Why Businessmen in Power Become Reform-imitators

Since the beginning of the ‘market revolution’ in popular consciousness, an extremely persistent and harmful myth has been established that people with experience in the private sector of the economy demonstrate the highest efficiency in public positions. Originally, they were described as “strong businessmen,” then “honest businessmen,” and now they are, “managers with Western education/experience.”

This is natural. People tend to have illusory perceptions and rely on hypothetical omniscient and all-powerful miracle workers. It is just as natural that among the applicants for comfortable positions, such as officials and deputies, there are quite a few who are happy to exploit human naivety.

But business management and state management require slightly different sets of skills. Of course, no one denies the triad, “professionalism – decency – patriotism” (here we mean patriotism that consolidates society, not an extremist version), but it is only being implemented in practice in business and the sphere of public administration. Important features of these differences are as follows:

First, the ‘business’ system and the ‘state system have different degrees of complexity.

Business has to operate in the categories of, “assets,” “personnel,” “the market,” “brands,” and “cash flow”, whereas state authorities have to consider, “citizens,” “rights,” “responsibilities,” and “social standards”. Of course, categories such as “security,” “reputation,” “anti-corruption,” and “enforcement” pertain to both business and the state.

While there is of course crossover, in part and in whole, between ‘business’ and ‘state’, this has limits. Even the most skilful and successful businessman demurs when invited to solve the problems of pensioners, the disabled, the unemployed, prisoners, ecologically harmful industries, and endangered species of animals while having at the same time to arrange the budget so as to be ‘robbing Peter to pay Paul’.

Second, the two systems operate at a different scale and a different coordinate system.

There are global corporations with turnover equal to the combined national income of a dozen countries that are barely making ends meet. They stand apart, and their interests are only weakly connected with the national security of a given country; their top management are ‘citizens of the world’ to some, ‘corporate fat cats’ in the eyes of others, and perceived as ‘economic killers’ by many more.

The way in which companies relate to the state varies between different business models. There are local medium and small businesses humbly replenishing the budget of their state, whose owners and senior managers may be more or less patriotic, but they are always weak when compared to the state Leviathan. 

Third, the systems have different goals.

A business has to make money – this is its nature and the meaning of its existence. Even for the most conscious entrepreneurs, social and environmental responsibility/efficiency are secondary and, unfortunately, all too often performative. In turn, the function of the state is to please its citizens with stability, help the weak, not oppress the strong, and maintain an international reputation. Therefore, by default, the mission, goals and objectives of the state are less pragmatic than the equivalent criteria in business structures.

These differences are either not understood or not even considered by Ukrainian government bodies. That is why businesspeople scowl in disgust and run away like timid schoolgirls when plunging into the underbelly of the state machine, or (less commonly) they disgustingly adapt and become equally cheerful bribers and reform-imitators in the mould of professional bureaucrats whereas it would be better for them to honestly acknowledge their inadequacy as politicians and at the same time stay and really try to change something. After all, reforms in the state are a form of change management, but in relation to a more complex, large-scale, and non-pragmatic system. Therefore, instead of ingloriously withdrawing with the whine that, “They do not let me do my job” or imitating hectic activity, you can try to work with the following in mind:

• changes (reforms) should be implemented in accordance with goals, strategies, and plans that are clearly and equally understood by all participants;
• successful changes (reforms) in a turbulent environment are parallel changes in strategy, structures, and people’s behaviour;
• changes always meets resistance. This cannot be suppressed violently if you want to achieve a result;
• it is necessary to find compelling arguments and achieve the acceptance of changes (reforms) by the majority of people who will be affected by them;
• initiators of changes (reforms) are obliged to take unconditional personal responsibility for the results of their decisions;
• the initiators of changes (reforms) are obliged to explain each of their steps to the people who will be affected by these changes as honestly, openly, and fully as possible;
• the main key to the success of changes (reforms) is a favourable atmosphere.

However, it is hard and difficult especially if there are no systemic business management skills, charisma, and a sincere desire to change something in the fundamental algorithms of the state administration system. That is why things are not just standing still in Ukraine but rolling away in every sense.

Novoe Vremya 2015