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Doing Business With Russians – How to Understand Russian Business Mindsets
There are some fundamental mindsets of Russian entrepreneurs. Anyone doing business in modern Russia or with Russians would benefit from knowing them, as much business behavior is driven by mindsets.
These five mindsets are
1. How things happen or not
2. Decision making – Hierarchy
3. Concept of time
4. Connections – “Blat“
5. Faith in the system itself
6. Conspicuous consumption
How things happen or not
In Russia how things happen or not is a mystery very difficult for outsiders to understand. For example, in neighboring Finland things (excluding issues related to politics) tend to happen quite systematically in a bureaucratic way and the process tends to be quite transparent. In Russia nothing important happens without a crisis or a major drama that forces people to act and the forces behind these crises could remain hidden from view. When you are stuck in this “inaction period” don’t tell the Russians that they are lazy or inefficient. This is a big mistake. They are immensely proud of their culture, superpower status, and achievements such as space exploration.
Decision making – Hierarchy
Russia is a highly hierarchical society and decision-making processes are very different from Western (especially Finnish and Swedish) models. The hierarchical nature of Russian society with a very large power distance is very important to remember in business. Who approaches whom in business dealings is critical to success. Nowadays, Russian businessmen pay a lot of attention to the way they dress. Russians in general probably spend more money from their household budget on clothes than any other nation in the world. Those who cannot afford to buy clothes from top fashion brands (such as Versace, Armani or Hugo Boss) prefer to dress in cheaper but still well-made clothes. There is an old Russian proverb: “They want to meet you depending on how you are dressed and say goodbye depending on how wise you look.”
Many entrepreneurs in neighboring Finland have begun to embrace the American concept of time: time is money. This is quite strange to the Russian concept of time. Although he doesn’t appear to be much of an academic, the Russian businessman is well aware of how Russia rose from the Novgorod days to become a superpower. Russian time does not go in a straight line; it’s more like a process of quantum jumps and small circles without a clear line connecting the circles. So, this long-standing concept permeates all the actions of the Russian businessman. If you lose your temper when things don’t move quickly, you show signs of immaturity.
Connections – “Blat“
In Russia nothing significant moves without “Blat” or connections. People remember and count favors like currency. There is a strong emphasis on building and maintaining cordial personal relationships through respect, gifts, favors and counterfavours.
Faith in the system itself
The Finnish and Swedish neighbors believe that the Finnish or Swedish version of the democratic welfare state is the greatest achievement of the human mind and are very proud of it. Russians have a messianic approach to being Russian. For them it is the embodiment of the dream about perfection: nature, the world, man, the life of man, the dream about the Golden Age, about the heavenly city – Modern Rome. They believe that Humanity always moves forward only if divine light illuminates the way. Until the fall of communism they rarely doubted this messianic mission. The current state of Russia, with high prices, insecurity, terrorist attacks and the failure of post-communist capitalism to bring heaven to earth, has seen the Russian mentality move towards: “Let’s learn and adopt everything Western!” never forgetting “Mother Russia Knows Best”. The fact that people complain about the current situation does not erode this basic messianic faith. The following joke highlights this faith.
“A Russian and an American die and both go to hell. Satan, the director in charge of hell, asks them: “What the hell do you prefer, Russian or American?” “What is the difference?“asks the Russian.”In American hell, you will have to eat a bucket of waste every day; in Russian, two“, Satan explains. The American decides to go to American hell. The Russian, being a patriot, chooses Russian hell. A year later, the two men meet each other.”how is your life“, asks the Russian.”I can’t complain,“answers the American.”I eat a bucketful of garbage every morning, and then I’m free for the rest of the day. And you?” “It couldn’t be better“explains the Russian.”Just like on earth! Either they are late with waste delivery or they are running out of buckets.”
American economist Torstein Veblen first coined the term in his “The theory of the leisure class” back in 1899. Veblen argued that economic life is not driven by notions of utility but by social vestiges of prehistoric times and much of today’s society is only a variation of primitive tribal life. This tribal character of Russian life is very central . to understand the stratification of Russian society. Brands and visible symbols of success are the number one priority. Here is a good joke, which is very descriptive of the NRs or New Riches.
After a car accident, a NR is lying on the side of the road, crying loudly. Oh, my BMW! – cries, – Oh, my BMW! A passer-by is shocked to hear this and asks “How can you cry about your car, when you just lost your whole hand?“The NR assesses the situation and resumes its cries: Oh, my Rolex! “
With Russians, you cannot separate culture from business. Acquiring cultural knowledge and learning the rules of behavior is vital to success. It takes time to gain the trust and respect of the Russians. Da (Yes)! Once you get that, they can be good and fun partners to do business with.
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