Doing Business With Russians – How to Understand Russian Business Mindsets

There are some fundamental mindsets of the Russian business people. Any person doing business in modern Russia or with Russians would benefit from knowing these as much of business behavior is guided by mindsets.

These five mindsets are

1. How things happen or don’t

2. Decision making – Hierarchy

3. Concept of time

4. Connections – “Blat“

5. Faith in own system

6. Conspicuous consumption

How things happen or don’t

In Russia how things happen or don’t is a mystery very difficult for outsiders to understand. For example, in neighboring Finland things (excluding matters to do with politics) usually happen rather systematically in a bureaucratic fashion and the process is usually rather transparent. In Russia nothing important happens without a crisis or big drama which forces people to act and the forces behind such crises could remain hidden from view. When you are caught up in this “period of inaction” don’t tell the Russians that they are lazy or inefficient. This is a big mistake. They are immensely proud of their culture, their status as a superpower and achievements like space exploration.

Decision-making – Hierarchy

Russia is a very hierarchic society and decision-making processes are very different from western (especially Finnish and Swedish) models. The hierarchical nature of Russian society with very large power distance is very important to remember in business dealings. Who approaches whom in business dealings is crucial to the success. Nowadays, Russian businesspeople pay a lot of attention to how they are dressed. Russian people in general probably spend more money from their family budget on clothing then any other nation in the world. Those who can’t afford to buy top fashion brand clothing (such as Versace, Armani or Hugo Boss) prefer to be dressed in cheaper but still well made clothing. There is an old Russian proverb–“They want to meet you depending on how you’re dressed and they say good bye depending on how wise you seem.”

Concept of time

Many business people in neighboring Finland have started adopting the American concept of time – time is money. This is rather strange to the Russian concept of time. Though he may not appear to be very academic, the Russian businessman is very conscious of how Russia rose from Novgorod days to become a superpower. Russian time does not go in a straight line; it is more like a process of quantum leaps and small circles with no clear line joining the circles. So this concept of long time permeates every action of the Russian businessman. If you lose your nerves when things are not moving fast, you show signs of immaturity.

Connections – “Blat“

In Russia nothing significant moves without “Blat” or connections. People remember and count favors like currency. There is a great emphasis on building and maintaining personal cordial relationships through respect, presents, favors and counter favors.

Faith in own system

The neighboring Finns and Swedes believe that the Finnish or Swedish version of the democratic welfare state is the greatest achievement of the human mind and they are very proud of it. The Russians have a messianic approach to being Russian. For them it is the embodiment of the dream about perfection: nature, the world, man, man’s life, the dream about the Golden Age, about the heavenly city – Modern Rome. They believe that Mankind always goes onward only if the divine light lit the way. Until the fall of communism they seldom doubted this messianic mission. The current state of Russia, with the high prices, insecurity, terrorist attacks and failure of post-communist capitalism to bring heaven on earth has seen the Russian mindset moving towards, “Let’s learn and adopt everything Western!” while never forgetting “Mother Russia knows best.” The fact that people complain about current state of affairs doesn’t erode this basic messianic faith. The following joke highlights this faith.

“A Russian and an American die and they both go to hell. Satan, the manager in charge of hell, asks them, “Which hell do you prefer, the Russian one or the American one?” “What’s the difference?” the Russian asks. “In the American hell, you will be forced to eat one bucket of waste every day; in the Russian, two,” Satan explains. The American decides to go to the American hell. The Russian, being a patriot, chooses the Russian hell. One year later the two men run into one another. “How’s life?” the Russian asks. “Can’t complain,” the American answers. “I eat one bucket of waste every morning, and then I’m free for the rest of the day. What about you?” “It couldn’t be better!” the Russian explains. “Just like back on earth! They’re either late with waste deliveries, or they’re having bucket shortages.”

Conspicuous consumption

The American economist Torstein Veblen first coined the term in his “The Theory of the Leisure Class” back in 1899. Veblen argued that economic life is not driven by notions of utility, but by social vestiges from pre-historic times and much of today’s society is just a variation on early tribal life. This tribal character of Russian life is very central to understanding the stratification of Russian society. Brands and visible symbols of success are priority number one. Here is a nice joke, which is very descriptive about the NRs or Nouveau Riches.

After a car crash a NR is lying on the side of the road, weeping aloud. Oh, my BMW! – He wails, – Oh, my BMW! A passer by is shocked to hear it and asks “How can you cry about your car, when you’ve just lost your entire hand?” The NR evaluates the situation and resumes his cries: Oh, my Rolex! “

With Russians, you cannot separate culture from business. Acquiring cultural know-how and learning the rules of behavior is vital for success. It takes time to earn the trust and respect of Russians. Da (Yes)! Once you earn that they can be good and fun partners to do business with.