SHERIFF’S STAR: Dmitry Strizhov, director of Sheriff security holding, on how to go beyond stereotypes and build the largest security holding in the country
You understand what he is saying when you look at the walls in Strizhov’s office. His sports trophies – about 50 medals won in the all-around Ironman system competition are the main decoration element of the interior. Strizhov’ point is understandable – business and sport of high achievements have much in common. Endurance and discipline helped him to overcome five full distances of Ironman competition and build a leading company in the market.
A desire, according to Dmitry, is another component of success which is often more effective than any other prerequisites. “The input data do not matter,” the certified economist is confident. Dmitry Strizhov told Leadership Journey how he managed to become the second corporate security in the market following the state-owned entities, as well as to defeat the cockroaches not only in an old office but also in his head.
Leadership Journey (LJ): You are in a specific business. There are stereotypes about the owners and leaders of security companies. You do not fall under any of them. How did you come to this area?
Dmitry Strizhov (D.S.): I studied at the Suvorov School (Military secondary school for boys – Ed). I received economic education in Kyiv Polytechnic Institute. In the third year of the university, I began to work in a security company: first as an ordinary security guard, then as a security chief, then as deputy director. I saw the structure of the security business from the inside and not everything was to my liking. Therefore, in 2002, I had an idea to create my own company, and a year later “Sheriff” was launched.
LJ: What was it exactly that was confusing you?
D.S.: Rigidity. The heads of security firms were unable to go beyond stereotypes and make non-standard decisions. And all because they were for the most part retirees – former Army or Internal Affairs Ministry officers. They were retired security forces with a well-established secured life, who perceived this business as a kind of hobby. By the way, the security service market is still abundant in companies a la “family leisure club” in Ukraine: about 4,000 companies in the country have security licenses, but I could single out no more than 10 serious systemic companies that operate in accordance with the market economy’ rules.
I saw the structure of the security business from the inside and not everything was to my liking
LJ: What was the starting point of the «Sheriff» story?
D.S.: It was «point zero». Do you know where we had the first office? In a school radio room, the guard’s room, which we used, in particular, for interviews with applicants. In this radio room, the worst part was not a lack of space or wretchedness of the interior decoration, but … cockroaches. You needed to knock at the door loudly before entering to frighten the hordes of them away. Imagine, you come, and a visitor is waiting for you. You cannot possibly lead him into the room with cockroaches, can you? We had to pretend the lock supposedly stacked and knocked on the door with a foot to scare the cockroaches away. In a word, it was a horror.
Fortunately, the first clients had come rather quickly, and our paths with cockroaches had diverged: they remained in that school radio room and the company got a decent office.
LJ: Did you have partners?
D.S.: At first, I was all by myself. I was the head of security and the accountant. I was also managing the personnel. I had to take the accountant courses and to read special magazines for personnel managers. Not because I had nothing better to do, it was a necessity. I had to be a jack-of-all-trades. The business was built that way, little by little. It was not easy. The technologies of the time were not like those we have now. I remember I had an import telephone at home with a call recording system on the answering machine. The guards used to call me at night and report on the state of affairs at the protected objects, and in the morning, I checked the reports and, if necessary, immediately rushed to the object.
I WAS THE HEAD OF SECURITY AND THE ACCOUNTANT. I WAS ALSO MANAGING THE PERSONNEL
LJ: How did you initially look for security guards for the company?
D.S.: Well, in general, everything was simple: I advertised the jobs and interviewed people. It is understood, that we were supposed to have licenses, medical compliances, and certificates of the absence of criminal convictions, as for the training… At that time, the issue of professional training of security guards was not talked about. A man was taken off the street, instructed hastily and sent to an object; and there he was left to his own devices. By the way, now the situation almost has not changed: 95% of security companies do not engage in the professional training of security guards.
LJ: What element do you consider key in your business strategy?
D.S.: I firmly believe that in business the initial characteristics are of no importance. Let us take our company: its founder, an economist by education, starts a specific business from scratch, with no significant start-up capital or patrons in power. There is only a great desire to build a qualitative structured business. A team is gradually formed, its own dispatching service appears, the client base grows, the company begins to participate in tenders for the protection of state objects, a unit of console security and other activities are launched.
And today, “Sheriff” is already security holding with many subdivisions and more than 17,400 objects of console security. We have achieved this result in just six years.
LJ: As I understand, the console security at the start was a real terra incognita for you. It turns out that you once again had started everything from scratch…
D.S.: I will tell you more: in 2012, when we launched this direction, there were a dozen major operators. Coincidentally, at the same time, USS, an international console security operator with a rich experience and foreign investments, came to Ukraine. Think for yourself. Who had more chances to attract clients: this company (USS) or “Sheriff” with no prior experience?
LJ: How did you manage to survive and develop the direction?
D.S.: In the first three years, our loss amounted to 6 million hryvnias. Because the overheads were very large, including maintenance, services, car insurance, training, and staff salaries. You cannot operate a console guarding without vehicles for response teams, as you know. At first, the fleet of vehicles was minimal: five to six cars.
Today, in console security, we are the first by growth rate in Kyiv
Gradually, step-by-step, we increased our turnover – till the moment when in 2014 the dollar increased by three-fold at once. We again returned to the starting point, because the main costs also tripled, and the prices of our services grew much slower. Today, in console guarding, we are the first by growth rate in Kyiv and so far the second after the state-owned security companies in terms of the size of the client base.
LJ: What is the structure of your business?
D.S.: Physical security – 40%, console security – 50%. Additionally, cash collection escort – 5% and detective work – 5%. The last direction deals with the protection of interests of foreign investors in Ukraine.
Practice shows, in 70% of cases, the companies with foreign investments have problems due to the personnel. More precisely – due to a lack of proper control by the investor. When the owner is in another country, and a hired top manager, a Ukrainian is in charge of everything, the latter is often tempted to take advantage of this situation and work for his own pocket.
In 70% of cases, the companies with foreign investments have problems due to the personnel
Therefore, we offer, first, a deep check of the personnel: a “bad” life experience, a background of professional activity, a check of the previous job and even a check of the place of residence. Second, we do official investigations, including a polygraph test in case of need, protection of trademarks, identification of points of sale of counterfeit goods, etc. In addition, our services also include a physical protection from criminal elements and a verification of potential business partners with an analysis of the transaction risk.
LJ: What is the most promising direction?
D.S.: Console security. This service is the most understandable one for people and therefore in demand. Theoretically, every resident of Ukraine can be our client. While we have about 400 clients on physical security, the console security guard objects amount already to over 17,400. I firmly believe that if every apartment had a security alarm, the burglaries would disappear as a phenomenon – because it would be very difficult to do this, almost impossible.
LJ: So, in your business model, you follow by scaling. What are the problems with this?
D.S.: Now we are paying a lot of attention to customer service. Several years ago, when the business began to grow rapidly, I had to change people in the customer service department three times. Because managers, due to the human factor and a lack of an automated system, were unable to respond quickly and fully to customers’ requests and complaints. At this stage of service, it is necessary to quickly process a large amount of information: to check the contract, to contact the accounting department and the operational service center, to analyze the actions of the response team, and to provide the client with a clear, reasoned answer based on this information. Therefore, we had no choice but to invest a lot of money in automation: a CRM (Customer Relationship Management) was installed, and now it is much easier to operate for us in this regard. There is a separate profile for each client; all visits and all calls are recorded. The profile is connected with the lawyers and the accounting department, technical requests and response team visits.
LJ: Have you ever thought of focusing on a separate segment – for example, the protection of wealthy people and their real estate?
D.S.: At a certain time, we did offer bodyguard services, but we quickly refused to do these. For this, you would need highly professional bodyguards, which automatically implies an impressive investment in their training. Besides, your relations with the Ukrainian business elite are good as long as everything is OK, but if something happens, the security company may have great difficulties in further work. In a word, profit is incomparable with risks.
The paradox is that wealthy people often prefer to save on security
The paradox is that wealthy people here (in Ukraine) often prefer to save on security. When in an apartment building 200 of 700 apartments are our clients, the response team can constantly be on duty near the building. In a cottage estate with one or two clients, we cannot afford a separate response group for a village. As a result, in case of an emergency call, the time of arrival can reach 20 minutes. This is too long.
LJ: What is your internal standard for arriving at a call?
D.S.: The operator on duty has 30 seconds to transfer the call to the crew of the response team nearest to the scene. The maximum time of arrival of the group within Kyiv is 8 minutes. “Sheriff” has 25 rapid response teams. By the size of the client base, we confidently strive for the first place in Kyiv.
LJ: What is the strategic goal of your company?
D.S.: The current strategic goal is to have 20,000 console security objects by January 1, 2019. By 2033 – 4 million. I am convinced; you should set only high and very high goals. One of these goals is to cover the whole of Ukraine and become the national operator of the console security. We plan to achieve this goal in five years. Now we aim our efforts at attracting investment, and we are in the stage of active negotiations with US companies on the issue.
I AM CONVINCED; YOU SHOULD SET ONLY HIGH AND VERY HIGH GOALS
LJ: What do we need investments for? The personnel?
D.S.: The response teams are the main cost item. Today, one group costs 90,000 hryvnias; it can qualitatively serve a thousand customers, excluding the cost of technical staff, the duty office. The average customer receipt is 400 hryvnia per month; therefore, until we bring the customer base to the required level, we will incur a loss. To reach the break-even level, a pool of at least 400–500 security points per vehicle is required.
LJ: Specific business needs special people. What criteria do you follow when selecting personnel?
D.S.: The company has several different areas of activity, which means that the requirements for employees also differ. The manager must have high communication skills and be able to sell. The operator of the duty office must make the right decision in an emergency in seconds. The installation engineer must properly mount the alarm system.
LJ: How do you select people for leadership positions?
D.S.: There is a wonderful book by Ichak Adizes, “The Ideal Executive,” where the roles of administrator, integrator, entrepreneur, and production manager are clearly defined. That is, the ideal leader must be able to manage, move, develop, and sell. However, the trouble is there are no people who would effectively combine these functions. An ideal executive should be preoccupied with the integrative entrepreneurial function; he should take care of the strategy. Other people should step-by-step build business processes, manage operations, etc. In fact, this is the way our team is staffed. The company does not need my clones. Everyone should do his or her part. For example, my deputy in development is under 30. In this case, the youth plays into the hands: the guy has an open mind, he has much to strive for, to develop himself and develop the company. Now our holding employs more than 2,000 people.
An ideal executive should be preoccupied with the integrative entrepreneurial function; he should take care of the strategy
LJ: How is built the company’s employee motivation system?
D.S.: Let me give you an example. At the entrance to our office, there is a board with the current number of objects of the console security and our target the number. Every day, employees see how close we are to the target. Every intermediate stage of approaching the target (say, another thousand objects) means an increase in salary for every division of the company. Then the head of the department is free to choose to increase the salary of current employees or to hire new people to fulfill new tasks. Everything is very transparent. Say, the crews of the response teams salary automatically rises after every thousand connection. If you respond to the calls faster, you earn more, at the level of salaries of directors of some security companies.
THE COMPANY DOES NOT NEED MY CLONES; EVERYONE SHOULD DO HIS OR HER PART
I strive to ensure that each employee sincerely wished the company was successful and worked to achieve it with an adequate reward
LJ: How deeply are you integrated in management of the company?
D.S.: I am aware that if I am stuck in the operations management, then at a certain moment I will become a bottleneck and thus slow down the development of the company. That is why, in 2014, in each of the seven areas of our activities separate managers were appointed who supervise operations of a segment. Together we work on strategy, and I dip into operations only in case of large-scale process failures.
LJ: What are your responsibilities at the company today?
D.S.: My first main function is strategic development. Once a week I spend an hour-long meeting with the heads of each department. I also supervise the direction of customer service, because now this is a priority for us: over the past few years, this segment has doubled. Every month we have a separate meeting on customer service, where we discuss the customers’ appeals and complaints. On Mondays, we have a meeting on crucial goals.
LJ: How do you allocate the remaining time?
D.S.: First, sport. Daily workouts for more than 12 hours a week. Obligatory two-hour morning exercises and swimming three or four times a week. I practice swimming in the middle of the day – it helps to reboot and be motivated until late at night. A 45 minutes swim and lunch refresh you and make you capable “to move mountains”.
I proved by my own example that sport changes life
LJ: As far as I know, for you, the sport is not just keeping fit, but something more, am I right?
D.S.: I proved by my own example that sport changes life. 10 years ago, my weight was 102 kg, then I lost weight a little, but I was still not satisfied with myself. In 2014, I was offered to try myself in a triathlon, and I started to train. However, I am not one of those who are satisfied with just participation. Very soon, I set a goal to get to the famous Ironman world championship. This is one of the most challenging one-day competitions in the world: every year 250,000 people participate in the qualifying rounds around the world, and no more than 2,500 of the best amateur athletes enter the final. In the entire history of independent Ukraine, two dozen of our compatriots participated in the Ironman World Championship.
And here I am, with zero chances at the beginning of my training path. At the first start in Kyiv, I finished among the last; in 2015, again in Kyiv, I hit the first 50% of the athletes who reached the finish line, and a year later I was already in 10% of the best! In 2017, I took the 317-th place among the 28,000 participants in the Ironman competition. And in 2108, I finally succeeded to qualify for the World Cup, held on the island of Kailua-Kona (Hawaii). Now, I am the first Ukrainian businessman who participated in the Ironman Championship in the Executive Challenge category.
«At a certain point, I realized that you would not earn all the money, you need to look and see what is next to you.»
LJ: Everything is possible – you just need to set a goal?
D.S.: Almost everything. You just need to understand, why you are doing this and what you want to achieve. Some people think that business and sport are incompatible. But I say they are compatible. You need to set goals with at least 15% of probability of achievement. Of course, 50% is better, but you can start with the 15% mark. In terms of goal setting, I recommend refusing obviously unrealistic tasks (for example, I will never be an Olympic Games champion). However, the goal must be challenging. You give every goal a three-year’ time span and go for it in small steps while disciplining the tasks completion and your will.
LJ: Does discipline help achieve a balance?
D.S.: I still remember the time when I left the office after nine or even ten pm with a briefcase full of documents to work with at home. Later on, the paper documents were replaced by the electronic files on flash drives. My briefcase was not as heavy as it used to be, but the task load remained the same. Now all this “operations’ hell” is in the past. At a certain point, I realized that you would not earn all the money; you need to look around and see what is close to you. Therefore, I made a decision not to deal with work issues after 7pm. Later at night, I only take calls of close people. Weekends are devoted to my family and sport.
From 10pm to 6am, only selected people can call me — the members of my family and the emergency duty officer, but only in the case of an extraordinary situation. As a result, my life style has changed. For example, in 2018, I spent 90 days out of Ukraine on vacation and at sports competitions. To set big goals and follow them, it is necessary to keep a balance and a steady mental state.
LJ: You have plenty of medals of different competitions on the wall of your office. How many awards do you have?
D.S.: There are various awards here – for example, there is an award for participating in 2013 in the Kyiv half-marathon, which was for me a formative stage on the way to the world championship. I have more than 50 medals in total; so far, I have five full Ironman distances in my asset.
LJ: If we summarize, does the success of “Sheriff’ lie in a correct goal setting, clear priorities and a consistent following the intended course?
D.S.: The understanding that the result depends not only on me as the head of the company, but also on each of its employees is the key point of our success. Any link in this chain, which binds us all together, is important. We have repeatedly made mistakes in the past, and it is clear that we are not immune from this in the future. However, mistakes are not crucial if you analyze them and make the right conclusions, if you motivate the staff and constantly improve the professional and personal potential of yourself and your employees. This will imply that the owner or CEO is responsible for his words and lead the company in the right direction.
I have more than 50 medals in total; so far I have five full Ironman distances in my asset.