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July 2007 Newsletters Archive
Welcome to the July issue of GidaScope!
This issue will cover developments in Russian Web 2.0 and mobile content areas, and share some useful tips for your business from some top Russian military generals.
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Russian Web 2.0 vs. Russian WAP: Two Different Worlds or One Game?
“What the Web 2.0 Revolution is really delivering is superficial observations of the world around us rather than shrill analysis,” says Andrew Keen, the author of “The Cult of the Amateur” (www.thecultoftheamateur.com), the latest anti-Web 2.0 bestseller. Keen notes that the “information business is being transferred in the Internet to the sheer noise of a hundred million bloggers simultaneously talking about themselves.” The book, which lambasts Web 2.0 as amateurish and inferior to the professional media, exploded the blogger’s universe. Accused by infuriated blogger-gurus of being biased and blind to the world’s technology and communication evolution, Keen himself, as well as his creation, was virtually lynched by thousands and thousands of comments and posts.
Whether you are pro-Keen or anti-Keen on this topic, one thing is pretty clear to me: the Web 2.0 phenomenon should not be taken lightly. Is it really an irresponsible and amateurish world of mediocrity? I think it is much more complex than that. If we look around, we see that experts and industry professionals are spilling their Wiki-wisdom to the Web 2.0 arena, providing credible and useful content to millions of users for free. At the same time, amateurs, comics, losers, maniacal depressive philosophers and clowns are entertaining those who want to dig into their dark and funny world.
This new techno-circus has anything and everything for us. But after all, it is addictive. Once someone’s started, they’ll never stop enjoying their freshly felt WWW voyeurism. Moreover, we Russians, long deprived from the ability to freely share our thoughts, like to blog. And it shows in the explosive 74% growth of the Russian bloggosphere. To learn more about being Russian, what’s hot in the Russian blogs and why Russians madly blog at LiveJournal.ru, read more here.
In parallel with the Web universe the Russian mobile world is emerging fast. In 2006 the Russian value-added services (VAS) market developed steadily, and continued its growth in 1Q 2007, reaching USD 615 million, a 34% year-on-year growth, reported ComNews Research. All three major players of the VAS market, operators, content providers (CP) and aggregators, as well as subscribers are growing with it. Major Russian mobile operators introduced more aggressive and assertive policies in the VAS scene, launching new WAP-portals and services and severely reducing the number of content partners. The VAS share in operators’ overall revenue structure reached 14% in 1Q 2007.
Yet the mobile content market slowed its tempo. From the 43% growth in 2006, ComNews Research forecasts that it will only grow 16% this year to about USD 520 million. The revenues from customization services and ringtones are steadily falling. Media advertisement rates are increasing, and cheaper Internet downloads create strong competition to mobile content providers. Facing these challenges, last year major CPs honed their skills in providing IVR and RBT services, pushing for more video content, mobile games and community services. Nevertheless, fierce competition, falling rates and stricter policy by operators towards CPs resulted in further market consolidation. Read more about real drivers of Russian mobile content, WAP preferences and mobile games here.
Finally, I’m glad to inform you that my book Riding the Russian Technology Boom: A Guide to Success in Business and Partnerships with Russian Telecom and IT Companies will be available this month at www.futuretext.com. Dr. Polishuk, President of Information Gatekeepers Inc. (www.igigroup.com), called the book “an excellent start for anyone interested in the Russian telecommunication market.” The book has a wealth of information and practical advice on doing business with Russian IT and telecom companies; dozens of interviews with leading telecom and IT players; an overview of the Russian ICT market; and full contact information for more than 100 IT and telecom companies that can be your partners. Read an excerpt from the chapter on useful lessons from the Russian military history here.
As always, your feedback is welcome! Enjoy your July issue of GidaScope!
Sincerely,
Andrey Gidaspov
Editor-in-Chief
Table of Contents
1. Russian Web 2.0 -- 'Pravda' of the RUNET
2. "Naked Truth" of the Russian Mobile Content
3. "The Science of Winning: Lessons from Russian Military History"
Russian Web 2.0 – ‘Pravda’ of the RUNET
I was a lucky kid. Since I was seven, I waited with great anticipation for lunch time, when my mother, who worked at a large publishing house, would bring a freshly printed pack of Soviet newspapers, like “Izvestiya,” “Pravda,” “Trud,” “Komsomolskaya Pravda,” “Krasnaya Zvezda,” “Sovetsky Sport,” all in all, up to 10+ newspapers. There was nothing more pleasant than to chomp on a juicy apple and read all the latest news in one pack! I even used to fight with my older brother over who will get “Sovetsky Sport” and “Komsomolskaya Pravda” first.
Despite the abundance of styles, from the stiff and official “Pravda” to the more relaxed and youthful “Komsomolskaya Pravda”, the opinions expressed were trimmed to the rules of the reigning Soviet propaganda machine. Only after the genie of glasnost came out of Gorbachev’s bottle, I saw some unusually critical articles in the Soviet press. Even then, people still could not really speak up or relate their opinions to particular events, except discussing it with friends or relatives in their tiny kitchens, where people could discuss anything and everything at small kitchen tables with the help of vodka and pickles…
Alas, in the early Yeltsin era, the newly minted democratic Russian media developed in a motley crew of yellow press, scandals and soap operas. Often it was hard to sift through this flow and find some real pearls of genuine truth and compelling critic. In the late 90’s, the Internet gave birth to the blogging universe, and it quickly gained popularity from mass users, journalists, politicians and critics, creating a gigantic Russian salad of opinions and philosophies never tasted before.
Today Russian blogging services are on their way up. The latest research by Yandex, the Russian search engine No. 1, showed that the two most popular services in the Russian Internet (RUNET) are LiveJournal’s Russian language community (RULJ) and LiveInternet (LI). On June 6, 2007, the RULJ proudly recorded 1 million registered users and blogs. Yet the long-standing #2 blogging site LI is rapidly reaching its main rival, RULJ, in terms of new blogs and everyday notes.
However, the gap is still wide: LI has 170,000 daily visitors, while there are 600,000 visitors at RULJ. LI’s General Director German Klimenko said to CNews that the number of active blogs at LI will exceed LJ by the end of 2007. Yandex research indicates that the overall growth of the Russian blogging sphere is 74% (41% worldwide), however the total number of Russian blogs account for only 3% of worldwide blogs. Analysts believe that by 2008 there will be at least 10 million blogs in the Russian part of the global blogosphere.
Let’s make a quick comparison between LI and RULJ. Once you check or register to both, one thing becomes clear immediately: RULJ is definitely more mature and garners an older audience. LI, boasting a kaleidoscope of services, is crafted for teenagers and young adults. Naturally, LI’s audience is growing faster than that of RULJ. After all, kids are craving for company and socializing. The big difference is in the quality of content and blogs, where at LI bored teenagers spill out their fresh half-thoughts and desires, while the good ol’ RULJ crowd is much more content with serious topics and informative content. There is a great number of really interesting blogs and boards at RULJ. Nevertheless, both blog arenas cover well for their type of audiences.
Depressed Russians and Football Widows
Well, yes, when you are entering the Moscow Sheremetyevo Airport, the first Russians who you see are not smiling and look pretty gloomy. But actually associating Russians with depression – that sounds funny to me. Little did I know that a new term “a Russian” means just that! Here is what one RULJ user, http://mi3ch.livejournal.com/1131649.html, offered to discuss to the Russian blogging community. Under the topic “presenteeism” this user shared newly coined English language terms that hadn’t yet come to Russia. These are the first three words:
“mac nazi” - people crazy about Apple Macintosh products
”football widow” - a woman who believes her husband is dead during football matches
”a russian” - a person who is constantly in depression and sees the world in black
And there is much more of this new language in there.
Now, how about checking the most popular blogs in Russia? Yandex regularly publishes its own rating of RUNET’s blogs at: http://Blogs.yandex.ru/top. As of July 3, 2007, there were 2,189,160 blogs rated on the Yandex system.
For example, the top-4 blogs in the Russian Internet on July 4, 2007, included:
1) www.Ajdnevnik.ru – Alexander Jdanov and pictures of the “Star Factory” – popular music show
2) http://drugoi.livejournal.ru – “an illustrated magazine about everything in the world”
3) http://lleo.aha.ru/dnevnik/whatis -- Blog of Leonid Kaganov, Russian writer
4) http://aqua_snezhok.livejournal.com – mainly various photos of glamour, animals, people and fashion
Blogger Services Rating by Yandex, July 3, 2007
LiveInternet 51,823 records
LiveJournal 48,439
Diary.ru 18,609
Blogs.Mail.Ru 12,289
Love ♥ Planet 7,935
Planeta.Rambler.ru 2,875
Beon.ru 2,398
Jamango 2,129
Search in blogs by Yandex, July 3, 2007
Steve Bloom
Transformerms of the game
torent
Timothy and Sobchak
Harry Potter
On July 3, 2007, some popular categories included (most popular are in caps letters): Anime, CRAP, spring, VIDEO, questions, children, DIARY, friends, Eurovision, LJ, life, games, interesting, Internet, history, pictures, cinema, books, culture, private, lytdybr or ksnls,h, love, people, my thoughts, my life, MUSIC, thoughts, thoughts aloud, mood, news about life, about me, rest, positive, POLITICS, pranks, nature, psychology, travel, job, pondering, various, dreams, events, sport, links, poems, tv, creativity, tests, films, PHOTO, football, hockey, school, humor, me, me and my friends.
Copycats Lure Millions of Users
However large RULJ and LI communities are, luckily there is much more that you can find in the Russian blogosphere. Ever wondered what the Russian copies of the famous Western blog sites have been? Here you are: MoiKrug.ru is a local version of LinkedIn.com; Odnoklassniki.ru – Classmates.com; Fakultet.ru, VKontakte.ru -- FaceBook.com; Habrahabr.ru – Digg.com; Privet.ru (Comby) – MySpace.com. MoiKrug focuses on professional community. Odnoklassniki are looking for lost contacts, mainly from their high schools. VKontakte and Fakultet are oriented towards students. While the copycats of the “One Million Dollar Site” that secured a real million to its British owner did not spark with the skeptical Russian web-community, social networks quickly went berserk.
The latest hit of the Russian Web 2.0 is VKontakte. Recently Alexa (www.alexa.com), a leading Web Statistic Portal, placed VKontakte as the Top-4 Russian site, right after such giants as Mail.ru, Yandex and Rambler. Users praise the site for easy-to-use design and many features similar to Facebook. For example, recently VKontakte announced video, allowing users to add videos to their pages. The site also allows you to search by job contact, Friends, and remind you of your friends’ birthdays. According to VKontakte statistics, some 12,000 people register on this site daily.
Created in 2006, Habrahabr.ru, an analog of Dig.com, became successful almost immediately. Habrahabr’s audience include people interested in the Web development and Internet economy, web-designers, programmers, journalists, analysts and various businesses interested in the Internet. The project allows its users to add blogs, write articles, paste news and create personal audio and video programs. In 2007 Habrahabr gained the Project of the Year 2007 and Best Internet Community Awards.
Apart from these sites that help to find friends and provide socializing platform, there are a few interesting projects covering various social needs. For example, according to Habrahabr, recently E-Generator.ru supported by FINAM holding, launched DrugMe.ru (note that in Russian drug literally means “a friend”), a social site for people with various illnesses interested in socializing with each other, finding better drugs and doctors, recommending good clinics, etc. Among the services which differ from RULJ, a sick person can search among users with the same diagnosis and leave a reference about a particular doctor and hospital, and many other things. By the end of 2007, the site hopes to get at least one million users. And its main promotion strategy will be using virus marketing via the satisfied pool of first users, supplemented by catchy medical news and success stories.
Education is another sphere that is destined to be Web-two-oed. As an example, in 2006 Intel and TransTelecom jointly launched a Web 2.0 project for Russian teachers. The Letopisi.ru project aimed at educating teachers in using Web 2.0 principles to create a platform for collective educational projects. Letopisi.ru helped many Russian teachers involve their students in group projects.
Show Me the Money: ‘Cherchez La Femme’ a la Russ
So, where is the money? Mamba.ru President, Nikita Sherman, said that some 15 million people use internet dating sites. And this market is growing 70% to 100% annually. Thus, in 2006 web-dating site owners harvested USD 34 million of profits. According to iKS-Consulting, 52% of these audience are men with higher education and business owners. Yes, for a chance to find your Cinderella/Jolie or a Super/Spiderman, Russian men and women don’t mind spending their hard earned rubles.
Yet Web 2.0 site owners also search for the “green” light in the end of Web tunnel. Given that you created a unique, popular and useful site, the easiest way is selling your start-up business and merging with large Russian Web cash cows. That’s what MoiKrug.ru and Damochka.ru did, selling their businesses to Yandex and Rambler respectively. However, top managers of Fakultet.ru chose a different way to monetize their business. According to CNews, Fakultet literally offered each of its users their share in the project, making their subscribers shareholders. This August the company will issue one million shares (1% of Charter Capital) and distribute among its users. The company owners are trying to both monetize their business and engage their customers in this business. Finally, other businesses, like DrugMe, are looking for sponsors and advertisement.
One way or another, Russian Web 2.0 is evolving into a very creative and living organism that brings people together and offers great business opportunities to bright entrepreneurs and programmers. So, are you feeling Russian now?
"Naked Truth" of the Russian Mobile Content
Next year I will be 37. Believe it or not, time is flying with ever increasing speed, while my universe is getting more and more condensed. Television attacks with news, sports and soap operas; billboards test your testosterone and adrenaline daily; Web is everywhere on my computer screen; and smartphones, PDAs and iPhone-hypnosis dominate the wireless air. I virtually cannot talk to a stranger today, as everyone has ear plugs and blank expressions on their faces.
What I see is a huge gap between me and those in their 20’s. A couple of years ago, I used to work with one of the largest Russian mobile content aggregators, and I was struck by that “black hole,” my lack of understanding with this young, hip (almost teenage) crowd.
Mobile games, drinks, ‘chicks’, obscene content and lots of music, that’s the Don Quixote set of the modern youth. Call it the third or fourth generation of communication, but the truth is -- this type of communication just leads to nowhere. Today, 60% of young Russian souls in their upper teens to 20s choose WAP as the mode of entertainment and cool time, according to WAPSTART research. Sadly, the most popular content in that brightly lit corner of the mobile universe contains porn, erotic and obscene jokes and games.
Who are to blame for this? Users, CPs or operators? Users, especially if they are young and immature, will always want to quench their thirst of curiosity and interest in forbidden fruit. All you need is to show them an “R-rated” sign. Do CPs and operators realize that? Of course they do. Major content providers are staffed by solid professionals, talented programmers, web-designers and computer specialists. These bright and mostly intelligent people are united by their enthusiasm to make interesting and appealing content. Each company has its own pool of top talents and great products. “Listen, if these guys choose to watch this type of content, it’s ultimately their choice. We do a lot of other stuff, but this is just an easy sell. Why not use it?” – confessed to me a representative of a major CP.
And this, unfortunately, quickly became the trend: last year most of the major Russian CPs boasted their own XXX-portals to get that “easy kill”. IVR, mobile games, pictures, you name it, everything was filled with the flashy flesh. Eventually, some of the large CPs were fined by the government for going overboard with ubiquitous ads for this sort of content in teenager and youngster magazines. Many argue that every new technological breakthrough went through that stage: VHS videocassettes, CDs and DVDs, all passed through the “naked test.” Later on, good movies filled the mainstream. Nevertheless, I am confident that had the major CPs and operators joined their efforts in making a clear policy on filtering content, things would be different.
Next year might be different, though. Pressed by the Internet competition, and growing government efforts towards blocking the incessant flood of crappy content, Russian CPs will lose some “easy money” and have to rely on what they should be best at – good content and true value-added services that are there to help people.
The Russian VAS Market in 2006-2007
In parallel with the Web universe the Russian mobile world is emerging fast. In 2006 the Russian value-added services (VAS) market developed steadily, and continued its growth in 1Q 2007, reaching USD 615 million, a 34% year-on-year growth, reported ComNews Research. All three major players of the VAS market, operators, content providers (CP) and aggregators, as well as subscribers are growing with it. Major Russian mobile operators introduced more aggressive and assertive policies in the VAS scene, launching new WAP-portals and services and severely reducing the number of content partners. The VAS share in operators’ overall revenue structure reached 14% in 1Q 2007. With the launch of the first 3G networks in 2007-2008, Russian operators will only increase their content offering. Consolidation and stricter policy by operators cut the number of core content providers to 80-100 companies. Last year CPs honed their skills in providing IVR and RBT services, pushing for more video content, mobile games and community services.
Major CPs pushed for better quality content offering, introduction of new products and global market expansion. Today the winning formula of the Russian VAS market is ensuring content quality and diversification of products and services. IVR, SMS-based TV lotteries, RBT and mobile games starred in the most popular and successful content services section. IVR services caught the “Lady Luck” of revenues in 2006. Furthermore, continuous WAP penetration growth, mobile community services and user-generated content all promised that this year will be positive.
However, the otherwise resurgent market has its pinch of salt. Piracy is on the rise, while low content quality and SMS-spam remained a significant obstacle to the market’s faster development. Finally, remaining high WAP-traffic rates and operators’ high revenue shares serve as the additional burden to the market evolution.
What’s the Name of the Game?
Pavel Roitberg, Head of Department of Products and Services, MTS, noted at the last Mobile Content Forum held in Moscow in June 2007 that “we have changed the rules of the game.” While before MTS, the largest Russian mobile operator, had 250-300 content partners, the analysis showed that 70% of all revenues come from 15 major partners, 20% from 20 CPs and 10% from 35 partners. As a result, MTS ceased contracts with ineffective partners, thus cutting their overall partner number to about 100 companies. And this is pretty much the same situation for its rivals, VimpelCom and MegaFon.
Low quality of content, as well as an abundance of fraudulent offers, diminished subscribers’ trust in CPs and resulted in a sharp fall of content sales in 2005. Learning from that negative experience, major operators and content providers rushed to ensure the better quality of mobile content. For example, MTS created a content quality control program making its partners directly responsible for the content quality. At the same time, major Russian CPs created an association to control mobile content offerings.
In 2006 the sales of “heavy” and expensive content grew further, as subscribers got more familiar with video, games, software applications and full mp3 tracks. Subscribers’ purchasing power in major urban areas increased, and they are satisfied paying more money for ‘heavy” content. A noticeable trend of 2006 is the resurgence of operators’ activities in the VAS niche. Several Russian mobile operators created and promoted their own portals, and took part in joint promotion with some largest content providers. Moreover, operators launched new billing methods, such as WAP-tariff: MT-charge and WAP-click.
WAP Nets Grow Further
iKS-Consulting estimated an average monthly WAP-audience in Russia at 14 million users. An average user is male (65%) in the 17-23 age group (60%), says WAPStart research. The highest growth rates for new subscribers are in the outlying regions. 71% of subscribers browse WAP via pre-installed mobile browsers. In April 2006, there were over 80,000 Cyrillic WAP-sites. However, only about 20 WAP-sites have large daily audience.
Below is the TOP-5 of WAP-searches in May 2007:
1. Porno – 42.00%
2. Free Stuff -- 29.49%
3. Software (ICQ, jimm, Opera, AV Programs) – 7.23%
4. Gays – 2.75%
5. Mail.ru – 2.65%
Source: poisk.wapstart.ru
MTS has been among the most active mobile operators developing the VAS niche. It launched a new well-designed WAP-portal and streamlined its cooperation with content providers, facilitating the content aggregation market. MTS’ direct competitor and Russia’s number 2 operator, VimpelCom (“BeeLine”), started successful voice-CPA and WAP-CPA programs.
In 2006 major mobile content providers significantly diversified their services and continued their expansion to the neighboring CIS market, as well as globally, such as INFON (Belarus), InformMobil (Tajikistan, Georgia and Kazakhstan), i-Free (Brazil and India) and PlayFon (South Africa, Germany, Latvia, Lithuania, Estonia). Other content providers, such as A1 and Interactivi honed their skills in mobile marketing and intellectual branded services. For example, A1 actively enhanced major FMCG brands in Russia and launched its new Java-based mobile community services “Ogloblya.” Similarly, Interactivi reported that during 2006 the company worked with some 1 million subscribers in Russia and organized over 60 successful promotional activities.
There were changes in promotion strategies as well. Many CPs admitted that TV advertisement efficiency is diminishing, while prices for placing an ad are skyrocketing. As a result, many CPs shifted their advertisement budgets to the WAP area and B2B partnership development. Yet some CPs still rely on TV advertising, for example, Nikita Mobile was on the 13th place in the TOP-100 major advertisers list in 2006.
Bumpy Road
Despite the steady growth of the mobile content market, several challenges remained unresolved. One of the most widespread was the lack of creative content and services. Overall, low content quality and a lack of education among subscribers significantly decreased faster market take-up. For example, low quality SMS-based TV contests undermined subscribers’ trust: in many cases subscribers received a great amount of SMS-spam. Furthermore, many market analysts noted that mobile operators’ revenue share was too high, and that resulted in an increase of the content price. In addition, high WAP-traffic costs added to the burden of increasingly expensive “heavy” content to mobile subscribers.
All About XXX: Mobile Games Sales Set to Grow
Some 15 million copies of mobile games were sold in 2006, estimated Playmobile. Mobile games are perceived by many market analysts and players as being among the future revenue generating giants. The adult and brand games generated the most profits, and will remain popular in 2007, said DDM in its mobile game research. Erotic games generated almost 50% of revenues, while brand games accounted for 20%-40% of revenues followed by casual games. Among other potentially interesting products are multiple player games, advertisement games and PC-title games.
TOP-3 mobile game developers:
QPlaze-RME
Shamrock Games
Herocraft
TOP-3 Russian mobile game publishers:
QPlaze-RME
Mobile Content Factory
Herocraft
TOP-5 Russian mobile game distributors:
PlayFon
Infon
Iricom
Nikita
Playmobile
Mobile games -- core sectors:
Casual games
Brand games
Adult games
Source: DDM, #1 2007
Dynamic VAS Quarter
In the first quarter of 2007 the market continued its dynamic growth. According to ComNews Research, during this period Russian VAS market totaled USD 615 million, which is a 3% increase over 4Q 2006, and 34% year-on-year growth. The VAS share in operators’ overall revenue structure reached 14%.
ComNews Research emphasized the growing popularity of WAP services, as well as continuous growth of prices for the end users. The two sides blamed each other for the increase in price: operators think that the problem lies in the inability of CPs to produce meaningful and quality content, while CPs believe that operators have oversized revenue share.
20% of operators’ revenues came from the VAS segment. The whole structure of VAS revenues (gross) was as follows:
Base services – 6% (USD 36 million)
Content – 20% (USD 124 million)
M-Internet – 20% (USD 123 million)
Messaging – 54% (USD 332 million)
Source: ComNews Research
In 1Q 2007, mobile Internet brought some USD 123 million to operators, almost matching mobile content revenues (USD124 million). The main trends of 1Q 2007 are practically similar to the ones in 1Q 2006. Revenues from customization services are falling, while IVR and RBT continue to be on-demand. Other fresh segments are community services and m-commerce. Thus, i-Free reported of successful launch of its Jamango, a mobile community portal, in a number of global markets, like India and Singapore. Other trends include, mobile phone customization at the production stage and popularity of SMS-based contest technology.
Yet, content operators can no longer ignore the new trend: active promotion of operators’ own portals. Their sales significantly increased to almost 35%. Average revenue share structure between CP and operator in 1Q 2007 was 61% and 39% respectively, said ComNews Research.
Mobile content revenue structure:
Customization – 34%
M-Commerce – 3%
Games – 14%
Infotainment – 16%
Chat/Community – 9%
M-Marketing – 6%
Media Projects – 18%
Off-portal sales prevailed over portal, with 65% and 35% share of the market, respectively.
Source: ComNews Research
How does the future look? According to Playmobile, the growth of brand and erotic games sales will continue in 2007. The company estimated that some 25 million copies will be sold this year. Multiple role player games and PC-titles games will increase. Yet, ComNews Research predicts that in 2007 the mobile content market will grow only 16% and reach USD 520 million. To sustain their revenues, CPs will have to think of diversification of their business, moving towards corporate business areas.
“The Science of Winning: Lessons from Russian Military History”
Excerpt from Riding the Russian Technology Boom: A Guide to Success in Business and Partnerships with Russian Telecom and IT Companies by Andrey Gidaspov available late July 2007 at www.futuretext.com and www.amazon.com.
Nowadays it is trendy to compare doing business with military strategy: from Sun Tzu to Klausewitz, the book world has lately seen a wave of titles dedicated to the works and teachings of talented military men of the past. While I don’t think that doing business in Russia is exactly akin to a battle, there are still some lessons a foreign investor can pull from Russian military strategy to better understand his/her partners and find success in his ventures on Russian soil.
In Russian military history there are two men, who stand out for their successful strategies. They are Generalissimo Alexander Suvorov, who miraculously saved his troops by leading them through a snowy Alpine pass in late 18th century, and field marshal Mikhail Kutuzov, who saved Russia from Napoleon by most controversial means. While both men were talented Russian generals of their time, the two used information differently and followed very different strategies.
Suvorov is known for his surprise attacks and refusal to allow his troops to retreat. Feeble and fragile from birth, he trained his body and mind by hardships of the soldier’s life. He became known for his spirit, strong will and comprehensive knowledge of military science. However, Suvorov left conventional knowledge in the dust by again and again breaking all the rules – and winning. He fought on behalf of Catherine the Great, beating the Turkish Army in the Russo-Turkish wars and winning against the Prussian army.
In 1799, Suvorov was called out of retirement by Emperor Paul I to lead the Russian and Austrian armies in coming to the aid of Italy when French troops invaded. When he found himself in an Alpine valley surrounded by enemy troops on all sides, he did not do the expected and surrender in proper fashion. Rather, he turned on his heels and led his small contingent of men up through a snowy and treacherous mountain pass, complete with their cannons, horses and armaments. Not only did he save his embattled army, but he was also able to inflict serious blows to the French troops attacking them from above. Upon his descent from the Alps, Italians proclaimed him their new hero.
Suvorov put his principles on paper in his book, “The Science of Winning,” among them:
“To surprise is to win.”
“Fire rarely but rightly.”
“Win not by quantity, but mastery.”
In contrast, Kutuzov won the war with Napoleon by allowing the enemy to take Moscow and retreating to the depth of Russia where the harsh Russian winter and partisan war aided him to a crushing victory. He faced enormous pressure with Napoleon’s army sitting on his doorstep right outside of the capital. He had just lost thousands of soldiers in the devastating draw at Borodino and he thought engaging Napoleon again would risk the rest of the Russian army and the nation. Thus he made the boldest move imaginable: he sacrificed the jewel, Moscow. Its citizens burned down their own city in advance of Napoleon’s entry, and Napoleon was forced to continue on in pursuit of the Russian army as winter fell. Cash-strapped, outnumbered, and out-armed, Kutuzov used his creativity and the most basic of resources: the Russian winter. Napoleon eventually retreated after losing his army and Kutuzov returned a hero.
You will find some of these principles reflected in how Russians act in the business world. Often they are impulsive and trust their instincts. They will surprise you by going for a long-shot business deal on a hunch, and against all odds, actually making it work. They might sacrifice the one aspect of the company they’d said all along was essential, in order to pursue another venture. Strapped by limited resources, they might find an out-of-the-box shoestring solution that’s better than the most elaborate one Western money could buy. Just as Russian nature went against conventional, conservative Western European-dominated military science in the 18th century, it will also at times be contrary to the sensibilities of Western businesspeople. I would encourage you to pause before leaping to shake sense into your Russian partner when he proposes something you weren’t prepared for. You might have struck a goldmine: you might just be working with a Suvorov or a Kutuzov.
Some useful principles from military strategy:
-- You should only pick targets that make sense for your capacity. Try to differentiate real possibilities from wishful thinking. Be confident and rely on your team of experts.
-- Always keep your focus on your target. When in process, zoom in and out to see how far you are from your aim. Diversify your strategy.
-- Put yourself in your competition’s shoes, try to predict their actions.
-- Choose a direction from which you can simultaneously reach several goals.
“Chto Delat?”
While each idea might seem universal, every country needs its own patch (yes, just like Windows.) For Russia you must be inventive, creative and pragmatic.
-- You can be Suvorov and Kutuzov within one project’s life time. Know when to rapid-attack and when to procrastinate – then even your Russian Alps retreat (losing a tender to a Chinese competitor) will be a glorious win-win (paving the way to another account by getting to know your Russian client better).
-- Don’t be afraid of Borodino (being stuck in a resource-draining holding pattern while awaiting a government decision). Just take your chicken soup and ponder the problem in silence. Napoleon (most hated bureaucrat) has just lost his capacity to charge effectively, and understands that you are a patient counterpart. In the meantime find your leverage (another government official who understands your problem; meet with that nice Trade Attaché or AmCham member who agreed to see you for a cup of coffee).
-- Use your knowledge of Russian behavioral traits for your business and personal success: don’t operate in the individualistic, competition ridden and rigid molecular planning mode of the West. Open up to the new reality – Russia thinks differently. Your MBA will help you to identify the areas that need to be fixed, and your professional knowledge and growing experience with Russian creativity will help you to fix them. Good luck!
© Andrey Gidaspov, 2007
More about this book at: www.russiantechboom.com and www.russia.futuretext.com
