Dr. Vitaly Nishanov, Professor, University of Washington’s Foster School of Business
How does one successfully conduct business in Russia? How does one engage in negotiations with Russians? Is there a secret that allows one to understand the “mysterious Russian soul?” I must remark that quite a few works on the topic have been published in the US in recent years.
Some of these publications have focused on economic analysis of Russia’s transitional period. This kind of analysis is quite useful for resolving issues of investment and determining attractive businesses and industries for that purpose. In practice, however, the distance between making a decision concerning a potential project and bringing it to fruition is very long, including the negotiations with potential Russian partners.
By no coincidence, a second set of publications concentrate on Russian social and cultural traditions. These pay special attention to the general corruption of government bureaucrats and the tradition of making serious decisions in an informal setting, over dinner with a large number of alcoholic beverages. The practical advice, as a rule, is brought down to not needing to pay bribes or compete with the Russians in the volume of vodka drunk. This advice is entirely correct, but it does not ensure success, since the authors do not demonstrate how negotiations and deal-making really should be done.
A third group of publications has appeared, focused on a better understanding of Russian partners. As a rule, these are based on the popular system of classifications developed by Dutch social psychologist Geert Hofstede. According to his approach, it is theoretically possible to understand and predict the behavior of people from various countries and cultures. So, under Hofstede’s system of classifications, Russian businesspeople ought to be collectivists, making decisions only after collective discussion. They should care about the interests of others, value good mutual relations and their partners’ cultural values, and avoid situations of uncertainty. How far all of that is from reality! Thus, recommendations based on Hofstede’s system not only fail to work in Russia, they lead negotiators into misapprehension. On the whole, it turns out, those who know how to successfully do business in Russia are already doing it. Those who don’t know how it is done write books and give readers questionable advice.
In my view, Lev Lester’s book, How Business Is Done in Russia, is unique.
First of all, it is written by a practitioner, a businessman with twenty-five years of experience in the Russian market. Not only did he work as a consultant but as vice-president of a major American company to complete projects in Russia. Later on, Lev Lester worked with German companies, helping them and their Russian partners find mutually beneficial ways to cooperate.
Secondly, as an academic economist who lived much of his life in the Soviet Union, the author analyzes Russia’s social and political situation on the basis of personal experience. He shows the process of transition from Soviet socialism with its absolute control, to modern Russian capitalism with its absolute corruption.
Finally, the book has a special section of “Case Studies.” These brilliantly illustrate the peculiarities of Russian life that the author describes, the corruption of government structures and, most importantly, the author’s recommendations for how to do business.
It should be obvious that, without understanding your business partners’ system of values, it is impossible to predict their behavior and potential reaction to business proposals. That is why, in the first portion of his book, Lev Lester shows the evolution of Russians’ system of values, formed over the course of the 70-year Soviet government and, subsequently, the period of transition from socialism to capitalism after the fall of the USSR. In concise form, the author analyzes the dramatic process of establishing doublethink and warping the moral guideposts of Soviet people. This occurred as a result of Communist ideological dictatorship, alongside the repressions, the censorship, the denunciations, the absolute shortages, the system of cronyism and other basic elements of socialism.
The collapse of the USSR in 1991 showed that its 70-year path had led to a dead end. Instead of building communism, the time inevitably came for capitalist construction. The first stage of the transitional period came as a shock to the majority of citizens, less due to unfixed prices and the appearance of goods in stores than due to freedom of speech, freedom of enterprise and freedom of choice. Many people began to believe in the future of the country, and there was enthusiasm for opening private businesses. But it happened in such a way that the most successful “entrepreneurs” were former Communist leaders and members of organized crime, who were able to privatize natural resources, banks and major businesses. Once Vladimir Putin was appointed president, Russia’s true power and wealth went into the hands of the security agencies and secret police. That is where it has stayed for the past 18 years.
Suddenly, the most profitable “business” in the country became any work in government with the possibility of running a budget. In the second part of the book, Lev Lester demonstrates how new forms of corruption work in the country, where there has been cooperation between Mafiosi and government officials. Curiously, the former employees of security agencies now in power have not disrupted this cooperation. They have found it advantageous, allowing them to resolve delicate problems of seizing profitable businesses or eliminating competitors, along with journalists and members of the opposition. Precisely this situation has come up in modern Russia.
I must note that at a certain point while reading this book, I developed the impression that the author would soon make the logical conclusion that, due to the endemic corruption of government officials, the criminal situation and the unreliability of Russian partners, at present it is not worth doing business in Russia.
However, in the third part of the book, Lev Lester shows that it isn’t all so bad. He shares his experience of working with Russian businesses and explains how he managed to secure long-term, mutually beneficial contracts. In numerous specific examples, he convincingly demonstrates that it is possible to work successfully in Russia without bribery or undue risk.
In this section of his book, Lev Lester describes his experience of resolving the most difficult issues of preparing for contract bidding, conducting business negotiations and finding mutually-beneficial compromises in Russia. Indeed, he is sharing the secrets of a master craftsman which have allowed him to achieve success even in the most desperate situations. Of particular value is the author’s analysis of the good and mistaken decisions made by himself and his partners. This self-reflection helps the reader to develop strategic thinking. With the author’s permission, I am planning to include some of these case studies in my Strategic Management course at the University of Washington. I’m confident that the Lester’s Case Studies may be taken as the guidebook to business negotiations.
It will be especially important for American business people to learn the key factors that influence management decisions among Russian counterparts and government bureaucrats. I’m sure it will be useful as well for modern Russians to see themselves from the other side and better understand the ongoing situation in society.
I believe that Lev Lester’s book serves as a practical strategic guide for conducting business negotiations not only in Russia, but with partners around the world. It is in Russia, however, that Lester’s recommendations for doing business with both private and state-controlled companies without being drawn into corrupt schemes are of particular value.
Such a serious and in-depth book about the secrets of doing business and conducting negotiations in Russia has never before been published in the US.
Sergei Airapetov, Chief Engineer, Arzamas Construction Equipment Plant (KOMMASH), Russia
This book is unique. It’s written by an expert with enormous experience working in Russia who knows what you have to do to win in Russia. The “case studies” play an important role in the book. They brilliantly illustrate the author’s advice on doing business. Lev Lester describes his own experience of resolving the most difficult issues involved with participating in Russian contract bids, conducting business negotiations and searching for mutually beneficial compromises. A master of his craft, he shares the secrets that have allowed him to achieve success even in the most hopeless situations. He shows convincingly that it is possible to work successfully in Russia without bribes or serious risk. If American businesspeople follow Lev Lester’s advice, they can achieve wonderful results in Russia. There has never been such a deep and serious book about the secrets of doing business and conducting business negotiations in Russia.
Vladimir Shubin, President, TCI, Designer of original staff development methods
Lev Lester is the Master!
He is a striking example of a successful man who has put his talents to use in many areas (scholarship, consulting, teaching and management of prominent industrial companies) across several countries (America, Germany, Russia). Lev Lester has generously shared his acquired knowledge and colossal, unique experience in the book, “How Business Is Done in Russia: Secrets of a Russian-American Executive.” I recommend following the experience and advice of the Master. Its usefulness is obvious!
William Disler, President and CEO, AFC-Holcroft
AFC-Holcroft is a global leader in the design and manufacturing of industrial heat treating equipment. We have been successfully operating for a number of years in many markets, including China, Korea, Brazil, India and Russia. Among these markets, Russia remains one of the most challenging due to cultural differences and complex regulations.
Dr. Lev Lester has been a major contributor to our recent successes in Russia. Lev has demonstrated time and time again his knowledge of the Russian market. We feel fortunate to work with a local American colleague who can coach us through the complications and challenges of dealing with this growing marketplace. He has helped us both locally and within Russia over the past several years. We have successfully secured and completed multiple large projects with Lev’s guidance.
I am confident that without his advice on both practical and complex issues we would not have realized the successes achieved on these projects. He has excellent contacts within Russia and is able to proficiently assist with negotiations and navigate the intricacies of Russian business dealings.