com for a discussion about how you can apply them to help your business adapt better to the current realities of this market.
A fourth mobile operator will launch in Moscow this month, jump-starting a price war by ‘aggressively undercutting its rivals.’ If you're in Moscow you may have seen the billboards?
Good news for consumers, if the expected 30% price fall materialises. Less good for the established mobile operators. Their ‘cozy’ world is about to be disrupted as dissatisfied customers - one-fifth of the entire market - exit through their doors first.
Are the big boys worried? Apparently not. Aside from their infrastructure advantage they are confident that ‘client loyalty’ will ensure they withstand any threat. But are they right?
As Mark Twain (is often wrongly attributed to have) put it “It ain’t what we don’t know that gets us into trouble, but what we think for sure that just ain’t so!”
Claims of customer loyalty are not idle boasts. Russia’s telecoms industry has some of the sharpest marketing professionals in the game (witness Beeline’s rapid ascent from obscurity to global brand). They will all have hard evidence, drawn from years of customer research, that suggests the Tele2 threat is nothing for them to lose sleep over.
But what if all their data is wrong?
CFO pressure forced marketing departments to rapidly improve over the last decade. Campaigns are now run with one eye to their return on investment. The focus on hard data has pulled marketing away from its core purpose - understanding why people behave the way they do.
A few years ago Starbucks wanted to understand which customers drank which coffees in its shops. When buying coffee customers were incentivised to fill out a short questionnaire asking their age, occupation and ‘how do you have your coffee?’
On most measures the campaign was a success - except one. The results were confusing. Most people had said they have their coffee black, but the point-of-sales systems were showing that almost no-one has black coffee in their shops. Something was wrong.
The answer is that it’s our perception about how humans behave that is wrong.
In contrast to the default thinking of conventional economists and management theorists, humans are not rational, self-interested actors in full possession of perfect information. When asked for what we do, (or what we think we do), we are utterly unreliable (e.g. we like our coffee black, but don’t order that).
When asked a question by someone face to face we consciously or sub-consciously gift the answers we think people want to hear, or game the system to project how we want to be seen. It’s one of the reasons focus groups are fatefully flawed in minutes.
‘Do I love your brand?’ Well, I don’t want to disappoint you so, ok i’ll say it. Am I satisfied with your offering? Well, sometimes I am, sometimes I’m not - how do I record that on a 5 point scale? (Most people will discover a safe score, which is why your customer satisfaction scores probably hover around a 4 on a 5 point scale or 7 on a 10 point scale).
So Starbucks changed their question to ‘how did you have your coffee today.’ Removing opinion (and therefore bias) from responses they focused customers on their experience. The result was a set of figures that bore a close resemblance to the hard numbers coming out of the cash registers.
The only true test of customer loyalty is how people act: did they sign on again, then they’re loyal, at least for now. True tests of customer loyalty are how people act, NOT how people tell you they will act.
So, if the telecom majors are confident that customer loyalty (rather than customer inertia) will deflect the competitive threat of Tele2, but those numbers are built on people’s opinions - then it may be time to re-think. The future isn’t just an extension of the past.
Establishing a weak signal detection unit will provide real-time experience (not opinion) based evidence of emerging shifts in attitudes and behaviours. This will support timely responses if the market dies start to be disrupted on price.
Make sure you’re not caught out by what you thought you knew for sure, but that just isn’t so!
… the simple answer appears to be that too few Russians understand what the word charlatan means.
For example, I received an invitation recently from a respected business association in Russia (one I’ve done work with) to attend a seminar with “one of the world’s currently most famous gurus in developing business.”
Never having heard of this particular guru - whose focus is unsurprisingly on anti-crisis measures - I looked him up on Wikipedia. His page is the picture above and in summary reads: page deleted due to ‘unambiguous advertising or promotion’ and ‘no references to support claims of notability’.
While I have no idea if the above ‘guru’ is a charlatan or not it does shows how easily Russia buys the snake oil salesman’s pitch every time. Simply put, business leaders here (or those that promote or attend such seminars) are particularly susceptible to the ‘myth of the silver bullet’ - the one right answer that will solve all their complex problems in one easy step.
In crisis times ‘silver-bullet seekers’ are particularly vulnerable to smooth, self-promoters. But if businesses in Russia continually have the wool pulled over their eyes by those with style but not enough substance to convince even Wikipedia editors that their notability is genuine, then who does the fault lie with?
So, let’s take a moment to look at some other - non-guru dependent - options for real anti-crisis measures. How about actively engaging the 87% of employees who, according to Gallup, are not currently actively engaged at work at all? Wouldn’t this deliver a massive return on your current monthly payroll investment at negligible extra cost.
This may actually be easier to do than you think. Most (though not all) people who work in your organisation have a deep understanding about what’s really happening on the frontline and why. They are often deeply immersed in what they are doing and have insights into what could be done better. Few, if any, external consultants or ‘gurus’ have this deep appreciation of your local context. So, you’d be better off listening intently to your people that you pay anyway than throwing good money after bad listening to someone else with little or no understanding of your operating context.
In a complex world this is the new simplicity: answers are already known - they are just widely distributed amongst all the people in your network. Your challenge as a leader is to tap into those knowledge flows and discover yourself how to nudge your organisation towards a viable future.
So, instead of paying for the same old snake oil that will have little to no chance of solving your business problems overnight learn to start unlocking the evolutionary potential of your present.
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