ANTI-FRAGILITY: Igor Liski from “Effective Investments” on how to build a stable business in an unstable country
Igor Liski is among the few entrepreneurs who actively invest in new business in Ukraine. He did not stop investing even after he had lost his main production assets during the war in Donbas. Among the new projects of the businessman, there are the honey processing plant Beehive, projects in the energy sector and a startup for the production of cardboard toys. Leadership Journey learned from Igor how to build a business in a country that is constantly experiencing political and economic crises.
Leadership Journey (LJ): What is the main principle of your group of companies “Effective Investments”?
Igor Liski (IL): There are several basic principles, and one of them is to unlock the creative potential of people because the financial resource in Ukraine is very limited. The second principle is a production of export-oriented products as far as possible. The product should be of interest to the world market. Third, the product must rely on renewable resources and follow the leading trends in the world. All these principles reflect the philosophy of our group of companies. For us, creation is a priority; we are trying to find it in every project.
LJ: What products and trends are we talking about?
IL: For example, when eight years ago we were launching a line for the production of cardboard packaging for chicken eggs, we were told that this was nonsense; like plastic is cheaper and the Ukrainian consumer will not overpay for cardboard. At that moment, 95% of the eggs packaging in the market was plastic. However, we had our own vision: we wanted recycling, recyclable packaging, which fully complied with the global environmental trend. Eventually, we have broken the trend: now the share of carton packaging in the Ukrainian market in this segment is about 60%. In five years, I think, plastic will take no more than 10%.
The same holds for the packaging of fruits and vegetables in boxes with internal dividers. In this case, we reduce the storage and transportation waste (rotten fruits and vets). Even in Europe, this trend is just emerging – we are performing proactively.
LJ: What is the primary attraction of a project for you? Is it innovativeness?
IL: As a leader and shareholder, my task is to create an environment in the company that will be conducive to the philosophy of continuous improvement. I like it when an idea inspires people; when they realize that they do not work on KPIs, but feel involved in what is happening in the company. I like the word “creation” and I would like to believe that with each of our projects we are making the world at least a little bit better. When, for example, a modern enterprise is launched in a godforsaken village, which not only gives jobs and pays taxes but also creates a progressive product and moves forward the industry.
I like it when an idea inspires people
I will cite as an example our PAGL toys, sales of which will start very soon. I think this project will revolutionize the toy industry. No matter which aspect you take, this is a truly unique thing. First, the raw material is paper – it is 100% recyclable. Secondly, it is a big colorful designer, which develops a child’s imagination and thinking. Besides, it is completely safe: not to worry your child will hurt itself or swallow some detail. Moreover and finally, this toy bears a deep philosophical meaning – respect for the planet and its resources, which will be instilled in very young children. Not only families, but kindergartens, schools, and orphanages will also buy these toys.
This is a completely original idea, the development of our team. One can be proud of such a project because it is not something that keeps up with the most advanced trends in the world — it is ahead of them. I believe that PAGL cubes will become commercially successful.
LJ: To what extent is your business sustainable in the current era of turbulence in Ukraine?
IL: Being a businessman in Ukraine, and the one who, at a certain moment, had lost almost all the assets, but who never looks back, and tries to build something new – this is in itself an indicator of sustainability.
LJ: How do you make a decision to start a new project?
IL: At the initial stage, we try to involve as many people as possible in the discussion of ideas, in the collection of information. On the one hand, strategic decisions need to be made quickly so that competitors do not overtake you; on the other hand, you need to weigh everything. I do not like it when at first glance everything looks too beautiful, I do not like this sterile perfection. If everything is so good, why has nobody done this before? Therefore, any potential project must be viewed from different angles, taking into account all opinions, even non-standard (unconventional) ones. Having done this, you make the decision.
I do not like a sterile perfection
LJ: For you, the environmental friendliness of the product and technology is not a tribute to fashion, but a basis for doing business, is it right?
IL: Now we have a lot of projects, one way or another tied to environmental friendliness, and those that can be called innovative. I am sure that in the case of honey we have advanced this industry in Ukraine in many respects. Our competitors among domestic manufacturers have begun to work better and are already offering a better product; the industry itself and the attitude towards it are changing. This autumn we are launching the Beehive Academy for beekeepers so that people could turn beekeeping from a hobby into a business.
LJ: So it looks like you are raising the prestige of the profession along the way.
IL: We are doing this, too. Although, the main thing is that we are making new technologies, new approaches available. For instance, beekeeping without antibiotics or improvement of bees wintering conditions. By using new technologies a beekeeper has an opportunity to increase the number of hives from 6-10 (traditional technologies) to 100–200 units. This will be an income sufficient for the family (of the beekeeper) and business development plans.
LJ: Who else in the company, apart from you, participates in the discussion of a project and makes a decision on investment?
IL: This is the top management, first of all. Moreover, we often form groups to solve key issues. This usually applies to projects from scratch and cross-cutting projects that affect several adjacent spheres.
LJ: Does this approach prove to be productive? Are you already the largest supplier of the Ukrainian honey in the EU?
IL: Not yet, but we shall be there for sure. The main thing is that we have introduced a new standard in the industry. We want our honey to be bought all over the world. Priority was given to Europe, the USA, and Canada. For homogenization, packaging of honey, we have built a high-tech plant that has a Food Safety System Certification, FSSC 22000. This is one of the most stringent standards in the world. To reach this standard, everything is important, every detail. Even the floor varnish in the rooms matters, to prevent a single speck of dust getting into the honey product.
We want our honey to be bought all over the world.
LJ: Many successful businessmen try not to take loans and develop a business using exclusively their own financial means. What about you?
IL: We are loaned much less than others are. I believe that the right business can and should develop in an entrepreneurial way. We attract partners in fixed assets, especially in the case of new projects. We are open to investment, but we do not take money beyond necessity — not because we do not need it, but in order not “to sink” into this volatility. This is one of the conditions for doing business in Ukraine.
LJ: Does the company justify its name “Effective Investments”? In other words, is it effective?
IL: Firstly, there is no limit to perfection. Secondly, in some areas we are pioneers in Ukraine, no one has ever implemented such projects here, so there is no reference point for comparison. Financial indicators are different. For example, our Zhytomyr Cardboard Factory is growing in annual turnover by 15–20% for seven years in a row. In my view, this is one of the most efficient enterprises in today’s Ukraine. On the other hand, let’s take the projects of the “Energy of Ukraine” company, which investments paid off in a few months. This is also an excellent result.
Efficiency and effective investments are our main value.
Generally speaking, efficiency and effective investments are our main value. Therefore, we do not invest in the state-owned enterprises’ sector, in which, if exaggerated, you can do nothing and just get a rent or live off rental payments. An industry or a company where it is possible to carry out an effective modernization or even build processes from scratch is our niche. Therefore, we practically do not invest in an established business. Any project in which we participate must in one way or another be associated with creation.
LJ: Let us move from production issues to corporate culture. What role does it play in your company and what is its foundation?
IL: People, who like to create and be involved in something new, come to us. Our slogan or, if you wish, our mission is “Together we build the future.” I stick to this position and those people who work with me too. Maybe, and I am ready to admit it, we are still lacking (weak in) corporate management approach; not all business processes are fully adjusted and not every employee has clearly defined functional responsibilities and KPIs (Key Performance Indicators).
At present, I believe, it is more important to communicate our business principles, to involve people in the activities of the company along the chain from top to bottom. There are no minor things in this task. Do you wonder why our Beehive barrels are gold and have a large brand logo? Yes, because we want to send a message to everyone that Ukraine can create a unique high-quality product. Being different from others, being involved in the process is what you call the basis of our corporate culture.
For me, it is important that the company was attracting employees not only by salaries. They should have a chance of self-realization, of being happier and of making a better world around them. At any rate, work is a very large part of our life, and in addition to money, it must give moral satisfaction.
LJ: It is certainly not easy to find such people. Do you interview your candidates for key positions in the company in person?
IL: I sure do. This is one of the important components of my functional duties. Of course, there is a preliminary selection and I see people who have received the recommendations of our HR-department. My task is to understand how much a person is, as they say, of our format: whether his eyes are burning, whether he is interested in new trends in the field. I like it when a candidate asks me smart, deep questions. His own assessment is also important, i.e., an ability to give a balanced account of his own shortcomings.
I like it when a candidate asks me smart, deep questions.
LJ: You have a year of studies at Oxford. In the field of education, this is a brand with a capital letter, a real thing in itself. Why did you go to study at this university?
IL: I first got to Oxford at the age of 12 on a school exchange programme. It was as if I had landed a different planet. Since then, I had a dream to get an education there. Fundamental knowledge, world-famous teachers, finally, prestige – that is Oxford. 25 years after my school trip I have received a diploma of Executive MBA at Said Business School, University of Oxford.
LJ: As we know, you are also an Aspen Institute graduate, which is referred to by many people as a turning point in life. Could you draw parallels between Aspen Institute and Oxford? Were you inspired with new thoughts, insights, and development vectors?
IL: Aspen focuses more on inner transformation: what is your place in life and what do you want to leave behind. At Aspen, they teach responsible leadership and the idea that in addition to meeting your own needs, you should work for the good of your country.
While Oxford provides an in-depth knowledge of macroeconomics, finance, and marketing. They teach global rules and etiquette of the business, morals of entrepreneurship: why a business exists, what its mission and fundamental value are. Many businessmen, mired in routine, in this mouse romp – like, to return a loan, to close a salary for an enterprise, etc., do not even think about basics. We all need to learn to dream and look at the stars: why do you do business, what is your place in the global context of entrepreneurship. If your business is about “debit meeting credit”, then eventually it will become ineffective or cease to be interesting to you.
I definitely do not want to do anything that makes money and nothing else. I like creative projects that bring something new to the world and make it better.
Reflections on this topic led me to understand what I want to do in business. I definitely do not want to do something that makes money and nothing more. I like creative projects that bring something new to the world and make it better. For this sake, you can work day and night; tolerate the routine, because the goal is worth spending your life on it.
LJ: What is your role in the company, apart from being the main shareholder?
IL: I am the Head of the Board of Directors, but if we forget the terminology of the staff list, I am the leader of each project. My task is to coordinate, inspire and sometimes make the final decision. You have to be a filter to eliminate dummy ideas, leaving only those that would really work.
Thanks to my experience in various sectors of the economy, I can attract experts from the other side of the World, eminent financiers and marketing specialists to brainstorming. These meetings allow the team to make considered and justified decisions on launching a project. What else can I do? I am very good at scolding those who allow a negligence at work.
I am very good at scolding those people who allow a negligence at work.
LJ: Do you still participate in operations?
IL: I started my career as a manager and went all the way up to create my own company. Therefore, I see the inner side of the system: I can find and correct system errors and I understand when a person is not in the right position. I try to abstract from the “OS” because my main function is to find ideas and resources, gather a team and inspire people.
LJ: Are you a true leader?
IL: There are two types of leaders: a “top dog” and a “shepherd”. Sometimes I still have to be a top dog and lead people, taking them by my own example. But this happens more and more seldom. Now I try to act more like a shepherd: to monitor the general situation of the project and not allow the team to deviate from the right direction. Therefore, I see the picture “from the side” and I can make informed decisions. When you are a top dog, you run the fastest and lead the rest, but you often cannot think strategically. “Everyone is running after me!” This is not my method.
LJ: Are there any special techniques that allow you to look at the business process from the outside? Maybe meditation or sport?
IL: Of course, sport helps, but, largely, there are no special techniques. I think I was lucky in this respect: we have a very versatile business and switching between different directions helps me not to be stuck in the routine, and to have a strategic vision. The paper industry, energy, agriculture, IT startups are all very interesting in their own way. The main reason why all these are interesting (projects), there is a creative realization.
LJ: In your office, there are many interesting paintings. Are you a connoisseur of art and do you gather a collection?
IL: I participate in various charity auctions and, sometimes, I get something from them. However, I cannot call myself a great expert in art: I buy only items, which I like and in tune with my perception of the world.