If you want to survive a next crisis…

Mikhail Treivish, president of monitoring agency OmniGrade and a member of Marchmont’s Advisory Board, ponders on short-term mentality and what pitfalls it may bring. The author can be reached at:: tre_mi@omnigrade.com

President Medvedev is a vocal supporter of an idea to reduce government bureaucracy by 20%. “It is a tough measure, no doubt, but it would help address a whole array of pressing issues,” he said.

It is clear that slashing government officials is a counter-crisis move. What is less clear is whether it is aimed at tackling the aftermath of the past crisis (to which some experts still refer as “ongoing”) or it is laying the groundwork for Russia to deftly handle a crisis to come. The answer is crucial for the future of this country.

A new crash will happen—in two, five or ten years. It is now so obvious that Russia can’t be immune to the cyclic nature of the global economy.

The president’s determination has prompted me to draw parallels between officialdom and business. What does Russian business have to focus on to “address a whole array of pressing issues” of its own?

When the global recession crippled this country in the fall of 2008 most business leaders were preoccupied with the shortest-term task of “fending off the crisis.” Refocusing long-term strategies to adjust to changing economics across the globe was a province of the few. But it’s those few that will survive a next crisis.

As president of a strategic monitoring agency I can’t but think of how fair complaints were about international rating agencies’ distorted handling of corporate ratings prior to the crisis. To me the reason for their behavior was exactly what differentiates long-term thinking from ‘fleeting’ mentality. Those were ratings solicited and granted to pursue short-lived objectives of issuing cheaper bonds, cutting costs of borrowing, doing IPOs, etc. Ratings that show painstakingness and assist in strategic, slower and longer-term activity aimed at enhancing companies’ true creditworthiness were of little interest.

James Clarke, an American preacher and author, once described the difference between a politician and a statesman: “A politician thinks of the next election; a statesman of the next generation.” I think corporate leaders could be distinguished along the similar lines. Some think of quarterly reports; others of their companies’ stable operations in ten, twenty, thirty years’ time.

Coming back to bureaucracy to (hopefully) be reduced… I want to believe that at least part of the funds saved (if saving it is going to be) will help address Russia’s long-term strategic development issues. Unless this is done, we will hardly have hopes for Russia to face a next global debacle as a true “island of stability.’