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. Last Updated: 07/27/2016

Maturing With the Market

An important and inevitable change is occurring in the Russian market, especially in Moscow. It is logical and understandable, but because it is an evolutionary change and not a revolutionary one, it is often not appreciated.

This change is the professionalization of the market. This has led to an increased demand in the labor market for skills and experience that are industry- and function-based and less geographically, or "Russia"-based. Moscow and St. Petersburg, and to lesser extent the rest of Russia, are beginning to offer a recognizable, true and viable "market." This is more true of some sectors of the market, such as the financial and capital markets, and less in others such as oil and gas.

As Russia develops into a true, mature market, it has more to offer to the rest of the world, and therefore international commerce increases. Also, within its borders more and more business is being done. Thus, we are beginning to feel the "truths" of business and commerce having a greater effect.

It is no surprise, then, that as the market begins to acquire a more Western feel and identity, more of the issues and challenges that businesses face in the West become increasingly significant here. This applies to Russian businesses just as it does to Western businesses.

Competition is increasing. The market used to be so large and so difficult to handle that competition was not as big a consideration as pure survival and how to get your product to market, or even how to do simple things like find office space or telephone lines. In today's Russia we are hearing "Our competition is way ahead" or "We lost that contract to our competition" much more than before. Three or four years ago when you would ask, "Which products are in the highest demand in Russia?" the answer was a resounding "All of them."

Now we see the need for traditional market research as the market has developed and has become more segregated and discerning. True, for the next 10 years Russia will be wide open, but less frequently do you hear the Russian market being referred to as the "Wild West."

The savvy executive will not just react to this evolution. In order to prosper and thrive, the challenge to the executive is to be constantly on the edge of the development curve. Over-adaptation to a "Wild West" environment is a danger.

There are very few growing companies that have been here for more than one year whose present management structure is distinguishable from the way it was one, two, or three years ago. Constant assessment of personnel on every level is very important and constant training and professional development is also essential if your company is going to push that economic curve rather than race furiously after it.

It is no surprise that most successful companies here spend a huge portion of their budget on training and development. ABB, McDonald's, Coca-Cola, and other "curve-pushers" associated with excellent results in this market invest in people to be sure that they are not just reacting to the environment.

The need to recognize trends and plan strategically when speaking about management is especially important because the issue is people, who are a most unpredictable lot. Careful planning, personnel development and strategic recruiting are very important. Yes, being flexible and dynamic is a virtue, but not when those words really mean "ad hoc" and "panicked."

For the young professional, it is important to realize that industry or functional knowledge and experience will be increasingly important to employers in Russia. If we assume that the market will, eventually, mature into a market that looks like any other, then we must also assume that the job market will be the same. How many people do you know were hired in Atlanta because they spoke English, understood the American mentality, and knew how to get things done there? The chances are they were not hired just for these reasons.

A few years ago it was much easier for foreigners to land positions of responsibility with a company in Moscow because they spoke Russian, they understood the Russian mentality, and they knew how to get things done here. These qualifications, combined with the fact that they grew up in a market economy, were enough for some positions.

There are markets in which this phenomenon is more noticeable than in others. Take a look at the fastest-developing sector in this market, the capital markets. In a recent conversation with the head of one of the first-tier firms, this idea was reiterated: "The Russian capital markets were basically started by bright young people, but if they were to enter the market today knowing what they knew then, most of them wouldn't make it."

The financial arena is an extreme case because of the fact that there has arguably been more advancement in this sphere than there has been in any other. Another area that is moving forward quickly is the consumer goods industry. There is and always will be room for the commodities type approach to the market, but most large Western consumer goods companies are abandoning this type of strategy, indeed if they ever subscribed to it, and are utilizing a more traditional, brand -sensitive approach. Marketing in the West has advanced almost to the status of a science and Russia and Russians are not so different to the West and Westerners that marketing know-how and skills are not transferable and applicable.

The message to individuals is that in order to move up within an organization, your skills and knowledge must increase at the same rate that the market is developing. If you have ever said to yourself, "I would never have been given this much responsibility in the West," or "Someone with my experience would never be in this position in the West," you are probably right.

If you have been succeeding in that position, then it is probably because you have skills that are specifically applicable to the Russian market. If you do not gain some skills and knowledge that are applicable to a developed market, then as the market develops you will be left behind. It happens every day.

Alan Clack is a Moscow-based partner of Ward Howell International, an executive search firm. The Moscow Times welcomes submissions to Soap Box; please call the Business Desk at 257-3741 or 257-3067.