I have been on a panel with the Prime Minister of the Russian Federation, Mr Medvedev, at the Investors Forum, Sochi, September 20th, 2012.

At the Forum, I was asked an important question by the moderator  which due to time constraints I did not fully answer. I take this opportunity to answer it in writing.(1)

Mr. Prime Minister, I would like to take this opportunity to answer the question: “In your opinion, Dr. Adizes, what are the causes of the fear that Russian managers exhibit in their management practice?”

I am privileged to answer when you are here to hear it, Mr. Prime Minister, because you are probably the only one who can treat this malady.

There are two major reasons for the fear.

The first one:

You have probably heard about people whose legs have been amputated but who continue to feel pain in their limbs even after they were gone. Some people with this condition also experience tingling, cramps, burning, and freezing.

Apparently, memories are stronger than reality.

In the Jewish book of the elders, Divrey Avot, it says that in a house where a person hanged to death, it is forbidden to talk abut ropes. Why? Like a phantom limb, words can evoke past experiences that, in turn, arouse strong emotions–emotions that are unrelated to those words’ present context.

Using these analogies, let me broach a subject that is rarely discussed: the tragic accident in Russia’s history that has fundamentally impacted the behavior of its people.

I am referring to the Stalinist era, when brothers were ordered to spy on brothers, husbands to spy on their wives, and wives to spy on their husbands. Small children were even encouraged to spy on their parents.

I remember, in Yugoslavia when I was ten years old–a “Young Pioneer” with a red scarf around my neck–I was told by my team leader that my real father was Tito, and that if I heard my parents saying anything against Tito, I was to immediately report them to the police.

This was not a Yugoslav invention. It was imported from the Soviet Union.

What do you think is the impact that this history has on Russia till today?

Suspicion. Fear.

Russia as a nation has lived through a serious trauma and is still suffering from it. It is called “post-traumatic stress disorder.”

Let me give you two examples to illustrate.

When diagnosing problems in Russia, even today, people quickly start asking themselves: “Who should be blamed? Who is at fault?” It takes them practically no time to move from what is wrong to who is wrong. The process can easily deteriorate into a dangerous witch-hunt.

Here is a true story how fear dominates social consciousness. It happened to one of my Institute associates recently in East Germany: The unification of Germany happened already twenty years ago. The fear that was the hallmark of the Communist era should have dissipated. But in the national consciousness, fear is not so easy to purge.

A group of managers was seated in a half-circle. My associate suggested, as a warm-up exercise, that each participant tell the group something about themselves that no one knew. In the West, this warm-up exercise is practiced frequently, and the participants tend to talk about hobbies or trips they have taken. Very innocent.
But that day in eastern Germany, there was complete silence. No one volunteered to say anything.

During the break, the Adizes associate asked one of the participants why no one had spoken. The participant looked at him, his eyes cold, and said: “And how do you intend to use this information?”

Do you hear the fear?

And how should the disorder be treated? By reliving it. The more you try to put it out of your mind, the more you try to forget it, the longer it stays with you.

Across from the Marriot Aurora hotel in Moscow, there is the Gulag History Museum. It seems that it is supported by private donations exclusively. I am very sorry to tell you Mr. Prime Minister, it is the most run-down, dilapidated museum I have ever seen.

This is a mistake.

Mr. Prime Minister: If you want to free this nation from the relentless fear implanted in its consciousness by the atrocities of Stalin’s era, you should build the best, largest museum possible and accurately document the disaster Stalin perpetrated on Russia. Make it mandatory that children visit the museum. That no one graduates from school without taking a course about the atrocities of that era.

If the country is enabled to face the trauma directly, the fear will diminish. That is what is necessary if you want to increase innovation and entrepreneurship. Because neither can flourish in an atmosphere of fear.

There is a second reason for the fear, may I suggest and it is the following:

When a country experiences major transitions as Russia has, it often legislates a lot of new laws and regulations–right on top of the old ones. Take accounting systems. I am told that there are four different accounting systems in Russia. Which one is the right one to use?

Businessmen simply cannot keep track of all the new laws, particularly the ones that overlap with old laws. It becomes difficult, if not impossible, to know what is right and legal and what is not. No businessman or -woman can avoid violating some rule, usually without knowing it. What they do know is that they are surely guilty of something, and if the government chooses to prosecute (for whatever reasons), it can always come up with a violation. The businessman could wind up in jail.

How do entrepreneurs in Russia deal with this risky uncertainty? They have several choices: a) move out of the country; b) stay in the country but move their family and all their assets out of the country and have an up-to-date passport with a valid visa, so they can leave the country on short notice; or c) be well connected with those in power to be protected.

What most people can afford to do is none of the above alternatives. They live in constant fear.

What to do?

If I were you, Mr. Prime Minister, I would appoint A Senior First Deputy  Prime Minister, the highest in rank in the cabinet after you, give him or her a very well-financed ministry to analyze all laws, procedures, and regulations in all the ministries and regional governments, find the overlapping or outdated laws and the regulations that do not make sense, etc., and clean up the mess.

When it becomes clear what businessmen are supposed to be responsible for and what they are not, the fear will diminish.

But this process will do much more. It will also significantly reduce corruption. A messy bureaucracy practically invites corruption, by creating the opportunity for corrupt people to demand money for making the system work.

Right now, you are fighting corruption by prosecuting the guilty. But that is like killing mosquitoes. Instead of killing the mosquitoes, drain the swamp where they breed.

Thank you, Mr. Prime Minister.


Dr. Ichak Kalderon Adizes
(1) This letter was sent to leading newspapers in Russia.