Guest post by Valeri Belokon, Latvian businessman and co-owner of Blackpool, the English Premier League football club.
Despite the unforgiving winter that has plunged Central Asia into a deep freeze, Ukraine appears to be on fire. Over a month ago, protests erupted in the capital city of Kiev, as ordinary Ukrainians lashed out against President Victor Yanukovytch’s decision to back out of a long-planned economic deal with the European Union and instead pursue a compact with Russia. But however this crisis plays out – whether Ukraine ends up leaning east or west – the country’s ultimate success depends on more than just the economic support of one power or another. It depends on the ability of its own people to develop and sustain a thriving free market economy.
I know first-hand just how challenging this can be. Two decades ago, when the Soviet Union broke up, I was a student from another former Soviet Republic – Latvia – who was deeply interested in business. I managed to secure the opportunity to study at the University of Massachusetts at Boston, where I learned the basics of business – concepts that I had never been exposed to growing up in a centrally planned economy.
For the first time in my life, I saw what it meant to operate in a free market economy: I learned the importance of accounting; the importance of good human resources to recruit and retain talent; the importance of marketing and communications; and the importance of a functioning judiciary to resolve conflicts. Going to school in Boston exposed me to role models and helped to develop a vision for the kind of entrepreneurship I would go on to pursue. Eventually, I went on to a successful career—as a banker; as President and co-owner of English football club Blackpool; and as an active philanthropist and Trustee of the Board of the Prince’s Foundation for the Built Environment.
It may sound like a simple solution. But this is what the people of Ukraine and all of Central Asia, particularly the young people, need more than anything: the development of basic business skills – the nitty-gritty of how to start a business, how to run a business and how to work in a transparent environment.
In the Soviet Union, the reward for being an entrepreneur was prison. In the 20 years since independence, this region has simply lacked role models for how to operate a free market economy. After all, under the Soviet system, the government controlled every aspect of economic activity. You worked on salary, and got a bonus at the end of the year. Many people didn’t understand that there was a way to make money without wrongdoing, because the assumption was that it was a corrupt system, and you had to be equally corrupt to get ahead.
Former Soviet states that shared a border with a European nation received business training almost immediately from nations like Germany and the Nordic states. In Latvia, German entrepreneurs sponsored an array of business education programs; today, it’s ranked among the 60 wealthiest countries in the world.
But in the landlocked states of Central Europe that didn’t share a Western border, former Soviets had to teach former Soviets about free markets. It was like two people who had never even held a baseball teaching each other how to play the game.
The result? Even the most basic business skills are still lacking in Central Asia. Too many people don’t understand the importance of customer service; the importance of the customer is always right; the importance of giving the benefit of the doubt. Entrepreneurs haven’t been taught how to order goods, keep an inventory, work eight hours a day, or sign and honour a contract. The tendency is to fall back on old ways: taking whatever you can at any price.
Over the past two decades, governments have assisted countries in Central Asia with building the economy, improving infrastructure, and developing political systems. NGOs have helped with investments and have shared insights into creating a modern civil society with rule of law, a functioning judiciary, and equal opportunity for all.
But none of that generous help has touched the thing that aspiring young entrepreneurs and businesses need most: the basics. This is where businesses can play a major role. Fifty years ago, the U.S. government created the Peace Corps to spread Western values across the world. It might be time for the U.S. Chamber of Commerce, or other business-oriented organizations, to create an Entrepreneur Corps that can teach business skills to the emerging economies of the 21st Century.
Such an Entrepreneur Corps can help develop strong business partnerships focused on sharing information and knowledge. It can facilitate business-to-business exchanges and mentoring programs. It can partner with universities to provide distance-learning opportunities that teach basic business techniques. It can bring real-world experience and practical advice that can help citizens of the region create a business plan, identify start-up financing, and create a new generation of entrepreneurs. Over time, this could lead to a sea-change in the economies of Central Asia.
As more companies in the region understand how American businesses run, they will be in a position to establish stronger relationships with U.S. companies. In turn, American companies will benefit from developing contacts in these new markets and picking up new opportunities and ideas from different countries.
Former U.S. Secretary of States Hillary Clinton once observed that, “If sanctions are among our more powerful sticks, our culture of entrepreneurship is one of our most effective carrots.” At a moment when the world is watching to see whether Ukraine will strengthen ties with Western Europe or reinforce old bonds with Russia, America’s unique leadership in business and entrepreneurship could be just what the region needs to move beyond the legacy of its Soviet past and reach its full potential.