TEI: Did you expect the crisis at all? How did you react to it?
Mikhail Fridman: I can say I could see the crisis coming because it started earlier in the West than it did here, so it was clear that somehow Russia would be affected. The extent to which it was affected, though, has exceeded my expectations, as well as those of analysts and other people concerned. Overall, however, since we (Alfa-group) have already seen several crises we reacted to it more or less calmly, without panic. I would say that the approximate plan of action was clear to us straight away: cost reduction, efficiency enhancement, switching to a more conservative policy, trying to foresee possible negative consequences of this crisis in advance and to preempt them with action. To tell the truth, I have not noticed anything radically new in this crisis.
TEI: What helps you and your organization cope with the crisis? Which organizational competencies have proven most vital?
Mikhail Fridman: We are quite a conservative organization in every respect. We have never made excessively risky stakes. For example, we have never overpaid for assets – we have always paid what seemed to us a reasonable price. Basically, we have always bet not on our relationship with the government, but on internal resources. In a crisis, the one who is most mobilized and most prepared to fight is in the best position.
The major element of our business culture is conservatism; this also applies to our corporate governance. The truth is that in the companies where corporate governance is shifted towards individual decision-making, all risks are assessed quite subjectively. Whereas in the companies with a more or less developed corporate structure, a culture of decision-making and different institutes that balance each other, it is possible to avoid excess risks – not always, of course, but as a rule.
I would say that individually any person’s brain is imperfect, but if the right “chain of brains” which oppose each other – in the good sense of this word – is organized, then, asa whole, the power of this collective brain certainly exceeds the power of any individual brain, even a very clever one, even the brain of a near-genius.
TEI: How has your management style changed? Have your priorities changed? What skills do you consider most important at this time? What’s missing?
Mikhail Fridman: The managers who are used to relying on their own opinion and their own capabilities are the ones who win. The model in which the manager executes the orders of a boss is no longer relevant in a crisis. There are too many nuances, too many details that you cannot take into account, if you are far from the process. The closer a person is to the process and the more developed is their skill of making independent decisions, the more effective they will be in times of crisis. By the way, I believe our corporate culture supports this kind of people even in affluent times.
TEI: What did you have to sacrifice in this crisis? What have you learned? Has your idea of what a CEO should be like changed?
Mikhail Fridman: The organization has sacrificed some of its assets, just like the market did, but we could not change that. We are certainly going to suffer some financial losses – in the bank, elsewhere… This is a fact. My personal sacrifice was a trip to India that I had to cancel due to some difficulties that required my attention in Moscow.
«...individually any person’s brain is imperfect, but if the right ‘chain of brains’ which oppose each other – in the good sense of this word – is organized, then, as a whole, the power of this collective brain certainly exceeds the power of any individual brain»
I would not say I have learned anything particularly new, to be honest. I would say the following: my ideas – not only mine, but also our corporate ideas – about life as such, about business, about the proper management structure of a company, about the structure of human relations, about delegation of responsibilities – have by and large proven true. Therefore, we were helped by what we had done before. I guess we had the right idea of how the world is organized. It is difficult to operate without such an idea in the crisis – or even without a crisis… In times of growth, even a fool can manage – even if he has an absolutely misguided picture of the world. Whereas when everything is falling down, only those who see life more clearly remain afloat. That's all there is!
As far as the CEO is concerned, I only became more confident in my idea of what he should be like. He must be a true leader of the organization, not a singlehanded leader, but a team-playing leader; a leader who does not only subordinate others, but who can also comply with collective decisions, if needed.