FOAM ОF DAYS: Yevgeny Shevchenko from Carlsberg Ukraine about a survivor’s mistake, the uselessness of Trump’s books and the occasional white kvass
15 seconds. According to Yevgeny Shevchenko, the current general director of Carlsberg Ukraine, it took him 15 seconds to make a decision about moving from Russia to Ukraine. “My wife wanted to think it over till the next day, but had seen already the answer in my eyes,” he recalls.
The ability to make quick, risky, but effective decisions is a necessary skill for a top manager of a global company that fights for market leadership in each individual country. In Ukraine, Shevchenko had to meet with all the features of developing countries — with a political crisis, a falling market, and uncertainty about the future of employees.
Special circumstances required a special strategy. The company came up with new products that have become a bestseller, occupied vacant competitive niches and quickly increased their market share. Last year, according to Nielsen*, Carlsberg Ukraine officially ranked first on the beer market in Ukraine. In an interview with Leadership Journey, Yevgeny spoke about the principles and approaches used by the company to become the market leader.
Leadership Journey (LJ): We know that you are one of the adherents of the theory “survivor’s error” analysis. How does it apply to business?
Yevgeny Shevchenko (Y.S.): The essence of the survivor’s mistake is that success is visible, and failure is in the shadow. In the shops, there are many books «How to become a millionaire.» I never read them, because I do not know a single person who would read Trump’s book and became rich. It is much more interesting to read about failures, but such books are more difficult to find. As a rule, failures are not in the focus of attention. For example, the famous blue ocean strategy: many excellent success stories are described – Cirque du Soleil, Yellow Tail, etc., but very few failures. In the corporate world by paradox, success is never analyzed. If a unit fails in something, a team of “assistants” comes around, analyzes, makes career decisions, and sets the team on the right path. Success is taken for granted. As to us, we, on the contrary, love to analyze successes.
I do not know a single person who would read Trump’s book and became rich
LJ: Today we listened to your interview with the «Interviewer». Your story of the situation with the Baltika brand was interesting. Do you write the brand name in Latin letters because of the situation with Russia?
Y.S.: No, the story is much deeper. It was a risky situation because Baltika was our brand number 2 after Lvivske, our brand-locomotive. For political reasons, the attitude of consumers towards brands that, in their view, had stemmed in Russia had changed to negative. It would not be enough if we just wrote the brand name in Latin.
LJ: What else have you done?
Y.S.: Brand is a promise. The consumer must trust it. And if the brand is in Latin letters, but does not change, it will not work. We began to develop the brand to root it in Ukraine stronger; we launched options that exist only here.
BRAND IS A PROMISE
LJ: Ukraine adjusted.
Y.S.: No, it was adjusted to what the Ukrainian consumers would like regardless of their political convictions. The grade «Baltika Draft Soft», which is produced only in Ukraine, was a success. At the same time, Efes with its “Old Miller” had left the market and the niche of Draft bottled beer – a soft bottled beer, similar in taste to draft, but served not only in the bar became vacant. We had occupied this niche. After all, Baltika is not a Russian brand, but a Danish one, which was simply born in Russia in the late 1980s. Currently the brand lives its own life in every market.
LJ: Were there other elegant cases like “Baltika”? Maybe there were brands that failed or new brands were created on purpose?
Y.S.: Product innovations tend to fail. Globally, the survival rate for new products in the FMCG category is 20–50%. In Carlsberg Ukraine, the survival rate is higher. Definitely, there is a touch of luck. Baltika is an example of anti-crisis brand management. We had many other bright launches, for example, Kvass Taras Bely, which, by the way, was created by chance. We fermented it with cider yeast. At that time it was a unique product, but currently, it is produced by all kvass producers.
Another example with the element of luck is Kronenbourg 1664 Blanc. We were deciding to import it or to produce it locally. In the case of local production, we needed investments, and the commercial department doubted a success. But in January 2015, a decision at will was made to produce this variety locally. We were lucky, and the exchange rate change was in favor of this decision.
Well, the most important innovation for the Ukrainian market is S&R Garage. We caught the consumer’s demand for a tasty low-alcohol product on time. Young people drink beer less and less, “It is bitter, similar to the one my father drank, tasteless, unfashionable.”
The segment of fermented products with natural flavors existed before, but Garage has brought this category into a new orbit. We were going to launch it a year earlier but did not cope with the P&L. The launch of a new product does not always pay off in the first year. In addition, we have a rule — we do not start anything unprofitable. As a result, three years later, according to Nielsen, the product takes 4%** of the Ukrainian market in money.
Young people drink beer less and less
LJ: So, you have many opportunities to experiment within a global company.
Y.S.: Brewing is a unique job for a marketer because you can work in a global company and have a great freedom in brand building, and not just translate videos into Ukrainian. However, there are rules everywhere: we are completely free to do anything about some brands. At the same time, in some cases, for example with Carlsberg, we cannot violate the standard
LJ: Do you have any concerns about not being able to control everything, including the process of brewing, that you only make some global decisions?
Y.S.: I understand brewing, though not at the level of a technical expert. But I have an idea of the process and of what the quality of the product depends on. After all, I have been in this industry since 2002. Of course, in an international company, the power of the first person is limited, since there is a matrix organizational structure. Such a structure is inevitable for companies of a certain size. Despite the lack of direct powers, I can influence many processes; I just need to negotiate with people within this matrix. If there is an understanding that we have common goals, then there will always be a common language. Two people in different parts of the world and with different areas of responsibility, who at the same time see common goals for the company and have absorbed the same corporate culture, will always manage to come to an agreement.
LJ: If you had the task to describe your Leadership Journey, what major stages would you have identified and what mini-analysis of these stages would you have done?
Y.S.: I followed all the classic stages. Many years ago, as a novice leader, I fell into the trap of control. At this level, a person does not yet understand other people and interferes with their work, trying to control everything. In my case, it lasted from the mid-1990s to the early 2000s. Later, a maturity in my management style appeared. I even remember what helped me to overcome this first stage. I moved from Procter & Gamble to Lebedyansky company (a Russian juice maker, which was bought by Pepsi later) and opened a division in Yekaterinburg in the early 2000s. At first, I was working from home. I had a fax machine, a printer and a computer, which were a luxury at that time. This lonely voyage, which in five months had led to the situation when our company’s vehicles were all over the city, was a good lesson for me. I have realized that if you keep all the details under control, you do not have time to do anything. You need to trust people.
Subsequently, in my leadership practices, I came to what is called authentic leadership. There is a book «Why Should Anyone Be Led by You?» (By Rob Goffee, Gareth Jones), which is very close to me, and I have been practicing these methods for ten years. The essence is simple: do not try to be smarter than everyone and do not interfere with smart people doing their job. Do not lie, because people feel it. You can enumerate principles for long, but there are only four basic ones: people want to be a part of something in common, people want to see sincerity in a leader, people want to feel enthusiastic, and people want to feel their own importance, regardless of the level or area of work they do. If the leader is giving this, they will follow him. Tested on my personal experience.
LJ: What are your control points?
Y.S.: There are reports that I regularly check. It is impossible to manage a company without delving into the numbers. But my main point of control is culture. My people know that we have a «No Surprises» philosophy: if you come and warn in advance about the problem before it arises, no one will punish you. This culture element works most effectively.
LJ: You were saying that one should analyze not only failures but also achievements. Do you find out the reasons for success, if some subdivision showed a good result?
Y.S.: We try to do it. Because in any success, there is an element of luck, and you need to understand is there anything in addition to just luck. In other words, we were just lucky or was it justified. You cannot exactly tell the share of luck. We can carry out a factor analysis, see what had influenced the result, and if there is an obscure bar (on the diagram), then this is probably luck. Statistically, luck is 20–30% of the result.
LJ: Do you analyze your own success in the same way as your team’s success? How do you do it? Is there any done list?
Y.S.: No, I just reflect on it. It is difficult to apply structural factor analysis to your own success. But you can think about it occasionally. Every manager should have some time for reflection. On the Internet, I saw a publication about the daily routine of great people: writers, artists, scientists. It struck me how much they had done in their lives. And it could be the XVIII, XIX century when there was no telephone, no e-mail. I noticed that they were spending less time on writing or research than on reflection.
LJ: Jeff Bezos spoke about fatigue from decision making in an interview. He had to take a pause, not even for an hour, but for weeks. This was confusing for his subordinates: a simple question but the decision was made in a week. Did it happen to you and how do you get out of it?
Y.S.: Decision-making fatigue is an objective medical fact. I know only one way to get out of this state — to be idle for a few hours. Being engaged in meditation is not an option for me, I treat such practices with skepticism and humor.
Decision-making fatigue is an objective medical fact
LJ: Regarding meditation techniques. Do you involve “hyugge” in your corporate culture?
Y.S.: Well, “hyugge” is not meditation. To understand it, you need to know the Scandinavian culture. They have a good base for “hyugge”, which we do not have in Ukraine. First, this is a high level of public confidence and security. Therefore, a Scandinavian cup of coffee under the plaid evokes completely different emotions: it does not mean hiding from stress and problems, but being in harmony with the outside world.
LJ: You say that trust is important. We know that in Ukraine, trust between managers and subordinates is very low. Do you do anything to raise trust within your company?
Y.S.: The only way to raise trust is for managers not to lie to the employees and for their deeds to meet their words. This leads to trust in a natural way. But I would not say that this rule has a universal effect. Any business is a projection of society. You cannot have a high level of trust within any company in a low-trust society. Nevertheless, we have a good base. In our company, people feel protected: they know that they will be paid on time and that the management will not lie if the company is threatened by a crisis.
The only way to raise trust is for managers not to lie to the employees and for their deeds to meet their words
LJ: In Ukraine, the humanity of a leader is often perceived not as a positive attitude and sympathy, but as a weakness. Have you come across such a paradigm?
Y.S.: Probably not, because everything should be in moderation. Sympathy and trust in a person should not lead to a decrease in his productivity. In the above-mentioned book, «Why should anyone be led by you», there is a good recipe, «Be close, but keep the distance». That is, you need to draw a line where your personal life begins. I do not get into the private life of my employees. Never cross the border, when your colleagues become your friends. This devalues the boss-subordinate relationship. You should not make friends with your subordinates.
LJ: Did you catch yourself thinking that you were holding on to some people? Were there people whose performance you evaluated using a different scale? For example, because of past merits.
Y.S.: It is impossible to avoid subjectivity. But a global company has a simple principle: if you like a person, let him go. Therefore, if an employee demonstrates good results, in two or three years I will make efforts to “push” him into the big world of Carlsberg.
LJ: There are talented people, D-factors according to the Thomas System, who break the walls and need new challenges. You surely have such people in the company. How do you find new zones for them to capture?
Y.S.: If a person is bored, I see it immediately. You should send this person to the big world. Unfortunately, we do not have many opportunities at this level. New challenges and projects is another approach. I strongly support the idea that you need to develop people by their participation in new projects and not by training events. I received new valuable information only at two of a great number of training seminars I had participated in during my life. In our company, we have an opportunity to send employees to other countries for an in-the-office training for three-six months. But sometimes people do not return. We had cases when an employee liked it out there so much that we lost a person for the organization.
LJ: Speaking about the value of training. You did study in IMD. What are the three main insights you have learned there?
Y.S.: Often, an MBA provides networking because a person meets people from different countries and industries. In my case, the program was made for the Carlsberg Group, so I saw, mainly only my colleagues. The truth is MBA thoroughly «cleans the optics» and expands the horizons.
The first insight: it is hard to marry beer to the digit. I was a digital idealist. Digital transformation means an opportunity to put the right questions. “How to become more digital?” is a wrong question. “How to use digitalization to become more successful?” is the right question.
The second insight: change in management and culture. Culture is an iceberg, and very deep layers are under water. There are visible formal manifestations: corporate culture, rules, and policies. A huge part hides in the dark depths of the waters. These are stories, myths, some scandals, and intrigues from past times that we do not see. In particular, the informal part of the culture is not visible for new managers. This hidden part influences the corporate culture more than the part that glitters on the surface.
The third insight: there is no universal knowledge. It is difficult to assess the world based on an article you have read 10 years ago.
LJ: In an interview, you said you do not believe in the work-life balance. Do you still hold this view?
Y.S.: To find the balance is the most painful effort. You have to check yourself all the time. What am I doing now? For instance, while I help my child with the homework a business idea comes to my mind. I make a note. So, is it work or life? That is why I still do not believe in work-life balance. My position allows me the luxury of freely managing my time. Definitely, not all employees can afford it. I live and work at the same time. If a person cannot fall asleep, thinks about his job problems, is it work or life? Of course, when you have a narrow operation job, you turn off the computer, switch off your head and go to your family. But that’s another story.
LJ: Do you practice any measurement in the company? eNPS, employer loyalty. Is there any dynamics? Maybe after the crisis, when it was hard, but the company retained its performance, did not dismiss anyone, these indicators have raised.
Y.S.: You are right, after the crisis, the indicators have raised. Everyone saw that the company did not stop and retained social guarantees. Relatively speaking, the lunch price in the canteen did not change. There were no employees’ cuts, which everyone feared. Of course, a person becomes accustomed to everything, and over time, satisfaction rates began to decline. We realized that people might not see what the company is doing for them, and we began to remind them. Every quarter we have a meeting at all three plants, where we gather employees and tell what is happening in the world, in the Ukrainian economy, in the beer market and what we managed to do and what did not. We remind people: according to the results of the previous survey, you wanted this and that, now this has already been done, and this is not yet.
LJ: What were the latest market perturbations you managed to steer? There was a live beer boom, which is almost over now. How did you react to this?
Y.S.: We are a large manufacturer. It is important for us to produce beer of stable quality, achieving the same taste with each brew. Live beer is unpasteurized beer. We tried to play with this trend, but abandoned it eventually, leaving this niche for regional producers of beer. The share of these local plants on the Ukrainian market is about 8–9%.
LJ: Is it much?
Y.S.: If we compare it with other markets of the post-Soviet area, this is not much. Moreover, in recent years, the share has declined, although at the end of the last year we saw a slight increase. However, not all of them produce exactly live beer, because live beer is unpasteurized, and its shelf life is only a few days, so it will never stand on the shelves of retail chains. I would not call it a megatrend in the Ukrainian market. We see no point in responding to it. In addition, from the point of view of the dynamics of the beer market in those countries where I worked, live beer is leaving as an element of archaic. People are not looking for “liveliness”, but new tastes. And the craft revolution, which in Ukraine so far only happens on Facebook, is a reflection of the global trend for something created by a small party, especially for you. This is an emotional response of the world population to industrialization. This is a “back to the roots” request – to the times a granny was growing onions, which was the best in the world.
LJ: How do you invent new products? Has it ever happened that you gather a large group and the birth of this product begins?
Y.S.: There are chance innovations, as with the white kvass, and there are planned ones, for example, S&R Garage. Marketing is always open to novelty if the production section comes out with something interesting. Our main brewer is experimenting; he is an «artist» after all. If he comes up with something unusual, he goes to the marketing department, and they evaluate success in the market. After all, we constantly monitor the market; keep a dialogue with the consumer.
LJ: Do you have an entrepreneurial spirit?
Y.S.: Considering that I am the General Director of Carlsberg Ukraine, not an entrepreneur, I would say, my entrepreneurial spirit is not sufficient.
LJ: General Head of a regional structure should be an entrepreneur to an extent.
Y.S.: If we understand this as a capability to see opportunities, then, probably, yes. But many years of working in corporate structures lead to professional deformation in relation to risk. And it is impossible to be an entrepreneur without the willingness to take a risk.
It is impossible to be an entrepreneur without the willingness to take a risk.
LJ: Does it ever happen that you see a mistake of your supervisors and you have either to do what they say or to leave?
Y.S.: Of course, every manager of a large company sometimes has to say to himself, “Do what you must, and be as it may”. I try to put myself in the place of a person whose opinion I disagree with. Every good leader should be capable to obey. Suppose I would like to do a project the company cannot do … According to my contract, I cannot do business. Therefore, if I have an idea, I share it with an entrepreneur I know. Let him realize the idea; the world will be better.
LJ: How deep a hired manager is allowed to plunge into the business of the company?
Y.S.: It depends on personal choice. But you have to live business in a way.
LJ: How deep can you let it in?
Y.S.: Until the business is making harm to your health, both physical and mental.
LJ: In a recent interview, you mentioned you agreed to move to Ukraine very quickly. So you have made the decision during a day.
Y.S.: I made the decision in 15 seconds. But there is also my family. My family goes everywhere with me. My wife took time to think until the next day but saw everything in my eyes …
LJ: If you compare Russia and Ukraine, is the mentality different?
Y.S.: I do not accept this word at all. I think this is a Gumilev-style, greatly simplified construction. If we take a newborn Japanese and raise him in a family of Americans — will he be a carrier of the Japanese mentality? I categorically reject the notion of mentality; it can be replaced by another construct, for example, cultural code notion. A cultural code can be both, acquired and inherited. It is obvious that Ukrainians are different from Russians. And within Russia, Muscovites and residents of Vladivostok are noticeably different.
LJ: Does the difference affect business somehow? Did you have to adapt to the Ukrainians? Maybe something was working there, but is not working here?
Y.S.: No, other factors influence business: the rule of law, the legislative regulation, the competition, the national economy, and finally the level of solvent demand. You always should adapt to conditions, but in Ukraine, the adjustment for me was minimal. I had more adaptation problems when I had moved from Russia to Latvia, and then to Uzbekistan. The culture difference was greater in those countries. I was young when I had left Russia. Besides, I had an authoritarian management style.
LJ: How did you change your style there?
Y.S.: I had changed my style and soon left for Uzbekistan. After two years in Riga, I became an adherent of consensus management and supporting leadership, and I had realized that this style did not work in Uzbekistan. Despite the fact that I had a multinational team: Uygur, Tajik, Uzbek, Lithuanian, Ukrainian, Danish, etc. Anyway, “the existence determines the consciousness”. The authoritarian leadership style was used in the country and I had to change. The situation was, however, even more interesting. In July, the brewery showed losses because they were stealing money.
LJ: Who could be a perfect manager? Maybe some concrete people, or a collective image.
Y.S.: I do not have authorities. I do not want to be arrogant, but there is nobody I would mention. Every successful person is a product of a huge number of variables. Therefore, I have stopped reading the books of millionaires. I read researchers who collect a panel of leaders and analyze the stories of each of them.
I do not have AUTHOROTIES
LJ: Once I had a discussion with a recruiter, who said, “The owner has the right to do anything.” That is, even if the owner leads his company to collapse, a top manager can only say what he thinks about this and step aside. Do you agree with this thesis?
Y.S.: First, the owner knows better what he is doing. What management perceives as a collapse can be actually a success. On the one hand, this is his business, his money. On the other hand, a good owner should also think about people. Any person has the right to spend the money, as he likes – to give to charity or lose in the casino. However, if a large business goes to collapse, not only the owner will suffer. Good business owners understand this.
LJ: Many very competent people have difficulties to perceive other people’s opinions or to analyze themselves. There are even special assessment methods, for example, 360 degrees. Do you use assessment methods? Do you have people who give feedback on your actions?
Y.S.: I always give people honest feedback and expect the same from them. Any of my people can easily tell me everything he thinks (about me) without any negative consequences. 360 degrees — yes, I also use the method. When using this method, you need the courage not to cheat with the panel. There is always a temptation to get good grades and to this end to choose respondents who treat you favorably. In this case, you need to make an effort and choose those who are not in favor of you.
LJ: We know companies, where the feedback culture took years to be introduced. It all started with mutual insults and complaints. What about your company in this respect?
Y.S.: How do we do this? We are doing this through corporate communication channels, mail, meetings, the same 360 degrees evaluation at three or four management levels, including me. There is more work to be done. When people receive feedback they tend to shelve it away with disgust if the evaluation is bad or a smile if it is good. I want to implement an approach when people would discuss the result of 360 degrees not only with a manager and with HR but also with colleagues. This is not easy to do, especially if the feedback is unpleasant. My first 360 result, still in Latvia, was terrible. Oh, how I was evaluated there! Of course, I began to look for an excuse. This is another mistake of our thinking: you get a five at the exam — this is your merit, but you get a three – you look for excuses (lack of sleep, the teacher was angry, etc.).
LJ: What is the most valuable and significant achievement for you as a leader and manager? Well done, because …
Y.S.: Well done, because I came to Ukraine with a Russian passport on February 15, 2014, I kept the team at that time and led the company to the results that it now has.
LJ: To what extent did you refresh the team?
Y.S.: By 90% in five years.
LJ: Why do you think Russian top executives are coming to us in such numbers?
Y.S.: Where are those numbers? Probably, it was in the pre-revolutionary period, but now I do not see it. In Ukraine, there was always more freedom, and, probably, people came here to have more freedom.
Title photo: brandstory.com.ua
*Nielsen Holdings N.V. (NYSE: NLSN) — Leading global provider of consumer behavior and shopping habits. For more information, visit www.nielsen.com
**Calculations of PJSC “Carlsberg Ukraine” are based on the data contained in the Nielsen retail audit reports in the beer category for the cumulative period January 2018 – December 2018 for the beer market in the urban and rural parts of Ukraine (without the occupied territories of the Autonomous Republic of Crimea, Sevastopol , parts of the Lugansk and Donetsk regions), valid on 01/25/2019 (© 2019, ASNilsen Ukraine LLC).