It is difficult to overestimate the importance of private entrepreneurs' contributions to the transformation of Russia. Although the collapse of communism brought business dealings that were frequently of a decidedly shady nature, by 1993 a group of business leaders started to emerge whose success was based on their own efforts rather than overt political connections. Today, some of them have gained respect in the international business community.
A study of their successes not only provides lessons on leadership for future Russian entrepreneurs, but also contributes to understanding for outsiders seeking business partnerships in Russia.
The scope of the research is wide: the transformation of a former Soviet factory, from fledgling import/export to conglomerate brand management. The authors studied companies in the telecom, software development and investment management industries, as well as a chain of fitness centres with a focus on getting Russians in shape. And, not to forget, of course, Mikhail Khodorkovsky, former CEO of Yukos, whose trial in 2004 affected the price of oil on an international scale.
A picture emerges of young entrepreneurs with a deep sense of mission who are catalysts for change. They have a capacity to reinvent themselves and reorient their organisations. They take the best Western business practices and adapt them to the Russian context. At the same time, they are persistent, resilient and have a high level of emotional intelligence. The authors term this emerging leadership style "Global Russian."
The working paper also identifies a number of challenges. As with many entrepreneurs who are quite young, in many cases, little thought has been given to succession. Trust is also in short supply. There needs to be more trust within the organisations and they need to be more open to the outside world. The investigations into Yukos and the arrest of Mikhail Khodorkovsky suggest that new power dynamics may create important challenges for entrepreneurs and also test the stability and maturity of industries and markets within the whole Russian business community.
The research was undertaken by Manfred Kets de Vries, The Raoul de Vitry d'Avaucourt Chaired Professor in Leadership Development and Clinical Professor of Management and Leadership, Stanislav Shekshnia, Adjunct Professor of Entrepreneurship, Konstantin Korotov and Elizabeth Florent-Treacy. It concludes with some key objectives for future development.
Businesses should be designed for long-term value creation offering transparent relationships with stakeholders and respect for the social and physical environment. There are still a number of organisational competences, common in international rivals, that need to be mastered. Empowerment and delegation need to replace rigid procedures and regulations. Internal networks, virtual or otherwise, need to replace hierarchy. Traditional Russian habits regarding information as a source of power need to be broken. The challenge is to create information systems that support the sharing of data and best practice to strengthen corporate values.
Are these new business leaders, who built their wealth and influence on the ruins of the Soviet empire, capable of leading their nation to prosperity, civil society, personal freedom and openness? Russia has not fully mourned its past and influential forces in the society push it towards chauvinism and federalism. However, young Russians who decide to take control of their destinies and embark on an entrepreneurial career will no longer have to do the hard labour of path-breaking. There is now an impressive diversity of successful Russian role models for them to emulate.