The power of freedom

Companies need centralized management, but always try to bring elements of entrepreneurial culture into the workflow. Many companies I’ve seen fail to fully utilize entrepreneurial potential. The distribution of power can be effectively adjusted through the addition of more proactive entrepreneurial elements. 1.

Income Distribution Principle: Employees should receive a significant portion of the value they create, and this share can vary based on their contributions.

2. Employees or partners should have the right to use resources at their discretion. In our system, a realtor can choose not to advertise or spend 100,000 rubles on advertising and potentially earn millions of rubles. It’s up to them. In typical companies, such as sales departments in property development, employees often cannot advertise on their own and must wait for the company to bring in clients. Recently, I spoke to a real estate developer and suggested empowering their employees to find clients, advertise, and earn a commission from deals. They listened and implemented this principle.

Now we see some realtors promoting themselves on social media, posting ads on platforms like Avito, hosting personal fairs, and branding themselves. This is an excellent example of an entrepreneurial approach even among developers. Some developers have sales specialists who not only don’t advertise but also don’t leave the office. They seem to be “stuck” in one place, which is not right.

3. Transparency: The success of entrepreneurship is always determined by the final result. For instance, in our company, the ultimate product of a marketer's work isn’t just incoming client traffic but net profit. We evaluate marketers based on the city’s net profit and profitability trends.

4. Decision-Making Autonomy: If an employee doesn’t have the right to make real decisions, it’s not entrepreneurship. Granting this kind of right to employees can often be challenging for managers because we tend to control rather than coordinate and develop. Coordination and development are certainly important, but entrepreneurship requires a different approach.

Imagine that your employees are not just staff but internal franchisees or partners. Your marketer isn’t just an employee; they’re the owner of their own marketing firm. How would you build a relationship with them? Or consider that your HR department is like a consulting firm you pay for services.

This approach fosters a more independent and responsible team capable of making decisions and driving the business forward.

The principle here is that employees should make decisions without constantly seeking your approval. There’s a book by Alexander Friedman titled "You or Them: Professional Exploitation of Subordinates. Regular Management for Leaders." I fundamentally disagree with the approaches outlined in it. I find it hard to accept the ideas proposed by the author. After reading it, I felt compelled to reach out to him. Although I recognize Friedman as a talented coach, consultant, and manager, his principles greatly irritated me. Reading "You or Them" prompted me to start this work. I wanted to express my belief that every person has unlimited potential. It’s important to grant people freedom, trust them, and support them in decision-making. In my view, this approach is more effective and fairer than the one Friedman suggests.

5. Problem-Solving with Money: I like the saying, "If a problem can be solved with money, it’s not a problem but an expense." I believe entrepreneurship is a wonderful activity. Personally, I’d never be able to work as a surgeon or a pilot, for example. I don’t want to take responsibility for other people’s lives. I cherish life and consider it the highest value. I wouldn’t be able to sleep peacefully if even one life were lost due to my actions, even indirectly. I am convinced that I couldn’t manage such systems or take on those kinds of risks.

In business, you only risk money – specifically, your own. That's your ultimate risk. This is why I believe that entrepreneurship is significantly easier in this regard than many other professional fields. Of course, I care about my employees, but I don't bear the same level of risk.

I want to share one of the most intense situations I've experienced in my life. While on vacation with friends, we decided to ride some water slides set up in the sea. We slid into the water, and when we surfaced, one of our friends was missing. At first, we thought he was just joking around, but after about 20 seconds without seeing him, we realized something was wrong.

Diving under the surface, we discovered that our friend was tangled in ropes beneath the slide. We tried to free him, but in our panic, we only made things worse. The situation was incredibly tense; we could see he was struggling. Fortunately, we managed to pull ourselves together and get him out. This incident reinforced my belief that I couldn't work in environments with such high risks. Even though everything ended well that day, I understand that I am an entrepreneur and nothing more.

From my experience, about 30% of employees quickly adapt to changes and start to actively engage. This is typical in any system. Around 20% tend to leave almost immediately after introducing changes to the motivation system because they seek stability rather than value, and it can be really hard to predict people's preferences in advance. Another 30–50% of employees are worth fighting for. It all depends on how convincing you are selling the idea, how strong your influence within the company is, and how well you build the motivation system.

When we transition to a new system, we always calculate motivation using two models and pay out the larger of the two amounts. That's our rule.

The main problem preventing many company leaders from developing an entrepreneurial culture is their inability to effectively balance three key elements:

1. Responsibility: In many companies, responsibility is concentrated at the top of the hierarchical ladder. You can compare responsibility with a marble slab – rigid, heavy, and sometimes even unmanageable. Leaders often struggle to share responsibility because they believe that subordinates are incapable of taking it on, but that's not the case. From my experience, I can say that every time I delegated responsibility, it was embraced. Imagine that! The highest level of management skill is when your employees start taking on responsibility and showing initiative by asking for resources or suggesting improvements. It’s crucial to delegate responsibility wisely – to sell the idea to the specialist of why it’s necessary for them. This is beneficial for everyone: for the leader, as it frees up resources to tackle new tasks, and for employees, as they can only grow and develop in such an environment.

I often ask during audits: “How often and to what extent do employees ask you for resources?” The most common answer I hear is, “No one asks me for resources.” You might think this is impossible, but it really happens. People often say that everything in their company is clear, well-planned, and distributed, and that everyone understands what resources are available.

For me, the best response to this question is: “Resources are requested frequently and regularly, and we constantly debate who gets what.” In a well-formed entrepreneurial culture, there will always be competition for resources. This is a sign of a healthy system.

Don’t trust systems if there’s no competition for resources within it – it indicates that processes are poorly structured. There are definitely systems that can develop only in the absence of competition, but in most cases, the struggle for resources is essential for efficiency.

No competition means no struggle for resources. No struggle for resources means no effective use of them. And without efficient resource utilization, there’s no business development. Long-term growth is impossible without an effective system.

2. Income and Power: The next aspect is delegating income and power along with responsibility. It’s like precious gems that many leaders prefer to keep to themselves. But true entrepreneurship begins when leaders are ready not only to assign duties to subordinates but also to share the fruits of labor and decision-making authority with them. This helps to form a strong team where everyone feels involved in the common cause.

3. Delegation of Authority: Delegation is the essence of management science. It’s often done poorly, but when done well, the results can be astonishing. In an entrepreneurial culture, delegation allows an ordinary employee to become an entrepreneur.

Moreover, delegation is a reflection of a leader's inner world. I believe in the theory of symmetry: business is a reflection of your "self." The ability to delegate indicates trust in people and a lack of fear, which signifies inner freedom. If a leader does not delegate authority and believes they can do everything better than others, it means they are not free on an energetic level.

If these three components are distributed correctly, the system becomes more stable because its "weight" is evenly balanced. In this case, the employees become the foundation of the system, which makes them less dependent on the leader. This effect can be compared to the lift generated by an airplane wing. An entrepreneurial culture creates the lift necessary for the company's development. It is essential for leaders to recognize and embrace this concept if they want their business to reach new heights.

I strongly believe that a good leader easily shares responsibility, income, and authority with their employees. This is how they redistribute energy. Let’s see it as a celestial body: if a planet were to retain all its energy without radiating heat into space, it would overheat and eventually explode (as we know from the Big Bang theory). Similarly, a leader in a company must not only contain the system's energy but also actively share it, just like the Sun. The Sun continuously emits vast amounts of heat and energy, sustaining life and fostering growth and development. Likewise, a leader should generate energy to support and develop the company while distributing available resources. This approach prevents "overheating" in the organization, which could lead to its "death" due to an excess of unallocated energy.

When reflecting on entrepreneurship, every leader should ask themselves: where is the line between delegating and retaining power? The answer is simple: face the truth. Who is the source of power in the company – the entrepreneur or their employees? What answer can you give to this question right now? If you say it’s the employees, you’re on the right track. You are creating something great and sustainable. But if you feel like you’re carrying everything on your shoulders, you might quickly become exhausted and burned out.

Entrepreneurial culture is based on unleashing the potential of each team member and transitioning from a hierarchical structure to a network of responsible and proactive individuals. In this context, not only financial incentives matter but also the opportunity for each employee to express themselves, make changes in management practices, and even assign specific tasks to colleagues during a project based on their own vision and competencies.

Entrepreneurship is not just a business model; it’s a mindset rooted in individualism and each person's responsibility for the collective outcome. It’s the energy that transforms tasks and projects into final results, making every employee a co-author of shared success. For this reason, entrepreneurial culture can and should be the foundation of modern business, where every team member feels valued and connected to a common purpose.

I didn’t come to this understanding right away. Now, I write about it in my book being confident, due to my experiences, even though many of the results I achieved didn’t come easily. The 2008 crisis forced me to rethink my views on management and radically change my approach. I realized that I was facing inevitable transformations, both as a person and as a businessman. The situation was critical: I sold everything I could, lived in a rented apartment, and had no money to pay my employees. I gathered my team for an honest conversation, explained the situation, and shared my concerns – I laid everything out as it was. I told them that we needed to cut salaries by 20%, but I promised that with increased efficiency, everyone could earn 40% more in the future. All the employees accepted the conditions and stayed in the company because they understood that we had common goals and that together we could achieve more.

When managing processes, it’s crucial to recognize what underlies people’s actions. People always act based on their personal interests, and trying to change that is pointless. Instead of relying on collective intelligence, it’s better to implement a motivation system that addresses individual employee needs, including those related to recognition and self-expression, which are part of Maslow's hierarchy of needs.

Maslow's hierarchy of needs

https://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs

Management systems that understand and apply the principles of this approach tend to achieve great success.

I always emphasize that selfishness and self-centeredness are powerful driving forces. By understanding individual motivations, we can build large and successful systems tailored to the interests of each person. This understanding helps businesses choose the right customer service principles and marketing strategies.

In practice, effective marketing approaches are based on recognizing personal benefits: people choose services that demonstrate clear advantages for them. This management approach allows for the creation of sustainable systems that rely on fundamental values inherent in human nature. With this in mind, I always ask my employees about their motivations. In reality, a person's motivation often boils down to the opportunity to gain various benefits at different levels – material (which facilitate development or recognition), career-related (which provide security for the future), and so on. This is simply human nature, and it's perfectly normal. The key is to understand this and use it effectively to our advantage.

In effective management, it is crucial to build systems considering the unique characteristics and needs of each group of employees. There’s little point in striving for idealized expectations, as real-world conditions demand adaptive solutions. My strategy is to create management models that take into account both the strengths and weaknesses of each team in order to maximize their potential.

For example, in the real estate business, we implemented a system where an agent's income is directly tied to their performance: the more revenue they generate, the more they earn. This model not only motivates realtors but also attracts more qualified specialists to the team. While previously a realtor might earn around 100,000 rubles, top professionals can now earn significantly more.

We value that our partners work for themselves, and it is their personal drive for success that forms the basis of their motivation. Our task is to create conditions where everyone can express themselves and fulfill their ambitions. This leads to the creation of a system where individual benefits contribute to the growth of the entire company.

Entrepreneurial culture has its boundaries, determined not only by fundamental human values and societal laws but also by moral and legal standards. The freedom of action for some individuals is limited by the rights of others. Regulatory mechanisms are in place to maintain balance and prevent potential conflicts.

An entrepreneurial culture fosters sustainable development within the company, even if challenges arise along the way in the short term. In the long run, it strengthens the company by enabling leaders to anticipate changes and adapt accordingly. This culture effectively integrates information flows into the management system, allowing the company to respond swiftly to market changes.