Part 3. German Khan on Leadership, Business, Apprentices and Himself

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Talent Equity Exclusive: Here’s a question on business environment: How do you explain the success of TNK-BP, a company with anequal share of Russian and international shareholders that many analysts predicted to have an unenviable fate?

German Khan: I see it as being a part of our corporate culture. When I say “we” I am talking about Alfa. It’s hard to give a self-assessment, but we are one of the few groups that have large shares in projects, even shares that reach the fifty-percent mark. Most of these projects are successful in terms of setting up the right partnership and obtaining results. Having the right type of partnership doesn’t necessarily mean that itis warm and fuzzy; partnership involves always supporting the right balance between protecting your interests, understanding the other party’s interests and being able to find a compromise. I believe that we are able to do this better than anyone, at least in Russia. Why? Because, despite there being serious conflicts from time to time, we always act within certain rules and criteria in order to resolve them. As a result we come up with positive design compromises that become solid after local disagreements have been settled, because as they say, what doesn’t kill you makes you stronger. By going through these types of exercises, both the shareholders and management begin to understand each other better and respect each other more. These result in making a partnership more valuable. There is reasonfor the saying “one old friend is better than two new ones.”

Talent Equity Exclusive: How hard was it to put together TNK BP? How do so many different business philosophies of Russian entrepreneurship and the philosophy of a large multinational, public company fit in with millions of shareholders?

German Khan: Of course there have been and are some difficulties, but I wouldn’t overrate them. Working jointly is a dynamic process in the searchfor balance.

There was a time when some Russians were not included in the process because they thought that a big company had hit the scene and they knew how to manage and build everything. We stepped to the side to a certain extent and transferred virtually all key positions to foreigners. Then we just sat back and observed how the mechanisms work. We tried to fix some things by saying that the idea is good but the form isn’t. Everyone in Russia has their own point of view on every issue, and that’s something to keep in mind.

People from BP also need to be given their due, since the majority of them looked over recommendations and reorganized. New specialists replaced those that were unable to change. This, of course, all took place within corporate rules. So that’s how we began to develop a specific management style suitable only for our company, a sort of mix between what has worked in Russia and was inherent to TNK, and what BP has brought in.

Talent Equity Exclusive: Could this process go any faster?

German Khan: It would probably go faster if the company had more people able to make decisions “outside-the-box” for this organization and take greater risks. For example, make a dedicated effort to adapt to life in Russia. Unfortunately, the majority of our colleagues don’t speak Russian, even after working here for several years. Having said that, there are certain people, including executive vice-presidents, who actually want to adapt to Russia, they speak the language and try to understand the Russian way of life.

If people have come here temporarily, they need to be used as engineering advisors and be honest about this. I think this is an issue that can be settled easily with them. There’s a reason they say that if you were to close Russian and American oilers in a room and return three hours later, you would find them having a lively conversation with no language in common other than engineering slang.

Talent Equity Exclusive: Have you learned anything yourself after having worked for 6 years in a multinational company?

German Khan: Absolutely. First, I have learned English to the point that, even though I am not 100% fluent, I can converse with my colleagues without any problems and I find myself using professional interpreters less and less. Second, I have learned what my partners and colleagues are saying and how they think. That doesn’t seem to be difficult, right? Well, here’s an example: A regular conversation is going on with you trying to convince your partner or colleague about something and letting them know your point of view. The partner or colleague, meanwhile, sits in front of you, quietly nodding his head. Since he is nodding his head, one would think that he is in agreement with you. The conversation comes to an end, everyone leaves, and then it turns out he has an entirely different point of view. You ask him, “How? We spent 2 hours on this and you sat there nodding your head and didn’t object!” He then he says, “I was nodding my head to tell you that I hear what you are saying, but I never said that I agree with you.” This is important, because he seems like a straightforward person, but now I know that in the end I have to make sure whether we are in agreement or not. It’s simple, yet important.

Working in such a complex company like ours requires solving many tactical issues. I have learned a lot, become more flexible and more attentive to nuances.

Talent Equity Exclusive: How has your work changed since the economic crisis hit? Has your style, priorities and methods for cooperating with people changed in any way?

German Khan: Neither our style nor cooperation principles have changed.

Talent Equity Exclusive: Have you had to become softer and more spiritual, or more rough and tough?

German Khan: Of course not. Everything is the same. I am no softer or tougher than before.

Talent Equity Exclusive: Have you made any discoveries because of the crisis?

German Khan: We have always preached the philosophy that a bull or relatively stable market is nothing but a time to prepare for a financial crisis. Therefore the economic crisis has not opened our eyes to anything new.

Talent Equity Exclusive: What was your experience in the default of 1998 and all previous financial crises?

German Khan: This experience helped in that we immediately made a decisive action to cut expenses. Take, for example, the fourth quarter of last year, when we made cuts to our philanthropy program, which led to some consequences that forced us to explain ourselves to our respected governors. They, however, understood our actions as being in line with the reality of the situation.

Talent Equity Exclusive: Have you ever had the desire to bring some new blood into the company during crisis times?

German Khan: I think that doing so is needed no matter what the case may be, since we are speaking now of the current situation, whereas we need to think about the future…

Talent Equity Exclusive: In other words, the economic crisis has helped you do this a little bit more decisively?

German Khan: The economic crisis is not helping. It is a good reason to do somethings that are at times unpopular that otherwise during more stable times would be difficult to do.

Talent Equity Exclusive: For twenty years now you have worked a lot, been very successful and become one of the most visible Russian businessmen around. How do you keep doing so and continue to grow, rather than just rest on your laurels?

German Khan: It’s all about one’s inner philosophy. I believe that a person is born to create something, which serves as an important driving factor that should keep with them for their entire life. I’ll give you an example that hits close to home. My dad is eighty-four and continues to work. He and my mother had immigrated to the United States, lived there for 10 years and then returned to Moscow, where they have now been for 7 years. After a 10 year hiatus, my dad found a job without my help. He makes inventions that people pay him money for. He flies all around Russia on business, makes some new adjustments, goes to conferences and knows how to use a computer. I ask him: “What exactly do you want? It’s time for you to retire.” To that he says: “you don’t get it. I need to fly to Cherepovets to see some guys who are firing up a stove…” He’s a pretty old guy now with health problems that could just sit home and read the newspaper. When I tell him to go somewhere on vacation, he tells me that he doesn’t want to go anywhere, that he likes it right where he is, doing the job he is doing. There’s nothing more to it than that. That’s his philosophy.

«My main fundamental rule is that I should be able to say to myself that I did the best I could.»

Talent Equity Exclusive: So does that mean you need to do your own job?

German Khan: Yes, you have to love it and be a professional at it. Then you will have a common balance between family, hobbies, friends and partners. I feel comfortable conversing with my partners and enjoy talking with them. I know their strengths, shortfalls and weaknesses, but I like having partners that you can be proud of. I have a magnificent wife and kids and get along well with my parents. I am a happy person, and at the center of it all is my work.

Talent Equity Exclusive: Last question: do you have any fundamental rules that you follow?

German Khan: My main fundamental rule is that no matter what I do, after finishing it, I want to be able to say to myself that I did the best I could. Surely, it doesn’t always work out, since there are many factors that we can not influence. But if I am able to say to myself thatI did everything I was able to, I am at ease with myself. When I start to feel weak and tired, I return to this fundamental rule, which gives me the inner resources to recoup and continue to move in the selected direction. There you have it.

This publication is part of the interview with German Khan from Talent Equity Exclusive "German Khan on Leadership, Business, Apprentices and Himself".

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