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No Fear Leadership and the Digital Cowboys

Pekka Viljakainen has recently joined the Moscow School of Management Skolkovo as a mentor, leading a bi-monthly program. A successful international businessman, he was recently appointed to the board of Pochta Rossii, the national postal operator, which has 400,000 employees. He lives in Finland but spends his week in Moscow. He spoke to Mark Gay.

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Pekka Viljakainen

What is the biggest gap in the knowledge of young business people?

Russians are very international if you ask how much travelling they do. But I ask how many really trusted internationals do you have around you? Finns are not really good at this either. As long as the boss says 10 of my top leaders are Russians the company cannot be international.

It is a matter of trust. I call it full body leadership, whether you are willing to put yourself out of the comfort zone dealing with the different language, the culture, the different jokes, the different holidays, different drinks. Are you ready to put yourself into the uncomfort zone?

Why does it matter?

Russia is two per cent of the world market. Whatever product you are selling you want to pay attention to the other 98 per cent. The Finnish company Supercell is the most expensive games company in the world. It was started four years ago and is now worth 3 billion euro. It has 250 staff from 60 different nationalities. They know that when they have finished their product it is already suited to the Brazilian market or the Argentinian. But that needs a different type of leadership that builds trust with the staff whether they be Polish, Argentinian or Chinese.

If you are only in the local market, perhaps that does not matter but most of the Russian companies want to grow abroad. For me it is not enough to be the most beautiful boy in your own town, even if you can earn $100 million per year.

What is your key piece of advice to executives and students?

The role of a leader is more like running Walt Disney productions than running a steelmaker or a carmaker.

The producers of Toy Story knew within 24 hours of the movie's release what people thought of it around the world. Not because of the official sales but because of the pirate copies. They worked for three years to make one cartoon movie and then saw in one day whether it would fly or not.

Talking of carmakers, I was speaking to the leadership team of a very big German company and they said they used to be production centric but now they are brand centric. It may be that in a few years that they don't even make cars. But they want to know what the 18-year old Brazilian girl wants from a car or the 56-year old teacher in Tokyo and they want to know it two years before their rivals.

The pace is so fast is that those who want to copy like the Chinese cannot copy fast enough because the innovation is already old by the time they have copied it.

When the games makers release a game they know that within 48 hours there will be a copy. But they already have millions of users so they can beat the competition.

It is a big change for people who were brought up to believe that business is all about the process or the production line?

It is a problem especially for Russians because they love to have annual planning. I think it's an ex-Soviet thing. You have your annual planning, you define everything that is happening next year, and then you play according to the plan. It's a catastrophe: the plan, the mother of all plans, you know all the details and then you go for the new year holidays and hope for the best.

Is it the role of the manger to make predictions?

The leader's key competence is to be creative. Creativeness is to give your own flavor and predict where the world is heading but most leaders are frightened to predict because somebody might say they made a mistake.

If you are in a silo-based, monolithic organization you order some slides from a consultant and the board says this is our strategy. If it goes wrong you blame the consultants. This is not how you do change in a modern organization because instead of three lovely consultants, you want 20,000 people to tell you how to change your organization.

You want to hear from those who are in the very frontline dealing with the clients. The whole mentality to identify and develop that information is very different. You have to discover it fast and then you have to be the guide to lead this change.

We have to predict that the 18-year old Brazilian girl wants such a car design, but then we must be very quick to modify it if she doesn't buy it.

There is no single leader who can make all these conclusions on his own. There is no general wisdom that knows what to do. You have to have the network to find those best talents and grow them to find those issues.

You say employees should speak up. But in many companies you don't get praised for saying something is wrong. You get promoted as a manager by avoiding problems. How do you encourage change in that sort of climate?

If there is not a culture where every single mistake is open, and others learn from it, the whole cycle will not work. I have had a policy in my company that if I find a single case where somebody has hidden a mistake and that has led somebody else to repeat the mistake, I will fire that first person without any discussion.

There is nothing more stupid than to hide an issue that leads to a repetition. It is almost like stealing from the company. These people who say the format and the formality is more important than the content — I don't want to deal with such people. The process doesn't matter. Only the result is relevant. And how you repeat the success.

There are even people who hide a success so that nobody else can benefit from it, so it is not only about hiding failures.

Some companies can be very hierarchical. Is that a management style or a management problem?

Many Russian organizations are very hierarchical, very department oriented and many young talents know that it is not very efficient that everything must go through the boss. It's a slow way to do things. Learning has to go sideways, as I wrote in my book, No Fear Leadership: people must feel they can impact the future of the company despite their lower level in the organization.

This raises a third issue: the skill set. A lot of the manager's time is spent on the bureaucratic function. Of course the manager needs to know the numbers and the processes but the process very rarely makes the profit.

The founder of DreamWorks said leadership is primarily the work of being creative. This is a heavy statement: to say the number one issue is to be creative. If I think of my grandfather who was one of the founders of Nokia, he would turn in his grave because he felt his major function was to manage, to control. But this definition that has nothing to do with leadership.

Isn't that a big leap for some people?

Yes. There are a lot of older leaders who mentally understand this and accept it but because they have been doing 30 years in the business they don't know how to push their young talent to the next level. I think what I say is widely understood but people are weaponless in how to make the change. This MBA program might be a positive way to give you the edge.

Talking about the power vertical, the hierarchy: some people say it is hard to change because the top people in state companies have allegiance to the administration of the federation. What makes them feel secure is that politicians trust them. Is the change going to come form the level below them?

Yes. I call them the digital cowboys, born post Soviet time, or since 1985. I clearly see that the same generation is also taking power in politics.

If you look today at the 20 biggest Russian companies, their leadership teams are younger than anywhere in Europe. Look at the ministries: the deputy minsters are young compared to me and I'm the old guy at 42.

In a hierarchical company there are two ways: either you start sowing small seeds in order to change it gradually or you will explode the whole situation because the company is no longer competitive: there are lots of companies like Nokia phones, Xerox or Kodak that are not what they were five years ago.

These issues apply to politics as much as business: they are the same people, the same generation. They came from the same schools.

Where Russia has a problem, the top line story, is that Russia is lacking tens of thousands of leaders who are able to lead in truly international knowledge businesses.

How do you fill that lack of knowledge?

I talk of production centric and knowledge centric. Oil and gas is definitely production centric but if you are in journalism, accounting, or the games industry, these are knowledge driven. Most of the services sector, even the construction companies are knowledge business because they subcontract the actual building, even Apple is not making phones, it is designing phones.

What is the best way to share business experience?

A corporate universtity is good because it puts education on the agenda. But you should balance it so you get new ideas from totally different regions and companies. In my company, TietoEnator, we educated 400 of our bosses in this way. In my mentoring I talk about my experience but also my disasters while growing a business to a company of 20,000 people.

In Russia for historical reasons there are lot of young leaders who could be super performing on a global scale but they need mentors, experienced people who know how to run truly international businesses. Due to the collapse of the USSR, and the nature of heavy industry in energy and raw materials, there is a shortage of people able to be such mentors.