Where has Russia gone wrong?

A perspective in 2023:

This article contrasts the situation from an article written in 2014 with what pertains today and why the country has regressed hugely.

Novosibirsk Diary — 2014:

The terror has ended but the fear lives on:

I have a fantastic young team here in Novosibirsk. Most of them are in their late twenties or early thirties and they are symptomatic of the new, young, professional and confident generation of Russians. Most of them speak English or another foreign language and they all have what I would call an intelligent ‘world view.’ In terms of work, don’t anyone ever say to me again that Russian people are lazy or try to avoid hard work — these young people are utterly dedicated and motivated to make our company successful. They frequently work long hours and do far more than could be reasonably expected, without complaint. All of them respect each other and are totally honest and loyal.

So, you may well ask, what’s the catch? Right now, there isn’t one but I am very aware that this situation is tenuous and may not last. The commitment and honesty will still be there in the individuals but the teamwork and drive they possess can so easily be interrupted or even damaged irreparably. This could happen in any country of course but it happens too often in Russia. This is, in my view, the largest problem which is holding this great country back and stopping it from taking its rightful place on the world stage as one of the most highly developed nations. Russia, in theory, has everything — the most natural resources, the biggest land area, vast tracts of fertile agricultural land and a young, well educated, intelligent workforce. So why isn’t it achieving its potential? Why do U.S. companies invest hundreds of billions in China but not in Russia? Why has Russia no real manufacturing industry? Why is the country not properly organized?

For the answer, I will go back to my team. We started working together last March but for the first three months, I found it difficult to get them to understand my philosophy and way of working. For every initiative or suggestion, there were ten reasons as to why it might not work or why there was no point in trying it or that it was potentially illegal and we would get fined etc…Having worked in Russia before for many years, I recognised the symptoms and I know the reasons why. What holds this country back is a simple word — fear. Fear of being blamed, fear of being fired, fear of failure, fear of making a mistake. I am a great believer in the old saying that ‘the person who never made a mistake never made anything.’ This phrase is known in Russia also but is too rarely used in practice.

The ancient city of Tomsk.

It took me months to convince our little group that if they made a mistake, they wouldn’t be fired, blamed or ridiculed. We would just try something different and drive on, do it better next time. People who took initiatives would be rewarded. After a while, they ‘got it’ and it was like a ‘lightbulb’ moment — almost like a weight had been lifted. Productivity improved — people started coming up with ideas — everyone wanted to contribute — everyone suddenly had huge ownership of the company and wanted even more for it to succeed. Everyone started using all of their skills and abilities. They all told me that they had discovered ‘a better way’ and it worked and they liked it. Instead of having to check everything and obtain approval for each action, they started working more freely and achieved rapid progress.

Obviously ours is not the only company in Russia to encourage enterprise and manage in this way but my people told me that they had never encountered it — not in Novosibirsk anyway. Most of them had come from work backgrounds where staff were treated like sheep and were not encouraged to innovate or express their opinions and ideas. What a shame. But let’s look at what causes this and what, if anything, can be done about it. I have written before about what I called ‘the great terror’ that engulfed Russia and indeed the Soviet Union in Stalinist times. There is no need to repeat the awful catalogue of atrocities that were committed on these wonderful, innocent people and far better authors than me have already recounted it eloquently. The regime of state sponsored terror utterly changed the culture and attitudes of an entire populace and engendered a permanent state of fear which to a large extent lives on to this day. It may take several more generations before Russia develops a culture of free thinking and open, innovative and imaginative mindsets.

How does this culture manifest itself today? Apart from the aspects already listed — hesitancy to innovate; lack of imagination; poor organisation or unwillingness to use organizational skills; bureaucracy; stifling of enterprise and ambition and fear of change. But for me, there is one over-riding aspect which groups all of these in one — it is the obsession with control and the vertical command structure of almost every enterprise. Russians traditionally look to their leaders and there still seems to be a view that they need strong leaders everywhere. It may seem harsh to say it but these are not necessarily skilled leaders — just strong ones. So you will get enterprises who are ‘managed’ by people who are just good at control but who have little management ability and often low or even non-existent people skills. The innovators or imaginative people are ‘controlled’ thus stifling organisations and keeping them buried in the past and unable to fulfill their potential. All that is needed to achieve this is to fire or discipline someone who does something different and perhaps fails at it. Obviously they, and everyone else, will never try anything new again. I have seen this happen dozens of times.

Of course, Russia is now a modern advanced country and communism is a distant memory. But the totalitarian nature of the old Soviet State and its mechanisms, traits and heavy bureaucracy still exist and, some Russian people tell me, have got worse in some respects. Thankfully, the terror is gone so people no longer fear for their lives. Unfortunately they still fear for their livelihoods.

But, regardless of the general culture, we will continue our little experiment here in Novosibirsk. Hopefully it will last in the organisation. However, even if it doesn’t, I am confident that it will live on in the minds and mindsets of the sixty people who work here. They have all told me they have now found a better way of doing business — they like it and it works! What’s more, they like coming to work and will give everything to make sure our small business is a success. They are all young and I am sure that most of them will go on to do better and bigger things and will continue to carry the spirit of free enterprise and free thinking with them and will never return to the culture of blame and fear. Wouldn’t it be wonderful if the country as a whole were to throw off the shackles of the past and do likewise?

Watch this space. :)

Authors Note — 17/02.2023:

Early in 2015, I was asked by my German employers to move to Moscow to head up their main business. Their view was that, having established a good working operation in Novosibirsk, I would try to do the same in Moscow. Now, all of the businesses in Russia were joint-ventures with Russian partners.

Sadly, within a month of my departure from Novosibirsk, the Russian partner moved in and completely dismantled the organisation we had spent the previous two years building up. Most of my team were fired and replaced. The policy and practice of innovation was replaced with control. The business struggled and within a year, the German partners withdrew and the business was closed down.

In Moscow, I discovered that my predecessor had quit the position after only one month. I immediately discovered why. The Russian partner there was dominant; the organisation was completely dysfunctional; the staff were treated abominably and the view was, ‘we can treat them like this because they are lucky to have a job.’ There was a complete absence of teamwork; there was no strategic plan; there were no business goals or focus. The only two elements which were present were a budget and a suffocating level of control. I described the management system as straight out of Taylor’s scientific management manual, which had been established for manufacturing industry in the 19th Century but was completely and utterly inappropriate to manage a retail business in the 21st Century.

I did of course try to change things but I was frustrated at every turn. Unlike my predecessor, I stayed on for a year but I was like King Canute trying to hold back the tide. Eventually I resigned as there was little point in continuing in an organisation where the philosophy was the total opposite of my own. To be fair, the business did make money, but given its almost monopolistic position, it would have almost been impossible for it not to. In my view, it could have made an awful lot more if we had been allowed to introduce some innovation.

I did stay on in Russia for a many more years and undertook work as a consultant but it appeared to me that the entire country was regressing and returning to an even worse position than it had been in when the first joint-ventures were instituted in the late 1980’s. Some of my former colleagues who are still there have told me that things have now gotten even worse.

Altai Mountains.

And what happened to the bright young people from Novosibirsk, you may ask? Sadly, for the sake of Russia, most have now left the country and are thriving overseas. They have become part of the ‘brain drain’ of people who have emigrated to work in more progressive regimes and has left Russia bereft of some of its brightest and best minds.