Alex Lissitsa is a “new” Ukrainian. No, he does not have a share in the gas branch of the country, and he does not come at night to the Administration of the President, but he has ideas, which the country needs now more than hydrocarbons.
A graduate of the Humboldt University of Berlin has perfectly approved his diploma in the Ukrainian realities. First, as the President of the Ukrainian Club of Agrarian Business, and then as CEO of Industrial Milk Company (now Investment, Management, Team. – Ed.). In the first case, he managed to create a high-quality business association, in the second – to take the company out of the debt trap.
In the interview with Leadership Journey, Lissitsa has explained why you need to be able to make quick decisions, be honest with partners and arrange the players on the field correctly.
Leadership Journey (LJ): I remember very well how we in Forbes wrote the news about your appointment as the CEO of Industrial Milk Company (IMC – Ed.). The article title was something like this, “A consultant was chosen instead of a manager”. I then thought that it was not so easy to go from a public organization to the management of a huge company. Did you make this decision easy? Was there any self-doubt at that moment?
Alex Lissitsa (A.L.): You know, today I talked with students and gave them classic examples of situations when you need to make decisions in a very short time. This can be illustrated by this situation. You drive a car, exceed the speed, overtake someone, and a truck pops up on the oncoming lane. In principle, you have three possibilities: the first is to push off the road the car you overtake, the second is to collide head-on with the truck and the third is to turn left where pedestrians stand on the road. There is no fourth one. In my view, there is always such a dilemma in business when it is necessary to make decisions in a short time.
That was in 2013. I received an offer, and I accepted it, without thinking too long. During the time that I was in Ukraine, I learned the IMC company very well. Alexander Petrov, who is the majority owner of the company, and I have known each other for a long time. The offices of the UCAB (“Ukrainian Club of Agrarian Business” – Ed) and IMC were on the same floor in the same building. I knew the whole structure, I knew how it was created, how they came up with a name …
Therefore, the answer is the following: if it were some other business, I would have thought of choosing between the first and the second top position in the company. In addition, the public company for me was not something new. By that time, I had already helped some Ukrainian companies go public.
LJ: I had experience in non-government organizations. They are family-like chaos, you know. People come to the office when they like, the area of responsibility changes depending on the weather and so on. How did you manage to move to corporate governance?
A.L.: Actually, UCAB was not a typical Ukrainian association. UCAB had ISO certification for employee management. They all had KPIs, everyone understood who was responsible for what, and they knew their functional duties. That is why after joining IMC; I invited some people I trusted.
For example, Eleonora Evchenko moved from the UCAB to the IMC and became the HR director. Alexander Verzhikhovsky from UCAB became the first director of the company, and then the operating director, the second person in the company. Roman Slasten and Vitaliy Lanovlyuk from UCAB became directors of enterprises in Sumy and in Chernihiv region. That is, people who have gone through the “school” of UCAB could be working everywhere. UCAB was originally business oriented.
LJ: What was the first challenge in your new job? You said that regional divisions lived their own lives. Was there any clear vertical communication or any vertical communication at all?
A.L.: A survival under a financial burden was the main challenge. It was necessary to do something about debts. If you divide the debts of that time per hectare, it was a huge amount. In addition, these debts were also expensive debts. In such conditions, it was very difficult to get rid of them. Therefore, first, it was necessary to make some decisions to reduce the debt burden.
A survival under a financial burden was the main challenge. It was necessary to do something about debts.
In 2013, we attempted to issue our Eurobonds. We planned this for the future free trade zone with the European Union, but since this initiative met a dead end, we had not issued the bonds. We had to switch right away to something else. We signed a seven-year contract with IFC (International Finance Corporation. — Ed), took an unsecured loan of $ 30 million, and this helped us partially solve debt problems. In fact, the first year was focused on how to survive in a difficult situation.
LJ: I know that in that situation, an open approach had played a role – you personally were meeting with the creditors and convincing them that you could be trusted and you knew what to do. Had this worked in full?
A.L.: It was trust in a brand and trust in a person. Actually, both in a bank and in a company, there are people you trust and people you do not trust. A bank feels more comfortable to work with people who provide clear data. There is more trust in a manager who has a good reputation and can clearly describe the situation.
Transparency, in general, has become a feature of the new IMC team – we worked very openly, nobody hid anything.
TRANSPARENCY HAD BECOME A FEATURE OF THE NEW IMC TEAM
LJ: What processes were going on within the company?
A.L.: I had sorted out the personnel, began to understand the weaknesses and solutions of the financial problems. It was necessary to understand how to implement KPI indicators in a heterogeneous company.
Throughout 2014, we were unifying the structure of the company, introducing a system of salaries and bonuses developed by Ernst & Young. The planning system was quite a serious problem, so we also developed it with the help of Ernst & Young advisers.
We understood that in some respect we stuck in the old Soviet technologies
Next, there was a need to change the production system. We understood that in some respect, we were using the old Soviet technologies and it was necessary to pass over to new ones urgently. We invited consultants from the United States who helped us introduce new technologies, especially on plant nutrition – corn and sunflower.
IFC consultants, who were real farmers, came to us from America. They gave us advice at every phase of plant growth. When we had changed the organizational structure and introduced KPI, naturally, we were to change partially the team to rejuvenate it.
LJ: As for the team rejuvenation – I know, it was not easy. What difficulties were you to settle?
A.L.: Attempts to appoint young people as directors of enterprises met with misunderstandings at all levels. How come? A 27 years old person will be the director of the company with 30 million annual turnover and 600 employees. The people simply feared that this man would not cope. Therefore, I was doing the replacements by “breaking people over my knee” (by force). My good friend Igor Smelyansky (CEO of Ukrposhta. – Ed) says, that in this country other management methods apply. Do not try democratic discussions and round tables – they are not effective.
I immediately took people I knew and trusted to the team, and new people passed through a kind of sieve. We hired young people; we observed, we engaged them in the operation of enterprises and various services, promoted them, introduced them into management positions.
The experience has shown that all the companies with young managers started to work and to show very good results. The rejuvenation of the team was the main stage, which took place in 2014–2015.
LJ: How many stages of transformation has the company undergone since you started to manage it? What did it look like?
A.L.: We have a non-stop transformation process, and a review of business processes every year. I believe that in the present conditions it is the right thing to do. I do not believe that once you have updated the organization, you can then enjoy success for five years. This does not work. You need to review business processes every year. For this, we have a special person, the deputy general director “responsible for efficiency”, as we call him. His function is to monitor the spots of inefficiency in a particular business process. It often happens that solving a small problem gives rise to a new project.
For example, we noticed that the purchase of spare parts was done not efficiently enough. We created a project team to find a solution to get rid of this inefficiency. This may be some minor decision on procurement or reformatting the entire base.
It often happens that solving a small problem gives rise to a new project
This year, our team found that the cost of purchase of the combines’ spare parts increased significantly. This is because our combines are used with high efficiency in terms of the number of hectares processed per year. This intense use of combines makes it impossible to forecast the quantity of spare parts supply you need, no matter how you control.
We made a decision to sell all the combines of the company and buy new ones. Therefore, a small project has grown into a massive one. To sell the old combines was only half of the problem. We had to buy new ones. In parallel, we spotted methods to organize better maintenance of equipment. There is something new happening all the time.
NO ONE IS SURPRISED ANYMORE THAT WE NEED TO MONITOR EFFICIENCY PERMANENTLY
In my view, the IMC team is successful because we are accustomed to constant changes. We live in these changes, and no one is surprised anymore that we need to monitor efficiency permanently.
LJ: My guess is the delegation level is high. Still, how high is the level? How do you control your subordinates? What is on your checklist?
A.L.: The question is quite complicated, considering that in the West, delegation of authority is a matter of course for the CEO or top manager. As for us, there are nuances regarding trust.
Another point, many people are afraid of taking on responsibilities. Therefore, at the initial stage, they need help rather than control. It is necessary to make it clear to the employee that it is his responsibility and he should be responsible for his part of work.
If we talk about the current situation, then for certain divisions, for example, for production, the level of delegation reaches 90%, and I do not interfere. They know what to do, when to do and why to do.
In most business areas, the delegation level is very high
I would say that in most business directions, the level of delegation is very high. I assign some specific areas for myself every year as the task of the chief. This year, the issue of personnel, its motivation, and training will be the task of the chief.
LJ: Tell me, how do you avoid the “owner’s trap”, which top managers also often fall into? The case when you manage the processes based on your own convictions, you close the processes on yourself, which in the end can negatively affect the entire company.
A.L.: In my case, my work experience abroad helped me. Abroad, options with falling into the owner’s trap rarely occur. Especially in large organizations, that one person cannot manage, and you understand it yourself. There are many companies in Ukraine that grew rapidly for some time but their owners or managers forgot to update their knowledge and sort out the processes.
IN MY CASE, MY WORK EXPERIENCE ABROAD HELPED ME
Although now the situation is changing. Very many companies are already investing in education, in the MBA, etc. Therefore, it seems to me that this trap has already faded into the background. Only some small farmers who, still manage their business all by themselves, can fall into the owner’s trap.
LJ: There is a concept of decision fatigue, which has recently received a medical justification. Did you experience anything like that? The situations when you have to do with hard issues but feel exhausted. How do you usually behave in such situations? Are there, maybe, places to reboot or ways to reboot?
A.L.: There are, they are different, and they change. I think you should not stick to one thing for long. Either in your workplace or in your spare time. At some point, mountaineering was my reboot means. Then there was a time when I used to walk or jog long distances. I used to go on long hikes for 7–10 days with a backpack and 30 km a day. After seven days, I was coming back completely exhausted but ready to make decisions.
For the last year and a half, I had quite different pastimes. Today I may meet with friends, drink some good wine and listen to music. Recently, I started to experiment and began to draw following the advice of my friend Simon Chernyavsky (CEO of Mriya Agroholding. – Ed.). I was never doing the drawing in my life, but I have started it.
I FEEL GOOD WHEN I AM A BIT TIRED
I feel good when I am a bit tired. I need two or three days, just to fly somewhere alone and to wander. Just to walk, sit, eat, listen, and chat. And in three days I have recovered again. That is, it happens in different ways.
LJ: Regarding the large-scale personnel changes that have been carried out, do you agree with the phrase “hire slowly and fire quickly” by Jackie Fox? What does this process look like in your company?
A.L.: In my opinion, there is no one-fit-all recipe. Hire slowly! I would agree with this. However, sometimes there are talents you do not detect from the first time. Later you feel hurt and annoyed when these people end up in another company.
Therefore, first, I use my intuition and hints of my colleagues. It seems to me that getting older I make fewer and fewer mistakes. Now for me, it is sufficient just to talk to a person and I understand if he fits.
The probability of the “no way!” cases come to 99%. If I feel that I can work with a person, then I must look at him again. In principle, there are fewer problems at this stage.
LJ: Do you have any management icon or a collective image of a perfect CEO? Maybe some person from the past?
A.L.: I love football. I like to use football terminology in real business. It seems to me that everything depends on a team and a coach.
Alex Ferguson from Manchester United would probably be my idol. A man who is extremely successful as a coach who has made many superstars, including Ronaldo, Beckham, and Rooney.
He created a team, always clearly understood the needs of the players, managed them correctly and eventually became a legend in football management.
ALEX FERGUSON FROM MANCHESTER UNITED WOULD PROBABLY BE MY IDOL
LJ: What skill would you like to develop or upgrade in yourself now?
A.L.: I want to upgrade my skills in technical aspects of programming. I think that in the future this will be the main component of success in any company. Programming, IT – I want to understand how the entire system works. Next year I plan to hire a coach and take programming courses for non-IT specialists.
LJ: Regarding your devices, are you a supporter of Apple?
A.L.: Yes. Big fan.
LJ: And what exactly attracts you?
A.L.: Simplicity. Ease of use.
LJ: Steve Jobs, too, practiced from time to time the “bending over the knee” style. Who do you compare yourself with when you make some large-scale, inconvenient for people reforms?
A.L.: To be honest, I am the least worried and do not compare myself with management leaders, gurus, because it seems to me that it …
LJ: Not applicable in Ukraine?
A.L.: No, that is not the point. In my view, everyone should have his own approach. Especially, when you are not 25, but 45 years old, you either have developed your approach or not. I have formed my approach. I do not know, whether it is like the approach of Jobs, maybe not. But I am not concerned about it.
Recently, journalists often ask me to give a list of books that I have read last year on economics and business. I do not read them, because they are not interesting to me. What should I read them for? I read fiction. I can tell you about my preferences in fiction. But I cannot read books of the “How to become a leader” type.
LJ: What about work-life balance? We ask many people whether it is possible to separate work and life. The frequent answer is my work is my life. What about you?
I found the diagnosis – this is “the potato on your mind”
A.L.: I honestly do not understand this. Of course, I respect those people who say, “work is my rest”. Honestly, respect. However, for me, it looks like a disease, and I have already found a term for it. These are the same people, who to the question, “What the hell are you planting this potato for?” are saying, “The potato growing is my rest”. I use to say, “Listen, I hate this since my childhood. How can I rest by growing potato? Please, explain to me.” (Growing potato and other vegetables on small plots of the ground by the majority of late Soviet year’s population helped people to increase household income and survive. The tradition has preserved in the time of independent Ukraine and is actual. – Ed.)
I found the diagnosis – this is “the potato on your mind”. Instead of really relaxing, immersing yourself in a hobby or doing many beautiful things people keep working. One can visit relatives and pass time with them, spend time with children, grandchildren, do something else. One can visit a museum. One can fly to one of the countries for $ 50. Particularly for top managers who, in principle, earn good money, it is not a problem at all.
Therefore, it is very difficult for me to understand such people; those, who say they are not interested in anything but work, surprise me.
LJ: This may be vaccination of your work experience in Western Europe.
A.L.: Well, maybe.
The potato upsets me somehow since childhood.