Russia's opportunity to diversify economy

Chinese language and culture have become even more important today. The two characters for the Chinese word for crisis (wei or "danger", and ji or "opportunity") are a guideline for the Russian government to overcome the current economic crisis - deal with the danger, but also look for opportunities which the crisis has created.

Crises are not new to Russia. The world knows the situations it went through in the early 1990s, 2008, and especially 1998. When Russia faced a major economic crisis in 1998 by defaulting on its bonds which caused the rouble to plunge sharply, I was helping Stockholm School of Economics to start a subsidiary in Russia.

Early during the crisis our organization as well as Vimplecom, one of Russia's largest mobile phone operators, were rapidly losing customers and were depressed. But Vimplecom's COO said that while the crisis had created many problems, it also had presented opportunities to modernize the company's management practices, which would be difficult to do if all was going well. Indeed the crisis ended up helping improve Vimplecom's organizational effectiveness.

The 1998 crisis in Russia taught me one of the most important lessons of leadership - that along with dangers, crisis also present opportunities, and good leaders of businesses and governments alike show their employees/citizens the opportunities, so that they stay motivated to try to create a brighter future for the company/country.

There is major lesson for Russia here. One of Russia's biggest problems is over-reliance on exports of natural resources, especially oil. Russia needs to diversify its industry. That said, it is very difficult for any country to succeed in such diversification program when so much easy money can be made from exporting natural resources.