Russia’s Business Future Lies With the Boys (and Girls) in Batman T-Shirts

The Sochi Olympics have focused the world’s attention on Russia’s ability to get things done. Or inability — in the leadup to the games, almost all the attention was on the massive cost of the games and the fact that lots of journalists were staying in troubled hotels (with weird toilets). Things have turned more positive since the opening ceremonies, but there are still lots of questions about how prepared Russia really is to compete and thrive in the global economy.

Those questions led me to Pekka Viljakainen, a veteran Finnish tech entrepreneur and executive who has spent the last two years advising the Skolkovo Foundation, founded in 2010 by current prime minister (and former president) Dmitry Medvedev to promote tech entrepreneurship in Russia. Viljakainen is also author of the management book No Fear: Business Leadership in the Age of Digital Cowboys — and of the 2012 HBR.org post “What the Heck Is Wrong With My Leadership? I asked him what he’d learned about Russia’s capabilities, and in particular its managers and entrepreneurs, over the past two years. In return I got repeated invitations to attend Skolkovo’s “Woodstock of startups” June 2 and 3 in Moscow (you’re all invited too, apparently), and the answers below (which have been edited for length and flow).

So … what have you learned?

Pekka Viljakainen: Just to give you a very practical thing, I’m going to visit 28 cities in Russia this spring, meeting 400 to 2,000 people per city, young talents. And they’ll have Batman T-shirts on, they don’t give a shit about the politics, they just want to do business.

This is something that is totally untapped potential. Within five or 10 years, the old ex-Soviet people will be gone from the power elite. In the new government headed by Mr. Medvedev, I am an adviser and I am one of the oldest. I am 41. And the ministers are like 34, 35, 36 years old. I live four days a week in Moscow, and we never go even to have a beer after work. Not to mention vodka. People go to practice for a triathlon, they go to take care of their children, they go to watch the kindergarten Christmas parties, and so forth. This was not the case in Soviet times at all. The whole value base is totally changed.

But obviously the most visible guy outside the country, Putin, is still of that older generation and older style.

PV: Without a doubt. Russia is like 79 states of the U.S., and the difference between the states is much bigger than between Texas and Boston. There are 100 nationalities, lots of different languages. I don’t see it as a surprise that the traditional leadership culture is like a tsar. Because if an ultraliberal president would start tomorrow, we might see 50, 60, 70 wars — like in Bosnia in the ‘90s. In that sense I have started to understand a little bit what Mr. Putin does and what he doesn’t do.

But you’re absolutely right that that his age group is what I call the Soviet children. The big question mark both from the business opportunity standpoint but also from the risk exposure standpoint is how the new post-Soviet leadership generation is mentored and educated to be the new leaders of the country.

In terms of business leadership, at the risk of making sweeping generalizations, what’s different about it in Russia?

PV: If I take a 30-year-old leader at a startup or a big state company, I think the skill set and value base do not differ drastically from a guy in Stockholm or Boston or London or Silicon Valley. The differences in this basic toolkit of managers are surprisingly small. However, what is missing is that leadership is about models and best practices. In Russia, people don’t have in their mindset a leadership model for knowledge businesses. Because all the great leaders in Russia are either oil/gas, heavy industry, manufacturing, or construction.

The problem is not where to find the great engineers or great project managers. The problem is where to find leaders who can build powerful teams in knowledge-intensive businesses. That is the reason I was headhunted to Russia, because I have experience in this.

Russians are entrepreneurial by nature. When the Soviet Union collapsed all the equity was gone, currencies were gone, and they still had to survive so they had to be entrepreneurial. But the leadership issue is a problem.

If you think about the basic mentality in the U.S. or Silicon Valley everybody has been told, “Guys, start your own enterprise, even though it’s risky.” In Russia, mothers and fathers tell their kids, “Igor, you can start your business, but it’s not only risky, it’s dangerous. It’s almost lethal.” Because of the history.

Are there things about the Russian approach to business that work better than what you’ve been accustomed to?

PV: Russians are very pragmatic in solving problems — because they have been in a tough environment, so to say. Don’t take this literally, but the killer instinct in business, the killer instinct in a positive way, is strong. It’s a much more straightforward approach, and I think that’s a good thing.

In my team at Skolkovo Foundation, I have about 20 young talents. If I give them a task, they will find a solution. First they ask “Mr, Viljakainen, what should we do specifically?” I say “Hey, guys, have you read my No Fear book? If you still ask after one year working here what to do, whether I give you permission to do something, forget it.” After working two years together they are performing super well. I feel they are really good at executing tasks. They are extremely goal oriented, and really hard-working people.

There is one mega problem for the Soviet economy because of demographics. In the ‘90s not many children were born, because it was so uncertain with the fall of the Soviet Union. In all countries, people talk about needing more women in leadership, but in Russia it is practically nonexistent, women as leaders. This is a cultural issue; it’s a very masculine culture in many ways. But for the Russian economy, if there are no females in leadership, the whole economy will fail because there just aren’t enough leaders.

From what I have seen of Russian women as leaders, they’re extremely good. They’re much better at managing people, they don’t have the façades that men will have. I trust in the Russian women a lot to be able to lead knowledge businesses.

And now back to Sochi, and all those toilet problems.

PV: I was also in Beijing for the Olympics. If you have been in a place where 25 new hotels were built in Beijing, I don’t know how many toilet problems were reported, but I can tell you that not all of those hotels were high class from day one.

In Russia, a whole new city was built. I was there three years ago and there was absolutely nothing. Now there is a new airport, new railways, waste management up to European Union standards, 25 hotels. Everything has been built in three years, and I would be amazed if everything would be cool, so to say. Given the magnitude of the project, the fact that the construction business in Russia is the most heated and most corrupt of all, I think it’s a miracle that everything was in such a good shape as it was.

What is insane of course is, if it’s true, how much money was spent in corruption. Having said that, when you build a new city from scratch I would not count that the Olympics cost $50 billion. I would say that the Olympics was $10 billion, and then $40 billion was building this whole infrastructure. You might argue whether it makes sense or not, but Sochi is a wonderful place. Like Saint-Tropez, with a mountain behind it.

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