The power of freedom

This is the culture we foster, and it’s incredibly important. It’s the DNA of our company, and it’s invaluable for business. The courage and responsibility of employees are worth a lot.

5. Entrepreneurial Activity – This refers to the willingness to engage freely with others to achieve goals. A true entrepreneur sees themselves as the master of their own fate, even while recognizing that their activities are influenced by various external factors, such as resources or tax systems. Nevertheless, every decision they make is based on personal choice. It's crucial for every employee to feel that they can express themselves and influence the company’s resources. This empowers them to act like entrepreneurs, making independent decisions despite potential risks.

I remember in the early years of our work, we formed a team of managers to develop a unique entrepreneurial culture. It was a challenge similar to trying to change human nature. We encouraged managers not just to perform routine tasks but to think and act bigger. They were given the authority to influence various aspects of the company, including financial decisions and employee development. For instance, we allowed them to invest in training initiatives, thus combining corporate and personal resources.

An entrepreneurial culture involves thinking beyond just financial gain and considering bigger values. This is an approach we continually develop, including training our managers to be not just leaders but true entrepreneurs within the company who can generate significant revenue through their effectiveness and entrepreneurial activity.

6. Money and Values – In the world of entrepreneurship, understanding values is immensely important. While an ordinary employee focuses on completing tasks, an entrepreneur is focused on creating value, and an investor is concerned with investment returns. Implementing a values-driven culture within a company is critically important; the absence of such a culture can lead to organizational decline.

As an example, I’d like to share our experience in mortgage brokerage. We set a goal to create a high-quality service that would enable each broker, as the owner of their own segment, to earn money. Initially, we had a motivational system where brokers received a fixed salary of 50,000 rubles. Over time, we changed our approach: we reduced the salary to 25,000 rubles and offered the remaining 30,000 rubles based on achieving KPIs.

Then we revised the reward system again: we started paying 200 rubles for each approved loan. In one meeting, I proposed an even more drastic measure: “I suggest we pay 1,000 rubles for every approved application and reduce the salary to 10,000 rubles. Earnings will be solely based on results.” This sparked a debate, during which my colleagues advocated for their interests, requesting more authority to meet their targets. I listened to them, and they created a list of powers they needed, which I approved.

What happened next? Our team’s productivity doubled within a year, and the cost per transaction significantly decreased. Our employees began to think not only about completing their daily tasks but also about how to work in a way that would encourage clients to return. In business, there’s an important principle: a client should stay with you for life. Now, it’s not just me as the company owner who thinks about this; every mortgage broker is on it with me. Moreover, our employees started suggesting changes to our software – something that had never happened before. They began to feel like entrepreneurs, considering ways to improve their tools. Employees began asking for resources – this is a crucial indicator of a healthy entrepreneurial culture.

In today’s reality, every employee in a company is part of a larger organism, and the more involved you are in this system, the healthier it will be. If people in the company rush out of the office at 6 p.m. as if a starting pistol signal, that company will inevitably stop existing sooner or later. The more people in an organization who don’t share its values or see their work as a small business, the more likely it is that the organization is heading for decline.

Many people wonder how to elevate the cultural level of a company. Let me explain how this happened for us.

The first thing is recruitment. Some might think that one disorganized employee won’t affect the entire team’s performance, but that’s not true. The process of how a small part can undermine the whole can be compared to dripping some black ink into water: the entire water becomes dark. This is a metaphor, but it accurately reflects what happens in an organization under these circumstances. Therefore, I always adhere to the principle of not hiring people who are not a good fit for us.

1. Defining the Candidate Profile.

2. Leading by Example. In my opinion, a leader must always adhere to the principles they advocate. This may seem like a simple truth, but it is crucial. When faced with a task, I always strive to accomplish it. If I fail to do so, others will follow suit.

3. Goal Setting. This helps direct employees towards achieving results. I refer to this as our accountability framework. It’s a system of metrics and motivations. We can create a results-oriented system that retains only those who are driven to achieve. By giving people freedom and keeping only those who are motivated to succeed, we filter out the weak performers. Conversely, if we pay everyone for processes or manage processes alone, we end up with individuals who are good at managing but don’t achieve results.

We need people who can find solutions in challenging situations. I don’t persuade anyone to have those tests but they do explain a lot. Traditional interviews don’t always reveal these inner traits, but individuals who possess them tend to be successful in life.

4. Competition and Transparency within the System. The higher the level of transparency within the company, the better the results will be. Transparency creates a feedback mechanism: a) nothing can be hidden, b) everyone receives enough feedback to motivate them to take action. This is a complex but essential process. I have seen many organizations where autocratic leadership prevails and where such a culture is absent. Over time, these companies lose their bright and ambitious individuals – the ones on whom everything relies.

For people with critical thinking skills, it's important to understand that transparency exists within the company. This fosters productivity. Truly talented individuals who achieve results want to talk about their accomplishments. If a company doesn’t establish a system of transparency and openness, such people tend to disappear. I always welcome employees who offer constructive criticism. I've noticed that a tendency toward critique often correlates with personal achievements.

https://disk.yandex.ru/i/ku_atCAjz08IYA

Critical thinking is a true gift. Often, the ability to analyze a situation and envision alternative solutions gets a person to a new level. However, it’s important to note that only about 5–7% of people are genuinely open to constructive criticism.

Even if the criticism is misguided, it’s crucial to listen. If you prevent someone from expressing their thoughts, they may become reluctant to share valuable insights in the future. I’ve long decided to approach criticism from subordinates with a calm demeanor: I strive to listen, discuss their viewpoints, and I never reprimand anyone for having a different opinion. This approach has allowed me to cultivate a unique culture of openness within the company. It’s essential to understand that the ability to criticize is a sign of courage and transparency, even if sometimes the criticism is not expressed in the most appropriate manner. Teaching someone to communicate properly is easier than instilling the ability for critical thinking.

Many leaders dislike such individuals, but I believe we should be grateful if they are present in our organization. For instance, when someone comes to me to discuss their salary, I recognize that this person is trying to achieve more and earn more, and that’s perfectly normal. It’s always important to view situations from the other person’s perspective.

In this way, we can foster a robust entrepreneurial culture within the company that becomes a self-sustaining living organism – strong and effective.

But is an entrepreneurial culture associated with risks? Absolutely! I’d like to illustrate the main risk associated with an entrepreneurial culture through an interesting and instructive story from my own life. Once, I encountered an issue of greed that I’d like to share. I consider myself frugal rather than greedy. So, where is the line between frugality and greed? Someone once asked me how to differentiate between a frugal person and a greedy one. I replied that a frugal person applies the same standards to themselves as they do to others, while a greedy person prioritizes their own needs above those of others, showing no concern for them.

For an entrepreneur, frugality is beneficial, while greed is detrimental. Here’s the story: It was 2009, during the crisis. We had 12 million rubles in our cash reserves, which was very little for a large company. One of my relatives said that they wanted to buy a country house and needed 6 or 7 million for that. I explained that we couldn’t afford such expenses at that time. He insisted and presented various arguments, including the claim that “you’re working, but there’s no money.”

Why am I sharing this? I want to illustrate where money can go and how important it is to manage it wisely, especially during a crisis.

Many people think entrepreneurship is merely about spending or earning money. Some believe it requires excessive investment in business ventures. But I would argue that often, basic greed hinders people from growing their businesses. For example, if someone has 2 million rubles and wants to increase their income, they need either to risk 1.5 million or take out a loan for 5 million. If they aren’t willing to take that risk, they may miss out on opportunities for growth.

Working in our office in Sochi. October 2023

In public perception, entrepreneurs are often seen as people who splash out money. It bothers me when I see someone publicly flaunting their spending. If an entrepreneur is truly successful and everything goes well for them, they can certainly afford certain expenses. However, we must remember that we are role models for others, and this brings with it certain responsibilities.

Sometimes, businesses need to move quickly from point A to point B, which requires significant resources. Speed is not a luxury; it's a necessity. I don’t deny that I don’t always perfectly adhere to the principle that sometimes requires investing substantial resources for speed.

However, I’ve established a rule for myself: not to spend more than 10% of what I earn. This helps maintain balance and sets an example of responsibility for those around me. Currently, this figure has dropped to 3%. Some might ask, what’s the point of all this? Let me explain: I believe that all earned money belongs to the company. If an entrepreneur truly loves their company, they will never take vital resources away from it; instead, they will strive to support it. I love my company very much. Initially, I took half of what I earned from it, then reduced that to 30%, then to 10%, and now it's down to 3%. I've been through various stages in my life, and as I described in my first book, there was a time when I even lived in a rented apartment so that the business could grow.

I can publicly say that I drive a car that's 11 years old with 120,000 kilometers on it. And I don’t think I’m doing anything wrong. There are months when I earn more in an hour than my car is worth (once, I made that amount in just 30 minutes).

If you want to have a large and growing business, you must immediately say "no" to personal gain. If you agree with this, you can continue reading this book. If not, it will be difficult for you to understand it, and it may evoke negative feelings.

This philosophy is tied to the idea that finances do not fulfill the truly significant needs of a person. Often, people spend a lot of money on food and housing, but this only satisfies their basic needs. True human needs – personal growth, improving the lives of others, creativity, and the desire to create something new – go beyond mere financial transactions.

As a person grows spiritually, they feel less inclined to spend money; instead, their desire to create something great increases. This requires not money, but constant effective work, creativity, and the ability to change the world around them. A business has a chance of success only with such leaders on board. Businesses do not thrive where leaders are wasteful – not due to the finances deplete, but due to a certain inner world of those leaders. For them, creating a strong system is an overwhelming task. My perspective may seem harsh to some, but I sincerely believe that if I hadn't pursued continuous self-improvement, I would never have created anything at all.

Emotional and financial responsibility are key elements of successful leadership. Only this approach let you build a strong company and foster its growth.

If you want to cultivate a positive culture within your organization, you must start with yourself, and that begins with establishing your own philosophy. Society often promotes different values: spend all you earn and take out another loan. Marketers everywhere are primarily focused on your money.

However, you should not act according to what marketers want, but rather according to what is best for you in the long run. This is the foundation of a sound entrepreneurial approach.

Entrepreneurial culture is not uniform; it includes a variety of subsystems. These can include divisional structures, urban organizations, or network partners, as well as emotional groups composed of individuals with different emotional profiles. There are also intellectual subsystems where innovations are created and situational analyses are conducted. Each subsystem has its own unique qualities that leaders must take into account. Some subsystems can be quite isolated from one another. When building such links, it's crucial to consider the risks involved to avoid destabilization.

In one of our company's subsystems, we once encountered a situation like this. In the regional development department, a person with autocratic tendencies came into power. He quickly changed the culture within that subsystem but failed to meet the challenges, resulting in a disruption of balance. This manager possessed contradictory qualities that were incompatible with the needs of the system, which is unacceptable: a leader must have a deep understanding of the essence of the division they supervise. For our company, this department is particularly significant due to the high level of authority entrusted to it.