Ichac Adizes: "How to erase bureaucracy out of Samruk"

According to your theory, every company has a «life cycle» — the path from birth to death. At each new stage of development, each organization faces a unique set of challenges and difficulties. At the same time, the organization’s success depends on the ability of managers to manage the transition from one stage to another. What are the difficulties facing companies in Kazakhstan?

I believe that in Kazakhstan companies are in two places of the lifecycle. Either there are in the “Go-go” stage still running entrepreneurially by owner as a manager, which are a small companies privately owned. They have a problem of becoming more professionally managed. The other place in the lifecycle, is the big companies, like Samruk-kazyna, managed by government. And they have different problems. They are, on the one hand, still trying to run professionally, at the same time they are very bureaucratic. So there is a lot of work to be done to change the culture in these companies in both stages. By the way, it is not only in Kazakhstan. All developing countries have the same problem. Exactly the same. Either bureaucracy or small companies.

Not so long ago you met with Nursultan Nazarbayev and shared views on key aspects of the interaction between government and business. You mentioned the importance of further implementation of the transformation program of «National Welfare Fund» Samruk-Kazyna «. Can you mention the main directions for reform that you recommend to national companies?

Samruk Kazyna is going to be privatized. In my judgment, it is an attempt to debureaucratize government companies by making them profit-oriented and privately owned. In my judgment there could be a major side-effect, collateral damage. WHEN PRIVATELLY OWNED PROFIT BECAUSE THE DRIVING GOAL. ESPECIALLLY IF THEY ARE , Outside investor. If they are only profit-oriented, they are going to fire a lot of people. Because bureaucracy needs a lot of unnecessary labor, there is going to be a lot of political and other risks.THERE ARE DIFFERENT WAYS  to DEBUREAUCRATIZE., YOu can have a company which is government owned and it is very, very efficient. I think it is depends on management . My suggestion to Nursultan Nazarbayev was to debureaucratize the company without selling it off, because the new owner will have a different goal than government has. The country needs to keep employment, but new owner  could fire people.

How long does it usually take, in countries like Kazakhstan, to debureaucratize corporations?

It depends on the president, on the CEO. If they are really COMMITTED, you can do it in one or two years. It usually takes three years, but if really really push you can do it in one-two years.

Should changes occur in people’s minds or in corporate culture?

You have to change the environment, and people will open up. I don’t believe we can change people, we can change the environment. We can change the organizational structure, the reward system, your measurement goals, and measurement performance. If you do those things you debureaucratize the company. You don’t change people, you change the environment to make people open up.

In one of the interviews, you said, you have skeptical attitude to business schools, MBA, as they try to grow perfect leaders, which is impossible. Every manager is good in two roles maximum of four, you described, the other two are usually not effective. How to improve those weakest two? 

You can not improve your weaknesses, do you realize that? All this attempts to change a person, it is impossible. You don’t change people. What you need to do is when you know that you have weaknesses, acknowledge it, make your team COMPLEMENT  your weaknesses. Get someone, who is strong in what you need to fix out. Together you can do better. Business schools are derived from schools of economics. In the schools of economics there are all theories, based on assumption. All business schools train a manager how to be a perfect manager. They don’t teach you togetherness, they teach how to think and how to be independent. Not how to work as a team. They teach individuals, and individuals can not manage very well.

How to deal with nepotism?

Ok. Look. I told that to Nursultan Nazarbayev too. Kazakhstan historically is nomadic society and they survive by mutual helping, what you call nepotism is the outcome of culture of helping each other. Plus, when you don’t have professional management, when you don’t have budgetary control and systems, what do you do? You rely on people you trust. Who do you trust? You trust your family. Thus, nepotism is a really cultural outcome  and the result of the LACK of managerial sophistication in Kazakhstan.  Lets assume we prohibit it by law. It will stop the country. It will paralyze the country. So, nepotism is necessary evil in light of your tradition, in light of your managerial sophistication. The way to eliminate it is not to legally prohibit it, it would be dangerous to prohibit it. Instead, we should focus on managerial training and professionalization of management. Then you don’t have to trust your brother or sister to do your job, you can hire somebody, and supervise if they did a very good job.  So, we have to substitute trust with professional management. As long as you hire people who are qualified and trustworthy,  it’s ok. The danger with nepotism is that we hire and trust  people, who are not qualified. So, you hire people you trust, but they can not do the job. The problem is not  nepotism. The problem is that you hire people nepotistically who are not qualified.  If I hire someone who is qualified, that I trust and he is from my family, what is the problem?

Then how to motivate people to improve their qualification?

The second problem of nepotism is  that you hire people who are not qualified, and then, because they are family, you can not fire them, and now the company IS suffering. So the problem, how to make them qualified. I think the best thing is to offer training. People will study, kazakh people are smart, intelligent and capable. They will do it. We need  TO provide enough training.

The second and third stages of the program Adizes, transmitted by you on the Forum of Transformation  of «Samruk-Kazyna» in October 2014, says — «it is necessary to give all the staff the opportunity to share their views and make their contribution to the common cause. But at this stage we should focus on discipline, because we are dealing with people who for long time had no opportunity to speak, so when it introduced, to speak all they want. » Given the shortage of qualified staff to make this step effective? How is the transformation now? What are your plans for the next stage?

Kazakhstan like all other EIS countries suffer from the  Soviet Union legacy of authoritarianism. People are not participating, they are not sharing their brain. They are not sharing their knowledge, because of that they are not working as intelligently as they could. In the company everybody should be intelligent, so they are not using their brain. Not allowing people to express themselves to yield better result. The same problem in Ukraine, Russia, Belarus.

You saw our government and top management, do you think they will follow your suggestions?

I don’t know. (Laughing)

Are they ready for those kinds of changes?

Yes. In Kazakhstan people are very open and I was really encouraged to work in Kazakhstan. Unfortunately, I got sick, otherwise I would move there to help the country. I love Kazakhstan, I liked people. I wish I moved for two years to Kazakhstan. People are looking to change, they are very eager to change, eager to move forward. And I wanted to be part of it. I found all the conditions for success, they just need to do it.