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Konstantin Smolentsev: “Russian business is not interested in consulting”

Consulting is the mirror of business, but in Russia it reflects a rather disappointing picture. Russian businessmen stubbornly ignore services of professional consultants, but not because they can solve problems independently, but because of not being educated and not willing to follow world’s experience. Why is that so – certified consultant Konstantin Smolentsev has explained in an interview for E-xecutive.

Often Russian businessmen express their thoughts on management consulting with distrust and skepticism: I work day and night, know my business in and out and all of the sudden, there is a person from the side who is going to tell me how to do my business? Such reaction is understandable, although peculiar to entrepreneurs who do not know what consulting is and what are its opportunities, and unfortunately, are not keen on learning. If professional advices are definitely useless and ineffective, then why in developed countries number of certified consultants is counted in tens of thousands, and sphere of their work is broad – from small and public businesses to government and non-profit organizations? According to the opinion of member of the Board of “National Institute of Certified Management Consultants”, Doctor of Political Sciences Konstantin Smolentsev, Russian consulting has an entire line of problems, proving tough conditions of national business. One of those problems – informational vacuum, where Russian entrepreneurs are at the moment, and disinterest of the government to increase number of qualified consultants.

In the interview for E-xecutive Konstantin Smolentsev has explained why consulting is the mirror of business society and what contradictions justify Russian reflection.

E-xecutive: You go abroad often enough. Contrast of consulting in the West and in Russia is probably impressive?

Konstantin Smolentsev: Of course, and, unfortunately, not to our advantage at the moment. Let’s take Canada as an example. Recently had a meeting with colleagues from Canadian Association of Consultants – CMC- Canada. The country resembles us geographically, by size of territory, but with all that there are three thousand certified consultants just following the “Amsterdam standard” – and that is considering their population is 30 million people, – whereas in Russia number of those consultants is 26! Considering that development level of consulting services directly characterizes stage of national economy, the picture is rather harsh.

E-xecutive: But consulting market in Russia is still rather young – “civilized” business in Russia is only 10-15 years old. Perhaps, consulting in Russia just needs more time?

Ê.S.: Definitely, business traditions in Russia are still very young. Current crisis has exposed all problems of our business society, including its underdevelopment. Currently in the time of global economical changes, all these flaws are seen with no effort: priority for companies are not long term plans, but short term fast profit, material side of business is more valuable than intellectual, often strategies are used from the 1990’s – take credit and never pay it off, use others to achieve your goals… However, to get out of crisis, those who pump economy with money, which is by the way useless, won’t help, but effective leaders of a new level, professionally using knowledge of management will. That is why professional business consultants can actually help, because one of the main reasons crises happen – lack of quality management.

E-xecutive: But Russian consulting currently needs support and development. What are its main problems?

Ê.Ñ.: First of all, government support is important and realization of significance and opportunities of consulting. In Canada, for example, services of management consultants are widely spread even in the social sphere. They work in schools. It is supported and stimulated by the government. In Russia this profession exists de juro, de facto there are few professional advisers, just as there are a few people know what consulting is, how does it work and what does it give. It is close to impossible to explain revenue agencies what you do. Consulting is still considered to be vague and made for illegal money transfers in their minds. 

Situation is no better with clients. Consultants are still only hired if there is a harsh crisis, when help is needed immediately, or their services are considered as facultative or “status”, in demand only if company has extra finances. That is why one of the main problems consulting has today – productive dialogue with current and potential clients, explanation of essence of our work, including advantages of services from certified specialists in this sphere.

As well, it is important to improve active cooperation with regional experts, actively attract young people and promote the profession into society – improve it’s image, which in the end, will endorse increase of service quality. Abroad, in Canada, Europe, these functions are taken on by professional associations of consultants. In Canada every province has its own local association of consultants. They are all united by one main association. I think, “prof-union” of consultants, organized by the same principal, – good idea for Russia.

E-xecutive: You are saying that majority of clients have an incorrect understanding of consultants’ work. What are the goals of employers? What do they want first of all?

Ê.S.: If we look at demand on consultants’ services during crisis, then I can say that it has noticeably dropped and became more subject and precise. Clients are interested in immediate practical effect from investments, everyone needs guarantees of fast positive results. Moreover, often employers are waiting for a miracle! In such conditions consulting companies cannot always sustain qualitative level of their work – outcome of that are decrease of ethical norms of the profession, unscrupulous following requirements and wishes of clients in detriment of expediency, chasing benefits – all of that plays in disadvantage of consulting.

General problem is that society as a whole doesn’t know about opportunities of consulting and doesn’t show interest in it. Demand on consulting services shows development level of the business society, presence of traditions of effective and thoughtful leading of business, level of innovations in business. Countries with such traditions are at lesser risk to be affected by destroying consequences of a crisis. Canada as an example, again. In Russia no one is interested in consulting – not the government, not the business, which affects them accordingly.

E-xecutive: Is there a way to break that tendency?

Ê.S.: In Russia there is a “National Institute of Certified Management Consultants” (NICMC), goals of which are to support formation of civilized norms and rules of consulting activity, development of management consulting as a profession and support formation of a qualified client market in our country. However, tendency is such that Russian consultants and consulting companies do not have enough information about usefulness of being in the association. Although, these advantages are as bright as a day. It gives an opportunity to qualitatively increase your professional level, acquire new contacts with colleagues and clients, including international, open new perspectives of consulting, protect your rights and lobby in a civilized manner interests of the consulting society.

This profession has to have more young specialists, this program has to appear in universities, its popularization has to be stimulated on a governmental level.

E-xecutive: It seems like modern Russian consulting is still standing only because of enthusiasts…

Ê.S.: Yes, because of fans of what they do. Many consultants, including me, – people with a lot of experience conducting their own business, who are now engaged in management consulting. NICMC is contacted mostly by individual consultants – first of all, for new contacts, in search of adherents, support. 

E-xecutive: What companies form consulting market in Russia? It seems like there is no active interaction between them.

Ê.Ñ.: First of all, obviously, it’s the companies of the “big four”: Ernst & Young, KPMG, PricewaterhouseCoopers, Deloitte & Touche. In the crisis period it is easier for them to stay alive – among their clients there are a lot of large companies and corporation with governmental participation, those companies have high quality employees, and their business is built strictly. Small companies – participants in the market having less professionalism, but they are more flexible, mobile, and that is why it is easier for them to survive. Most of all medium consulting companies were hurt. Mostly because their clients are medium sized companies – segment which suffered the most in crisis. Besides that, those companies already had certain ambitions and obligations, which is why now they have a tough choice: continue on proving their specialization or change their activity profile to survive. They have one more problem – all of them work separately and have neither a wish nor opportunities to help each other out, main thing for them right now is constant fight for a client. Also, no one can really define the concrete sum of consulting services market in money value. There is no official data.

E-xecutive: So, merging process which has become a savior for some companies in different spheres, in this case is ineffective?

Ê.S.: Yes, absolutely. And in the near future there will be no such tendency. Moreover, process of business separation is obvious, however that risk is underestimated. Why does this happen? In the crisis period it is easier to take away intellectual property from a company (and consultants have nothing else). Unsatisfied and unscrupulous top-managers use that to their advantage – they leave, “taking” clients with them.

E-xecutive: In this case it is obvious that crisis will be pernicious for consulting and will destroy all that it has achieved over the years?

Ê.S.: In this case situation where Russian consulting has got into, is analogical to the one all businesses are experiencing.

As I said before, current crisis – is first of all, crisis of management consulting quality, that is why only those companies will survive that have efficiently organized and conduct their business. To expect that Russian consulting market will recover fast is useless. Recovery will happen gradually and with certain delays comparing to general temps of normalization of economy’s condition. Having said that, the most important thing at this stage is mutual development of consulting and business. Winners would be mobility, service quality and originality of products, professionalism and responsibility. This equally relates to consultants and their clients.

E-xecutive: Does it mean that business society will finally understand meaningfulness of certification of consultants’ services?  

Ê.S.: We are hoping that that happens and are supporting it as much as possible. For now clients don’t know advantages of services provided by certified consultants. Precisely, only a small portion of businessmen know that – as a rule, those are the people with quality education and lots of experience. For others the only difference is that those services are more expensive.

E-xecutive: You mean “Amsterdam Standard”? What does it give?

Ê.S.: Yes. The so-called “Amsterdam standard of management consultant” was developed by “International Council of Management Consulting Institutes” (ICMCI). It is the body which carries out certification in accordance with that standard – exclusively management consultants. Those, who have passed that procedure are given title Certified Management Consultant and given an according pin. This title and attributes – certified recognition by the world consulting society of achievements and high professional level as an expert, it is a recommendation for potential clients, which also means greater responsibility of the consultant to society. In Russia, for the fourth year in a row, NICMC is responsible for certifying under the “Amsterdam standard”, it is the only body in the county which can legally carry out that procedure.

E-xecutive: How are the regional consulting companies doing during crisis? What are their main goals right now?

Ê.S.: If we’re talking about regional map of Russian consulting, then here Moscow and Saint-Petersburg stand out. In other cities there is a variable amount of consulting companies. Market of each region is exclusive in its own way. However, all regional companies are characterized by decrease in demand, increasing competition from capital and foreign players. In this hard situation companies have to strengthen positions and attraction of their services for clients which is quite problematic.

E-xecutive: Picture of Russian business as a whole drawn by you looks pretty depressing…

Ê.S.: It is necessary to note that shock experienced by Russian business recently is slowly fading. I think that the most important thing for us right now is belief in human factor, as well as stimulation and quality control of provided services by the government and business society. Equally interested in that must be the government, entrepreneurs and consultants. Professional management consulting is a competent help in management, opportunity to move a company to a next level, open and use its hidden reserves and opportunities, increase efficiency of its activity. In other words, it is what Russian business needs right now but what it has been ignoring. I am a realistic optimist. Government and business sooner or later will understand one of the conditions – for Russia to become a blossoming advanced power, and for Russian business to be competitive, the country needs to form a highly qualified consulting society.

Interviewed by Olga Bedareva, E-xecutive

http://www.e-xecutive.ru/knowledge/russiantoplist/1130594/ 

09/07/2009

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