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I am absolutely sure that:

- success of each person is in his own hands,
- success of an organization depends on its leader,
- success of a leader in many ways depends on a cooperating with him Adviser (Consultant).
Konstantin Y. Smolentsev
SMOLENTSEV & Partners » Press Centre » Inverviews & Comments »

Smart advice for a smart director

Konstantin Smolentsev was almost an hour late for the interview. Ph. D, the Academician of IIA, Certified Management Consultant in accordance with the Amsterdam Standard ICMCI, Chairman of the Board of Directors of IC “SMOLENTSEV and Partners” tried very hard to make room in his busy schedule for this interview. When at last he arrived with a disarming smile he confessed that surprisingly sometimes he manages to devote time to himself and relax like past Sunday: “After all it is necessary to give yourself days off not to burn out completely” he said. 

- Most probably that is what you advise your clients?

— Precisely, although I can hardly follow that advice myself.

- Konstantin Yurievich, consulting executives is your main occupation…

— Yes, that is true, because the success of any organization has everything to do with its leader. If the executive is ready for change then the company will be able to do the same. Furthermore, before making a decision to reconstruct the business, it is an absolute must for you to sit down and think why you need this. Do you as an individual want this?

One time I was invited to visit a consulting company. They had enormous amount of plans and the market was open. The problem, as it appeared, was that director did not have any wish to grow. This person had different priorities which focused on family, compact small team, where he being the father-leader knew and understood problems of each employee. On our side, we helped the director make a right decision to forget about growth for the sake of growth and just focus on doing business in the way he feels comfortable. You can build a small, well protected business and be content working on a local market. On the contrary, if the personality of a leader demands large scale operation, limiting it would only eliminate all perspectives for business development.

- When talking about protected business could you give an advice on protection from raiders?

— These risks need to and have to be managed! Average companies are under greater danger of being attacked by raiders. While you’re small (three, five, ten-twenty employees) you are an interest only to “low-level” officials from according institutions and to swindlers who wont consume you fully just because they are interested in a few bucks. However, when you are as large as LUKOIL, Norilsk Nickel or Sberbank they will attempt to rip off you ridiculous amounts of money by making offers on such level that is hard to resist. Let me give you an example of Russneft. Average business is the most dangerous zone. As soon as company reaches that level it can calmly protect itself from small hunters, but immediately becomes a major target for raiders.

For protection, it is necessary to understand and consider weak spots in your business. Investors should be the first ones to think about that. It is in their competency to define level of closeness or openness of the company, manage extra capital, make decision on attracting a strategic investor, including foreign. Moreover, foreign investor besides having other advantages gives a decent protection from unfriendly absorption: raiders don’t like publicity and don’t want to deal with international arbitration. In other words, there are reliable technologies of protection from raiders. But you have to think about it, and think preventively…

- Last week in Tyumen you presented a new instrument of attracting investments for middle size business – “club bonds” for companies with annual turnover 250 million rubles. Did it invoke interest?

— Yes, and it all happened on a big scale! Even heads of credit and financial organization and heads of industrial enterprises were interested. It is truly a new tool, an intermediate form between syndicated crediting and classical bonds. Week earlier we lead the same successful presentation in Moscow for capital bank and investment community. Legislatively such bonds certainly are described, however "in nature" nobody has yet seen them. We are carrying out a pilot project. In my opinion, this tool, among other things, can be very interesting for investment companies, in particular, as one of perspective directions of their activity.

 - However, there is an opinion that bonds and even bills are unmanageable for middle size and in, particular, regional companies.

— Tyumen is a unique city where on one side it is developing in many directions ahead of the world, on another quite conservative, even causing inertia. Representatives of local authorities and business recognize this fact. Furthermore, I can say one thing: when two years ago we suggested Zavodoukovsk’s group of companies "AgroIntel" to issue bills, everybody thought it would be impossible. However release of bills was launched nevertheless and the enterprise covered their next issue. If one enterprise successfully works with bills and plans to work with bonds, then the question is: why nobody does it more? Simply recognize that these are good and simple tools of financing average business and organizing them with forces of regional investment company or bank.

- To be honest, I spent quite some time preparing for this interview and from some of your publications it is clear that business nowadays is in extreme need of employees, not even investments.

— (Smiling). Yes, especially business is in need of employees highly motivated and responsible for the outcome.

- Where can we get them?

— Well you can train them with the help of motivational-development approach to managing business. This implies that employee is focused on achieving strategic goals of the company when he is personally participating in development of those goals and precisely knows the reward for successful work. That is how participation, and accordingly, interest are formed.

- So one more advice to a director: don’t be lazy to explain employees how the company lives and what it is trying to achieve and how much money and for what type of work each concrete specialist will receive?

— Yes, you can put it that way. However, this should be an active dialogue rather than a monologue.

- If the company hires a professional consultant to develop a long-term strategy for development, how should their relationship be built ideally?

— Consultant’s work is to pose the right questions and help the executive of company find answers. However, the consultant should not impose his own opinion. Let me give you a simple example from everyday life. I want to buy a dress shirt, but the sleeve is too long. Sales associate is trying to convince me that the dress shirt is perfect and that I will be comfortable in it. A young woman 20-25 years old who does not wear men’s dress shirts is trying really hard to convince me into buying one (example of aggressive behavior popularized by sales trainees!). Anyone would be irritated in this situation and the opposite from desired result is created. This is also true in consulting.

- So is it possible to quickly “adjust” personnel to corporate norms with the system of “encouragements and punishments”?

— Definitely yes, however it is not enough. In order to succeed as an enterprise certain environment is required which includes team spirit, belief in yourself, in your work, friendly atmosphere shaped by the leader. Otherwise, this is not professionalism. Unfortunately today in Russia we witness absence of business culture and respect for an individual. A person in our society is not a figure of priority and is portrayed as a mean for attaining certain goals. Our only desire is to see an individual being treated righteously and with respect… At least just because that very individual is a client and a key to success in any business.

- What about profit?

— No, it is a huge mistake to set profit as an ultimate business goal. Profit is just a necessary condition for survival. I will repeat this again: the most important element in business is the client, who brings money. If you have no clients and every morning you wake up with a thought of “stealing” a penny, this attitude reminds me of a raider’s behavior.

You have to get satisfaction from business, just like from life. I would advise executives to handle their business like their beloved child, think of him, cherish and take care of him. Only then everything will be okay. As well I have a strictly professional recommendation: do not ignore a good advice. Your decision is your choice, but listening to an advice is never redundant…

Author: Alyona Buchelnikova

02/19/08

Link to the publication: http://www.vsluh.ru/news/economics/134738.html

© 2000-2008 Internet newspaper "Vsluh.ru"
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