Alexander Vysotsky is the founder of the international consulting company Visotsky Consulting. Mr. Vysotsky conducts his own business in the United States, Russia and Ukraine. He is the developer of the world’s best consulting project for the implementation of management tools, which is confirmed by the International Association of Entrepreneurs WISE. Alexander Vysotsky is the author of 4 business bestsellers for business owners and the speaker at the seminars and presentations, which was visited by more than 50,000 employees and entrepreneurs.
Visotsky Consulting is an international consulting company on systematization of small and medium businesses. Company offices are located in 6 countries of the world: USA, Taiwan, Russia, Ukraine, Kazakhstan, Belarus. The main product of the company is the “Business Owners School” – a consulting project on the implementation of management tools for systematizing business, creating opportunities for the company to reach a new level of development and transfer operational management to managers. This allows the company owner to fulfil professionally their responsibilities for the strategic management of the company.
The topic of today’s conversation between Luxury Lifestyle Awards and mr. Vysotsky is the management of organizations of the future and how they could transform in the current turbulent environment in order to become more successful and competitive.
The term “Management” comes from the old English word “manage” (to ride horses). It is clear that a lot of time has passed and this concept has changed and transformed, the last interpretation that I remember from the management course is: managing people in order to achieve a result. What is the meaning of the concept of management now?
In fact, nothing has changed since ancient times. “Management” means governance, care, development, encouragement and direction of people. The task of the manager is to groom and cherish people to achieve a certain result. It was the same with horses, many years ago.
Then what is the difference between the sense of management in those days and the modern company management system?
Hundred years ago, management perceived people as small screws, they were not expected to take any initiative. The execution of their tasks was their main objective. Now the management is much less mechanistic, and more emotional, they no longer control people by the whips, but motivate the staff and inspire people to achieve the result. The form of management is also changing, new approaches to management and communication within the company are emerging. Skype, instant messengers, team platforms, CRM, ERP. The approaches to hiring and motivation changing. But again, the fundamental laws of management have not changed, because they are built on the basic laws of psychology and sociology, which are constant as the gravity laws.
Well what happens to the companies themselves. Is there a difference between companies that were created 50-100 years ago and the companies that are entering the market now?
Yes, in this regard, there have been great changes. Now there are almost no local businesses, this is also one of the very interesting phenomena. About 50 or 100 years ago you could have a coffee shop in some small town, and, in fact, it was your whole universe. You did not feel any competition. Today you may open a coffee shop that employs 3 people, and it is compared to Starbucks, which has 25,000 coffee shops around the world. You must meet the highest standards of product quality and service. Nobody cares that you have just 3 people and they have 25,000 coffee houses. People use Internet, they are travelling, they get other services, they consume other products – they compare your service with the services of large companies, large corporations. If you fail, you have already lost. Fortunately for the consumer, unfortunately for a businessman, whatever business you do today, you have to think much more globally than it was 50 years ago. You have to take into account marketing, social media, PR, standards that other companies in other regions have, modern consumer trends and preferences.
Do I understand correctly that if the majority of businessmen earlier used to do business by intuition: they opened a coffee shop, hired people, brewed coffee, baked desserts, tried it by trial and error. Now, in order to compete with global companies such as Starbucks, you need to understand HR, finance, and marketing. Thus, it turns out that a person who wants to go into a business must first complete an MBA course and become competent in many issues?
Yes, this is true. But there is a positive side to this trend. Today, learning is a thousand times easier than it was 50 years ago. For example, you are interested in a course about how to develop your youtube channel, you find this course on the Internet, it takes 30 hours of your time and you get very narrowly specific knowledge from a very expert person who lives on the other side of the planet, the best in his field of knowledge. You should go to university, study for five years there, and when you graduated you understood that all your knowledge was outdated and had no relation to reality at all. Today, any business owner has the great privilege to receive expertise quickly, of the highest quality, very precise one. I would say this: the modern world allows us to acquire knowledge a hundred times more efficiently and more practically than it used to be. Therefore, everything is not so fatal. But the fact is that yes, you are right, there are enormous challenges small business today. And in general, to be honest, it makes sense to cope with this challenge, if only you want to make a big business.
It turns out that the owner of the business these days should be very versatile. But still, what is the main competence of the person who decided to lounch his business? Just if he studies how to set up the youtube channel or how to implement CRM in the company. Who will think about the product itself?
The basic competence remains the same as it was 1,000 years ago – this is the area of expertise of the company created by him. If you are, for example, a specialist in luxury marketing, then your core competency should be still the luxury marketing. If I am an expert in management consulting, my basic competence should be in management consulting; there are certain methodologies and principles in this area. This is still your main competence. But the owner still needs to understand what tools are in the business and how to use them. He should hire professional people or outsource specialists who are well versed in CRM, Youtube, Facebook and set them up for his competitive advantage.
That is, he must understand what he sells, and be an expert in it?
Yes. Now masterpieces cannot be done differently, you really have to be an expert. The second point – you have to be an expert in how to organize this all – to find the right people, how to make them work, how to organize the interaction, how to control everything. You should be an expert at this. And yet you must be an expert in marketing.
That is, marketing remains the main driver?
Three components of the business, anyway. The first component is your technology, how you make coffee. The second is marketing technology, how did you pack and sell this coffee? The third is management, administration, control. All these functions have to work synergistically and complement each other.
Then let’s talk about the management and administration of people. Why is there an eternal conflict between the manager and the owner of the company? It is like confrontation of the state and its citizens. The state wants to keep citizens within frames and comes up with all sorts of measures, but citizens resist it. How to make them play on one side?
First, you need to understand that this is normal, the person who came to earn a manager position has some goals and tasks, and the business owner has completely different goals. One wants the maximum salary while maximizing comfort for himself, the business owner has a task with minimal resources to get the maximum result. Therefore, they are different, and they are conflicting. This is normal, because the owner is a person who always sets unrealistic goals that always look unreal. If he sets realistic goals, he obviously does something wrong. That is, it is necessary to set unrealistic goals for people make their best.
Go out of your own comfort zone?
Yes, it’s ok, it’s like a personal trainer. Why do you buy a personal trainer? He forced you to do what you are not going to do yourself. In the same way – the relationship of the owner and manager. There is some, let me say, conflict between them, and rightly so, this is normal, it should be, there is nothing wrong in it.
What else the owner should do in the company beside the unrealistic goals setting)?
The owner must create an ideology, principles, this is a very important point. When you invite a manager, you say: “Here is our ideology, here are our principles, here are our approaches. Do you like it? Does it encourage you? Great, let’s work!”
Who is an owner for a business? He is god. Who is god? This is something that cannot be touched, and God is the one who creates the rules of the game, the creator of the material universe, the laws of nature, and everything else. Similarly, the owner plays the role of God for the company that sets the rules of the game. When do problems begin? The real, big problem begins when the owner does not do this, and when someone does not do something, someone always does it instead of him.
The manager takes over some of these functions; he is partly the creator, partly the owner. Here comes the conflict. To put it another way, in order to have cool managers who like what they do, who are highly motivated and devoted to company, business, the happy managers, the owner must do his job in the first place.
Well, let`s talk about the managers. Now there is a certain breakdown. If earlier everything was sharpened on material success and on the career, many managers moved from the lower floor to the upper floor, they wanted to get to that high level – get a corporate car, corporate insurance, have the opportunity to travel around the world. Now, many managers leave their jobs, lose all these corporate privileges, go completely downshifting, begin to draw, dance and surf. And some go into self-employment, because now entrepreneurship is at the peak of popularity. What’s happening? Why do people give up everything and go into their own swimming?
All right. There is such a thing which we also used to say, it is called the “laws of power”. That is, the power also has its own laws. Here, if you want to have power over people, you must understand these laws and follow them. One of the laws of power is very simple: either you control the lives of people, or they live their own lives. If you have power, you have to control people’s lives. If you are a business owner and you want good top managers for a long time, you need to learn how to manage them, including their goals, manage what they think about, their dreams.
Even out of work? Of course, it is necessary. But in my opinion now, on the contrary, everyone is trying to move away from this strategy. People are trying to separate life at work and out of work. After all, personal life is something intimate in which you do not want to let in corporate interests. When I worked in a large corporation, we had almost every two meters written: work&life balance. Which meant: you have your work, and you still have your personal life, in which you don’t take your computer home, do not work on Saturday and Sunday, but go with your wife to cafes, restaurants and theaters, and still spend your time with children.
This is beautiful, but I want you to pay attention, now you have your own business, you are sitting here in Manhattan.
You do not work in this corporation.
No. That’s right, I left it because I have realized that self-realization is much more important to me than to be some kind of gear in this whole chain of goals and tasks that I don’t understand.
In other words, if the corporation provided you with a field for self-realization, would you be happy there?
This is what I call management. The question is that you needed self-realization. You have a lot of potential. I can say, as soon as you started your own business, when you left the corporation, the corporation clearly suffered a loss. There are not so many people who can create their own business, who possess the initiative, courage.
Yes, but these skills were not required in the company.
I know. So this is the problem of this company, that it did not need the skills of talented people. As a result, they receive mediocrity.
In essence, their task is to find some person who would do some things within the framework of limited business processes. But this is stupid.
This is really stupid, but I do not know whether it is possible in such a huge company with more than 75,000 people work, to find an approach to each of them? To see his strengths, and to try to help him realize himself.
The most interesting is that the task is not to make an approach to 75,000 people, but to several hundred of the best employee. This is real. For this there is gamifcation, all sorts of tools related to career growth. To do this, there are tools associated with the fact that the unite creativity of people. Giving them the opportunity to influence the processes and strategy in the company.
It is a very interesting thought. Previously management was a hierarchical structure, that is, TOP management thought and determined the strategy, which course to choose, which market to enter, and middle management had to execute it all. Now more and more management system is built in this way, when even the middle management gets more authority to make independent decisions on the ground. Can this be termed as self-management?
I do not believe in people self-governing.
Do you believe in self-managed teams?
Within certain limits, if the team sets goals, sets direction, gives some guidelines, of course, the team can show incredible independence, ingenuity, and they will like it.
In other words, we can say that new generation companies are not hierarchical companies, but horizontal companies?
No, we can not say.
Still, this hierarchy will remain? I am the boss, you are a fool.
Of course. This is a hundred years old hierarchy. The hierarchy will remain, without it hierarchy it will never work. The question is that the nature of this hierarchy has changed greatly. Once it was “you do what I say because you are really a fool” in the pre-industrial era. Now it is like this: “We have such a task, you, my good genius, need to solve this problem. Please, realize your ingenious abilities and solve this problem. How do you think it can be solved?” Still, the tasks are set in the hierarchy, but the form is completely different.
Now the concept of blockchain is popular in the business world, and this trend probably affects the management system. The blockchain structure is decentralized. All this is now penetrating into finance, technology, science, medicine. Does decentralization itself influence the management structure today?
It depends on the kind of business you are considering. Would you like to come to Starbucks in New York to have the same standards as Starbucks in Los Angeles? Probably, you would like to see the same service standards and consistent product quality standards here and there, so you will not give these people and these organizations a lot of freedom. Therefore, when we talk about creative divisions that create something – of course, there is a maximum degree of freedom, a maximum degree of creativity. But, forgive me, 90% of the business is just a clear implementation of standards that have been verified by many years of trial and error. And they need to adhere to the staff or unmanaged chaos start will start.
Yes, I completely agree with you, work standards are good. But on the other hand, we now see how many sharks of corporate in America, which have been successful for more than 100 years now become bankrupt one by one. They just leave the market due to the fact that for many years they have not changed their work standards and cannot accept the realities of the changes that have occurred over the past 20 years.
Yes, it is, because they have a too rigid control system. Very often there are too many delayed decisions, a lot of indecision, discussion, dilemmas. Even if it comes about obvious things. There is not one responsible person who would say that we are turning out our ship and now we are following this course. Everyone is afraid to take responsibility in such large companies in their own hands. The manager thinks more about his reputation than about the future of the company.
Question about the motivation of staff. You always say that the main motivation in the business is the mission. But in fact there are few businesses in which you can build a beautiful legend that we are saving the world. Most businesses are making money, and a little bit of some kind of development: we are leaders in the market, we want to make first-class service, services, but fundamentally, most people understand that this is just a business. They do not have to be motivated by some bright things.
For example, what business are you talking about?
Any business. We can take, for example, a simple supermarket, not even a supermarket chain. Some person works there, and they have a slogan: “We use only fresh products”. Okay, but he sees that the products are sometimes fresh and sometimes not fresh.
Then the supermarket is lying a little. This is a very interesting, fine line.
Most businesses are sharpened on making money in fact, and not on saving the world, they are not going to make it better. Many people who work there understand this.
I think you will have to change this point of view. Let me explain why. We are not talking about saving the world, this is a very high category. But when you go to the supermarket near the house, it brings quite a lot of benefit to people, because these people can save time, they can spend more time with their family instead of running around and look for products all over the city.
If you philosophize so, then yes. But does a simple employee understand this?
If you bring this message to him., he understands. This is the first function of a business owner – to create an ideology, and create correctly. Do not lie, but create the right ideology. That`s why business is cool, why I never advise government organizations, political, and so on? I only do it with business, why? Because, as a rule, any business carries some very great benefits. Just by the nature that businesses pay money voluntarily, he cannot take it away from anyone. Therefore, businesses always exchanges them for some benefit, people voluntarily buy the benefit. As a rule, any business changes people’s lives for the better. Maybe businesses does not save the world, but creates a quality of life for people.
How to motivate a person with business ideology? Most people, it seems to me, work in order to ensure their existence, and do not believe in any ideology.
There are people who really do not perceive any ideology. “You pay me money, and I’ll go to work.” Well, well, there are such guys. Firstly, they are not the majority. First, if you explain this to people, they are imbued with it, they like it. One thing to understand here: people like to make sense of what they do.
You mean in life in general?
Yes. When a person has the point of view “I just work here, I get money”, in fact, he understands that it is meaningless, and for a human being it is painful because work takes up most of his life. When you give him sense, his life becomes more meaningful, and it becomes more important for him, more harmonious. Most people are romance by nature. Therefore, the business owner must give it. If he does not, they will find this meaning in something else: he will take care of homeless animals, go to the village and deal with the ecology, or something else.
That is, a business owner must first realize for himself these meanings, and then translate it into some understandable message, into some kind of understandable communication, in order to convey it. He has to saturate somehow a product, a service with this meaning.
Of course. If you, as the owner of your business, do not see any meaning in it, then there is a high probability that the people whom you hired will not see it and then their motivation will be very mediocre.
Alexander, how do you feel about remote work?
I actually have 200 people employed, 50 of which at least work remotely. One of my companies is called Business Booster, it is one hundred percent remote, we do not have an office in the Business Booster at all. We started it in June, after six months we have one million dollars turnover. As for online consulting project, this is, in principle, a good level.
Then, if this is a trend, and it is gaining momentum, what happens to corporate culture? Previously, everyone came to the office, there were some rituals, meetings, there were beautiful slogans on the walls. And now when everyone is sitting at home, how to build this corporate culture?
On the one hand, yes, you have no office, slogans, parties, worship, and so on. But on the other hand, you have a Google Hangouts, you can talk immediately with 20 top managers in different parts of the world. You can write a message to them, send a link to YouTube, and all your employees will look at it, and you will tell about the ideology itself, from the first person. For example, 30 years ago, McDonald’s employees could not see Ray Kroc and hear his direct message. They have heard it through two points of managers, and so on. And today, the modern Ray Crox is like Ilon Musk, he can go to YouTube, record a video, send a link to everyone, drop it into a general chat, and the whole world will know about it. In fact, we have such amazing tools today that allow us to shape our corporate culture.
Now a very popular trend is human multifunctionality. Do you believe that person can be multifunctional in principle when a person solves several problems at once? Suppose we have a sales manager, ideally, he should also be a marketing manager. And so that he himself recruited a team of people possessing HR skills and, if possible, managed finances)
I would say “no”, the modern trend is very narrow specialization, because today, thanks to the same teleworking, you can hire a marketer for four hours a week, and he will work fine for five companies, and he will prosper, and he will be an excellent marketer. You do not need him to sit in your office and think about what else he has to do. If he works remotely, you only need four hours of his work a week, you can afford it, it is okay for him, that’s all. I would say, on the contrary, the current trends are that there should be a narrow specialization of all functions.
That is, a person should be engaged in what he is an expert?
Ideally, yes. But still, you have to combine somehow, especially in a small business, when there are few hands, and so on. But this is, rather, just a necessity, it is not an ideal picture.
I want to talk about another new trend in companies. In addition to permanent remote staff members of the company look for the freelancers – part time working people.
What’s the difference?
But you yourself say that a person, in order to make a good product, must understand the meaning, must understand the essence of what is happening. But if a person works for you four hours a month, he does not understand any meanings, does not understand the goals and objectives of the company?
Yes, this is a problem, I totally agree with you. When you have a lot of freelancers, it becomes a challenge in terms of creating a corporate culture. Still, it is normal that you have less freelancers, because you cannot influence them much. From my point of view, this is just a phase. For example, I have freelance guys who are engaged in marketing. But we have been working with them for many years, and during these many years I have fully programmed the dialogue.
That is, they understand you, and you understand them.
Absolutely, yes. At the same time, they are not in the staff, and they do not receive a salary, they work on a project basis.
Do you agree with the statement that even in such large international companies as Procter&Gamble, Philip Morris, Coca-Cola, the number of remote employee – freelancers is going to be more considerable?
I think, yes. Will it be the vast majority? I’m not sure that they will be the vast majority. All the same, staff members are more effective, because you can learn, format them for your standards, promote ideology. This is better. Let them work remotely, but they are yours.
Freelance after all – this is when you need very special skills, or when you are small, and you do not need so much of this function. Then freelancing makes sense. I would say that freelancing is more necessity, and in large companies the percentage of freelancing will not be large, it will always be small.
How do you feel about the fact that now a lot of employees are called creatively “The person in charge with successful customers”, or “manager of work with talents”.
I always treat it that way. You like this? Well, call it a bucket, call it even a god, as you wish. It changes nothing. This is a wrapper. But people feel good.
Is there a direct tool in this to explain in two words what purpose this person has? For example, many HR managers do not understand that they need to hire talented people, but think in categories “to close a position”.
If this contributes to ensuring that this HR manager is responsible for ensuring that the company has talented, productive guys, you can call him a director of productivity. If it motivates him, fine.
Perhaps, it is precisely those meanings about which you spoke above?
Maybe I agree. I like talking names.
Your main company is a consulting company, right?
What is your current trend in the consulting industry? I see that, again, here are big companies, the same “big four” are really transforming very much. First, the range of their services is transformed, they take a lot of remote employees, they very much differentiate and adapt to the needs of the market. Boston Consulting Group devotes more and more time to digitalization of business, as if transforming a company from offline to online. What trend do you see in the consulting industry?
The general trend is very simple, it is generally the trend of modern business related to information. Narrow specialization is a contemporary trend. Therefore, the same large consulting companies are in a very threatening, frightening position. Most likely, their era comes to end, because to transform such a large company is almost impossible. What happens to big companies? There is one guy who teaches how to develop a system of motivation for retailers for retail chains with a store size of 15 to 30 people – this is a very narrow product. This guy with this product conquers the whole world. This large consulting company cannot compete with this product.
Because it has a very wide range of services?
It loses its position. Now there is another guy who says: “We have the best development of the company’s structure for such and such types of business,” and he bites off another piece from it, and another, and another. This is a general trend, and it will only intensify.
Roughly speaking, companies will be split into all departments. Suppose the Boston Consulting Group has launched a co-brand that deals purely digital.
Yes, but the problem is that these large companies cannot break up. Therefore, they comes to end. They will not be able to break apart.
So some Michael from Texas will compete with BCG?
Moreover, it will be more competitive than BCG with this particular narrow product. And Ivanka Jones will compete in the other, and some Amalie will do it in the third.
Maybe I will ask you a philosophical question. How do you see the corporate world and companies in the near future?
I do not think that we are waiting for some very big shocks.
Yes, but how can it be, if you and I say that many conglomerates are losing their positions, such as BCG, and small specialized companies are taking their place and are taking clients from them in certain categories of the market.
BCG is an echo of the industrial age when everyone wanted to build companies along the same lines. Today, people are trying to experiment to find new approaches and ways.
Well, how then do these two trends coexist – globalization and de-globalization? On the one hand, companies are becoming global. On the other hand, there are many small specialized companies or products.
The question is: what is globalizing. Previously approaches in the production of the product were globalized, standardized. We have built one large plant, and we pour coca-cola concentrate, we sell it all over the world. Where is it from? This is from the industrial age. We live in a post-industrial world, so we must globalize our approaches. Not a specific technology, but our own approach, our own ideas, our own philosophy. Globalization remains, it is simply at a different level.
At the level of information and communication?
Yes, because information is a product today. Companies that realize it and believe in it – this is a serious restructuring of thinking – they will win.