Saturday, 17 August 2013

Thoughts on the Russian Economy

I've been looking for a graphic like this for a long time, and I've finally found it:


Definitely a picture worth a thousand words. Twenty years' of economic growth were lost due to the difficulties in transitioning from the Soviet economy. (Also, overlaying Yeltsin and Putin's presidencies says a great deal...)

While I'm on the topic, if the facts presented in this article are true, then it would seem that the English-speaking consensus on the Russian economy is completely misguided. I think if you talked to most people on Wall Street or in the City, they would describe Russia as essentially a second Saudi Arabia, with an oil and gas based economy, with a little bit of defense and aerospace thrown in.

I was shocked, therefore, to discover the actual percentage of Russia's GDP that comes from natural resources: 9%. Nine percent—a big enough number (the much larger American economy has 2%), but a far, far cry from the 52% of Saudi Arabia.


Of course, Russia's exports consist almost entirely of natural resources—its booming industries in real estate, construction, and manufacturing only serve the domestic market, which explains why the economy looks so different from the outside than it does from within. (The blue chip stocks of the Russian stock market are also mostly energy companies, so Russian-focused ETFs—by far the easiest way to invest in the country from without—are similarly one-sided.)

So, since as a foreign investor it's quite difficult to make a Russian real estate or construction play, it's natural for foreign analysts to forget about the other 91% of Russia's $2 trillion economy; it's the submerged part of the iceberg. Conversely, foreign businesses looking to sell in Russia find breaking into the 150 million-man domestic market equally difficult, due to the strength of local competition; it's hard to sell cars, airplanes, and washing machines to Russians, because they make their own. (They even have their own Facebook.)

So that explains the very paradoxical status quo. Next, it stands to reason that this paradox will resolve itself in one of two ways. Either the domestic economy will expand, causing Russia to present a more balanced and diversified list of exports as it leverages the many advantages it has over the other BRIC nations to become globally competitive, or time and increasingly free trade will show the domestic industries to be less competitive, and they will be swallowed up in the globalised economy, as soon as Russia integrates into it more fully.

(The only other option, increased protectionism, naturally would stifle any chances Russian companies might have to grow, in which case they would simply lose ground on the pie chart to energy exports, and become less relevant as the Russian economy again moved backwards.)

Either way, I would expect to see a bellwether for the future in the Skolkovo innovation centre, since IT services are one of the most obvious areas where Russia should be more globally competitive than it is today, and Skolkovo could be an excellent vehicle for demonstrating that. Brain drain has long been a problem (and the US and Israel's gain), but referring again back to the graphic I started with, those days may finally start drawing to a close, now that Russia's economy is growing again. Perhaps the next generation's Sergey Brin might actually build his career in Russia?


By creating a stronger domestic concentration of tech jobs, Skolkovo should help slow that brain drain, and since it is planned to involve Intel, IBM, SAP, and most of the other big-name companies, it will also help Russia to integrate further into the globalised economy. In and of itself it will probably do little to cultivate the culture of entrepreneurship that makes Silicon Valley so successful, but on the other hand, many a gifted engineer who has put in a few years in a large corporate setting dreams of setting out on his own. By concentrating a lot of talented engineers in one place, to work with potentially less than exciting employers, Skolkovo may foster a flame for entrepreneurship despite itself!

Unfortunately, Skolkovo might also be a bellwether in another important way: the project appears to be in trouble, not for any business reason, but due to changing winds at the Kremlin. This just underlines, yet again, the extent to which political stability, and respect for the rule of law, are the real factors that will determine whether the BRIC economies meet their enormous potentials or not. All four countries still face a lot of challenges in this area, but that is material for another essay.


Protectionism is bad for everybody

With such a strong domestic economy, and little reliance on international trade, the protectionist faction will always wield political clout in Russia, so there's little point in complaining about the fact that it's there—it just has to be taken into account as a component of the landscape. From the Russian perspective, though, the shrewdest move is to open up the economy (a prerequisite for growth), but to choose to do so at the most opportune time—ideally, when the strongest Russian companies will be poised to expand abroad aggressively, or at least when it might stave off another round of costly emigration.

You don't have to be a kremlinologist to see that kinds of people who succeed in the Kremlin are the kinds of people who are good at making shrewd moves. The stop-and-go chaos surrounding Skolkovo, then, means as much as anything that Putin doesn't see now as the right time to bring more of the iceberg economy to the surface. That probably means that the domestic economy is still poised for further growth, that it will be stronger and more competitive in five years' time, rather than less so.

The fact that Putin is willing to lose so much face with American businesses is another sign of this: if he is willing to risk burning bridges with Intel, it means that his long term plans do not rely on Intel to create high-tech jobs. By inference, then, we must presume that he thinks Russian companies will be poised to provide those jobs, at least to a sufficient extent as to justify the cost.

I take away, then, that the Russian economy will not be opening up to outside investment or to more diversified imports and exports in a significant way any time soon. It's a frustrating conclusion for me to come to (since I would love to do business with Russian companies from here in France), but I can take some solace in the fact that, Skolkovo or no, my sector, IT services, is still seeing a lot of growth, so there may be opportunities yet, even if the overall trend is still looking the other way.

Posted by jon at 11:00 AM in Work 
 

Thursday, 25 October 2007

A new beginning

I start a new job tomorrow, and while I am looking forward to what I am confident will be greater opportunities and more interesting technologies, I will certainly miss the coworkers and ambiance of my previous mission, where I've been for the last year and a half.
Posted by jon at 6:42 AM in Work 
 

Wednesday, 27 October 2010

BP Chairman Carl-Henric Svanberg

Last Monday we hosted a guest speaker at the Saïd business school who, given the size of his enterprise and the historic disaster it was recently involved in, was undoubtedly the most important and topical European business leader that could possibly be brought in: BP Chairman Carl-Henric Svanberg.

It was exciting to hear what he had to say—because of the unique and high-profile challenges he has faced in his short time at BP, to be sure, but not only because of that. Certainly it was interesting to hear him talk about the spill and give his analysis into what BP might have done differently or better, and what steps he sees as necessary going forward.

But also, it was just interesting to hear his own story, since before becoming Chairman of BP he was CEO of Ericsson, the mobile phone company, and before that he had held other CEO and management positions, going back to an initial formation as an engineer. Obviously, for me as an engineer, hearing about those intermediate steps was quite interesting!

So the talk was interesting, as was the Q&A, but the very fact that we had it cemented for me one of the major advantages one has in coming to the Saïd Business School as opposed to other major European MBA programmes. I very much doubt that Carl-Henric Svanberg would give a talk at any other 'prestigious' business school such as INSEAD, LBS, or HEC (maybe he has done, but even if so, I am just making a general point here!): these schools exist as independent entities, and so do not have that major benefit of being associated with a larger, multi-disciplinary university, let alone a preeminent one like Oxford University. In point of fact, Svanberg's daughter herself attended Oxford, and that connexion, coupled of course with the university's unparalleled reputation, were doubtless key factors in getting him to come spend time with us.

I thought it was a beautiful illustration of how the business school brings benefits to the university, while the university at the same time gives a lot of added benefits to the business school.

Posted by jon at 11:27 PM in Work 
 

Tuesday, 12 December 2006

Code monkey likes Fritos

I've been humming this great little podsafe song all day by Jonathan Coulton, availible here. Between the lyrics to this song and the movie Office Space, you get a pretty good idea of what my job is like :-)

—Actually, although some of those jokes do ring true, I have a tremendously fun job and I don't consider myself a 'code monkey', which to me connotes more of an ad-hoc VBA or PHP programmer than an élite Java EE guru such as myself ;-)

Posted by jon at 9:09 PM in Work 
 

Thursday, 14 October 2010

Dana White at the Oxford Union

On Wednesday I attended my first speaker at the Oxford Union, CEO of the Ultimate Fighting Championship, Dana White. I was quite excited about this, not only as it was the first time I would hear someone speak in the famous debating chamber, but because the UFC was something I have followed (off and on) since the Gracie days, and its transformation into a major sport from the pitiful state it was in when White and his partners took it over make the UFC a fascinating business story as well. Also, I had watched the first season of The Ultimate Fighter (which featured White as a judge)—the finale of which, I should mention, is one of the greatest fights of all time—so I knew who Dana White was and thus was interested in seeing him, both as a celebrity, and as a CEO.

In conjunction with his visit he also met with a lot of Oxford athletes and martial artists, and I would say that these and UFC fans made up the bulk of the audience. Honestly if there was any downside to this talk it was that there were empty seats in the house at all, because those who didn’t attend really missed out on a great talk. But I suppose that the intersection of fans between bookish Oxford and the very physical world of the UFC is naturally rather small.

The talk, however, was really fascinating. A former boxing coach from South Boston, Dana White is not your typical CEO, and so even though a lot of the things he said were things you would expect a CEO to say (our company is doing phenomenally well and our growth potential is astronomical), his genuine enthusiasm for the sport and for the UFC's crucial role in it, combined with his straight talking style, made it really interesting to listen to.

Best of all, though, was that after he gave his talk, he opened the floor to questions and took questions for over an hour. This was really interesting, and some of what was said, he insisted, had to not leave the room. In that sense it was a privilege to be there, but it also shows that the enthusiasm on both sides of the discussion was real. The talk helped fill out some of the questions I had had about MMA, namely in relation to boxing, the previous major commercial combat sport. Clearly boxing's descent into a total farce helped create a vacuum in which UFC has been able to thrive, but I was interested to hear White’s take on what would prevent MMA from descending into a similar quagmire.

As it turns out, he's probably the best placed man in the world to ensure that that does not happen, with his in-depth understanding of the boxing business. What was fascinating was his ability to see why boxing wasn't working, and come up with a new way of doing things, and bring that to pass, in such a way that the fighters, the media, and the production all benefit.

That ability to create something totally new, to find new solutions and do what others thought was not possible is exactly what we’re learning in our MBA courses on strategy and entrepreneurship. And here was a man who had done it. It really brought a lot of points home for me. The importance of passion, for what your business means and what its core values are, beyond just making money, has also been an early theme in our classes. (Companies that know what they stand for perform better than those that do not have such a clear sense of core purpose.) Dana White’s talk was a powerful illustration of all of those themes, and I am really glad I attended.

Posted by jon at 5:54 PM in Work 
 

Tuesday, 27 April 2010

Educating Leaders for 800 Years

That is the current tagline on the website of our Saïd Business School at Oxford University. It is a good one. It cuts to the heart of what makes Oxford so special, as the oldest university in the English-speaking world, and one whose reputation and pedigree are unmatched in producing brilliant minds, great leaders, prominent authors—even saints. In fact, the exact age of the university is unknown, so that the school might have legitimately said "Educating Leaders for 1000 Years", but to their credit, they prefered to stick to what can be factually documented.



One of the things that most struck me, however, when I visited the Saïd Business School was its great modernity. Actually, no: the word "modern" does not do the school justice—rather, it exudes the confidence and success that make you immediately feel that you are someplace cutting edge. UK MP David Marquand has described the School as the "future of Oxford University", and once I visited the place I could easily see how one could arrive at such a conclusion. Since the MBA programme at Oxford is comparitively young, the push to build a world-class business school shows Oxford, not at rest on its prestige and past achievements, but actively deploying its wealth, energy, and expertise into establishing itself as a preeminent world leader in business education. Seeing such forces mustered is an exciting thing.

I had a lot of concrete reasons to choose Oxford for my MBA, and I could catalogue the list of them here, but I think it would make for boring reading. Instead, I hope that what I have said captures something of what the atmosphere and energy is like at Saïd Business School, which in itself says a great deal.

Posted by jon at 6:56 PM in Work 
 

Friday, 9 February 2007

I have the best job

At least that's what Money magazine says in it's list of the Top 10 Best Jobs. And I am inclined to agree, although like any job some parts are more fun than others. Still, I'm not surprised that I love my job, since it was my hobby long before I ever thought I'd end up doing it professionally. (And, as this site and DietTracker show, it still is my hobby too!)

What is surprising to me is that anyone else would rank it #1 (excluding other software engineers of course)—geek culture is not always understood by the masses. Besides, this is after all the exact job parodied in Office Space, the song Code Monkey, and Dilbert's field of electronics engineering is nearly the same thing. But at the end of the day I get to play with expensive computers all day, finding creative ways to solve problems, and producing something that makes life easier for people. All in a day's work :-)

Posted by jon at 9:26 PM in Work 
 

Friday, 15 December 2006

Learn 10 good UNIX usage habits

I was sceptical on reading this article that I saw on Digg today, but there are some really useful tips in there, and some of the 'bad habits' it cited are things I have been all too guilty of in my eight years' experience of working on UNIX systems. So if you use UNIX on a regular basis, I really do recommend it.

Adopt 10 good habits that improve your UNIX command line efficiency and break away from bad usage patterns in the process. This article takes you step-by-step through several good, but too often neglected, techniques for command-line operations. Learn about common errors and how to overcome them.
Posted by jon at 11:14 PM in Work 
 

Wednesday, 13 February 2008

Microsoft TechDays, Paris

I spent the day in Paris on Tuesday attending the Microsoft TechDays, an odd conference for a Java developer and Linux bigot like myself, but also an interesting opportunity to see how the other side lives. (And, for the record, I'm not really biased against C#—I simply refuse to pay license fees simply to learn to use a technology, especially when there are better alternatives out there for free, and so I don't use it.)

The conference also featured a session on Java and .NET interoperability through Web Services, which is something I am currently dealing with on a day-to-day basis, so that was useful to see. I also attended sessions on Microsoft AJAX (for a different perspective than my usual DWR and Ajax4jsf worlds), software as services, and a good session on creating web services with domain-specific languages.

On the whole I thought that the conference, despite being bigger and more diverse than Sun's TechDays which I attended last summer, was noticeably lighter on hard technical information. Still, I am glad I went as it is always worthwhile to take a moment to step outside of one's usual technological bubble to get a taste of some different perspectives.

Posted by jon at 6:49 PM in Work 
 

Monday, 31 July 2006

The Fortune 500

So my Fortune 500 issue finally arrived last week. I was surprised at how many French companies there were near the top of the list (especially given how few days a year one works here), and especially surprised to see the last two clients I've worked at on the list (both of them in the 100-150 range). Although I guess it makes sense that they would be--since those who know my technology preferences know that I measure how cool a computer is by how closely it resembles a washing machine, and I have shaped my skills accordingly:

Washing machine AS/400 minicomputer Sun E450

Java EE, DB2, and Unix skills are probably not the kind of stuff smaller businesses would have as much of a use for. So I guess I should be glad that France is well-represented when it comes to big companies.

Posted by jon at 10:04 PM in Work 
 

Thursday, 25 November 2010

Tommy Hilfiger at the Oxford Union

A few weeks ago I had the privilege of hearing Tommy Hilfiger speak at the Oxford Union. I was quite interested to hear him speak for a number of reasons. Firstly, just because it is always interesting to hear a successful entrepreneur and businessman tell his story. But also because he is a designer, as well as a businessman. Where did the balance lie? And how did he feel about seeing his name on thousands of strangers’ shirts and hats? Did that say something about his personality, or not?

Well, all thoughts of a megalomaniac, or an Andy Warhol-style “artiste” were quickly dispelled as soon as he opened his mouth. He was surprisingly authentic, and down-to-earth, and visibly impressed and proud to be speaking at Oxford. (In fact I would say that he was more authentic and down-to-earth than most people in Oxford, let alone fashion designers!) He spoke for some time, telling the story of his life, which was interesting and inspiring, then took questions until he had to rush off to the next stop on his tour.

To me as an MBA student, though, his talk was particularly good. It was sort of a capstone to many of the classes we have had this trimester. Themes from marketing, managerial economics, accounting, and strategy all came out in his experience and advice, and had much more weight coming from an actual entrepreneur’s experience than they ever could coming from textbooks or carefully crafted case studies. This, too, was confirmed by his talk: he actually had very little education. His MBA, he told us, came from all the lessons he learned when his first company went bust. It was refreshing to get a dose of “out there doing it in the world” entrepreneurship, to remind us not to get too comfortable in the classroom.

Not only was it a great talk, but everyone in attendance got a Tommy Hilfiger bag out of the deal too!

Posted by jon at 11:02 PM in Work 
 
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Non enim id agimus ut exerceatur vox, sed ut exerceat.