Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, November 28, 1995 TAG: 9511280065
SECTION: EDITORIAL PAGE: A7 EDITION: METRO
SOURCE: MICHAEL R. CZINKOTA
DATELINE: LENGTH: Long
When it comes to AID programs for Russia, the critics are wrong. Russia needs America's help, and AID is a good way to deliver it.
Reforming and modernizing Russia's economic system will require enormous sums of money. Companies doing business there battle poor supply lines, nonexistent distribution and service centers, limited rolling stock and inadequate transportation. Producers know little of quality control, inventory carrying costs, store-assortment efficiencies and -replenishment techniques - all basics of good business.
Most Russian companies, in fact, barely understand the need for information exchange, integrated alliances between distributors and suppliers, and efficient communication systems, such as electronic data interchange. Yet each of these skills is crucial to developing Russia as a competitive economy.
In the case of the former East Germany, western Germany has transferred about $100 billion to rebuild the onetime communist state. Even so, the eastern economy has declined sharply and the people remain discontented. To match what East Germany received on a per capita basis, Russia would need more than $1 trillion in outside help.
Russia, of course, has no such benefactor. It must attract money by creating trade and investment opportunities. The basis for this is a talented, capable work force. Building up this human capital will be essential to attracting financial capital.
The Agency for International Development can play an important role in developing Russia's human capital. Together with the telephone company US West, AID funds the Center for Business Skills Development in Russia. Begun late last year, the center is well on its way to transforming the Russian business landscape.
Researchers at the center talked to Russians, and found many who were anxious to learn Western management and marketing techniques. With that in mind, the center is acquiring the best of Western business knowledge and adapting it to the Russian environment, eliminating what doesn't fit and adding content that reflects Russia's unique needs.
With an emphasis on behavioral change, Russian students are taught decision-making, problem-solving, teamwork and profit orientation. Supervisors are trained in marketing, accounting and human-resource management, while executives are exposed to strategic planning. Each course is critically evaluated, with a focus on how classroom learning can actually help individuals and their companies to perform better. All courses are translated and taught in Russian, and some focus on entry level employees.
So far, progress is being made. Consider, for example, the Russian dispatcher who ran a car-pool, or taxi, service. When a customer called for a car, the dispatcher typically would say he had none available, even though that was a lie. He would then wait a while and call the customer back, claiming he had just found a car. The point here was to convince the customer he had done him a great favor, thus building up good will that could be exchanged for something the dispatcher wanted.
This, of course, was the way business was done in the old Soviet Union: Favors were traded because everything was in short supply and nothing worked well. The Western business center taught the dispatcher that his job is to run an efficient car-pool service, not play games with his customers. Today, when someone calls the dispatcher for a car, he gets it.
The U.S. business center also works with Western and Russian institutions and firms. It collaborates with the World Trade Organization, with Apple Computer and with Tekhnomash Rocket and Space Technology Co. After pretesting its courses with hundreds of students, the center's programs are becoming self-sustaining and are now offered throughout Russia. During the next few years, tens of thousands of Russians will be exposed to training sponsored by the center.
Because of the unique public/private nature of this venture, the cost per student for the U.S. government will be less than the price of a few textbooks. When the opportunity cost of not investing in the arms race is added in, this program produces a solid return on investment.
Indeed, the center represents the new AID. Its activities are effective, efficient and highly leveraged with private resources. Rather than working exclusively with governments, the center deals with people who are the seeds of social transformation. Its efforts are measured by results that can be observed and which are delivered quickly. And it addresses problems that are important to the United States and the world.
Yegor Gaidar, a former Russian prime minister, once said of his country's reforms, ``Everything is reversible.'' That's probably an exaggeration, since democracy and the market seem to have taken root in Russia. Still, instability remains a threat, and it can be caused as much by poverty and unfulfilled expectations as by guns and tanks. Economic programs that draw people closer together build prosperity. AID's efforts in Russia make a difference, and they should be rewarded in the budget.
Michael R. Czinkota, deputy assistant U.S. secretary of commerce in the 1980s who now teaches international business and marketing at the Georgetown School of Business, wrote this for the Journal of Commerce.
Knight-Ridder/Tribune
by CNB