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SME Forum Opened with Discussion of Success and Failures

23 May 2018
Форум МСП открылся с обсуждения историй успеха и провалов

Entrepreneurship in Russia: Anthology of Success or Academy of Failure? plenary session opened the Business Programme of the Russian Small and Medium-sized Enterprises Forum, traditionally held as a part of SPIEF.

“If my memory serves me right, we never spoke of failures,” said moderator of the discussion Andrey Sharov, Vice-President and Head of GR Directorate of Sberbank in his opening remarks. “Neither business, nor government, nor we as humans like to talk about our failures. We believe this is a valuable capital, which must be shared with those, who is just looking to develop their business and grow it globally.”

The subsequent insightful discussion partially filled this gap. Its participants frankly talked about personal failures and typical mistakes that are common for business in general, as well as how to avoid adverse decisions at the level of public administration.

According to Georgy Solovyov, General Director and Co-Founder of SkyEng, the largest English language school in Russia and Eastern Europe, the capital error, “which robs businesses of tens of billions rubles” is developing of the product without considering end user’s opinions. “This mistake almost killed our company… We invested all our funds in the development of the product and spent a year writing the code. In the end, it turned out that 95% of our services, which we were positive would be handy for teachers and students, was useless. They used our product not as we intended,” George Solovyov shared this story as an example. He believes the basic principles for building a successful company include testing all processes with people before programming, as well as using external interfaces, which allow for much faster progress.

Mikhail Dashkiev, Co-Founder of Business Molodost community, unconventionally linked the major entrepreneurs’ mistakes with the peculiar ways human brain functions: “What are the primary growing pains? What is the key reason for them? I realized that it is about the brain. The entrepreneur steps onto an uncharted territory where they need to adapt quickly. If the brain is busy concentrating on one task, others slip out of sight. The brain does the weirdest things to us… This is the story of an entrepreneur’s life, especially when a business grows fast.” Dashkiev believes that cash deficit, a reason for far too many small companies to close down, arises because the human brain does not perceive money as an abstract entity. As a result, entrepreneurs use incoming funds for services not yet rendered, and do not weave a financial safety net. Other dangers are associated with inability to delegate authority, as well as permanent use of solutions that once worked. “After a certain number of repetitions, the practice that worked before exhausts itself like an oil well. Therefore, we strongly suggest to constantly look for new ways,” noted Mikhail Dashkiev. In conclusion, he warned the participants from the ‘king’s crown’ when “it seems that you know it all”.

From her own experience, Suzanna Karpova, Co-Owner of Prive7 beauty salons chain, has two tips: from the very beginning do not loop all the processes onto yourself, but delegate part of the work to competent administrators, and invest in training your employees. “A person who believes that they have nothing to learn is a lost cause. Therefore, our concept is to constantly develop our employees professionally at the company’s expense.”

In his address, Sergey Borisov, Chairman of the Board of Trustees of OPORA ROSSII All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses, noted the shortcomings of governmental decisions, which, unfortunately, prevented small business from becoming a driver for the Russian economy. According to the Federal State Statistics Service (Rosstat), this segment of enterprises accounts for only 20-21% of GDP, explained the speaker. “Failures, and not successes, are largely due to the fact that they do not listen to business,” said Sergey Borisov. Among other adverse issues, he also noted insufficiently developed competition, in particular in the public procurement system, the rising pressure on business and lack of an effective education. “Business barely makes it to universities… In the US up to 50% of academics are people from real business… Here we have jealous hoarheads. ‘We will teach, and you go do your business’”, noted Sergey Borisov.
v Alexey Grigoriev, Head of the Moscow Office of Metro AG, shared a more optimistic view. He spoke about the actions the retailer undertakes to support small businesses in Russia. The company assists suppliers to get certified so their products would reach large retailers; develops small retail trade through Fasol grocery stores, owned by small entrepreneurs; implements the Restaurant Response (Restorannyi Otvet) project for restaurant business entrepreneurs.

Andrey Vanin, General Director of Delovaya Sreda, picked up on the subject of entrepreneurial education. He drew the attention of the audience to the following peculiarity: 99% of existing programs tell us what to do, but never talk about what not еo. To compensate for this shortcoming, Delovaya Sreda implemented the Academy of Failures project, where businessmen share their missteps. “There is a saying: Leadership is not about doing what I tell you to do, but doing as I do, when a person by their own example demonstrates what should be done, instead of quoting from the books,” noted Andrey Vanin. “For me, leadership is when a person says ‘Do not do what I did’, having gained courage to say it out loud to a large audience.”

Oleg Fomichev, State Secretary – Deputy Minister of Economic Development of the Russian Federation, demonstrated such courage admitting, “too many mistakes are shared by entrepreneurs and public administration”. “Too often state policies contradict each other. It is hard to say that our failures are a failure to support small business. This is more implementing policies in other sectors, which resulted in the small business doing worse,” explained Oleg Fomichev. He called for the principle ‘Think small things first’, widely applied in Europe, when all decisions are considered primarily in the context of the small business.

Concluding, Alexander Kalinin, President of OPORA ROSSII All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses, emphasized the importance of business associations for creating a favorable investment climate. “If we had six million entrepreneurs as members of various associations and they consolidated their grounds, we would have a completely different business climate”, emphasized Alexander Kalinin.