Russia’s Factories Gear Up for Efficiency

This article in Business Week offers a glimpse into some of the opportunities, and challenges, facing Russian industry, both in dealing with the global recession, and their tremendous work to get out from under the legacy of a state run economy.

Two things really jump out at me. First, this particular CEO (other than the fact that he is 26 years old(!) is taking a proactive approach to the recession. He is taking responsibility for dealing with the problems, not simply playing victim and blaming the economy.

…Andrey Gartung, the 26-year-old CEO, believes the global economic crisis offers an opportunity to boost productivity. This year he is adding new product lines, ordering every department to trim costs by 15%, and asking workers to ferret out waste wherever they find it—with prizes of up to $300 for the best ideas. “The companies that will survive are the ones that are efficient,” Gartung says.

With that kind of attitude, I think Mr. Gartung will go far.

But the thing that really jumped out was the incredible magnitude of the opportunity.

Despite Russia’s 7%-plus economic growth recently, much of its industry is little changed from Soviet times. Factory productivity is just 16% of the U.S. level, according to Strategy Partners, a Moscow management consultancy.

That means, friends, that they have an 84% upside. If they can harness that, think about what it means in terms of competition.

Russia, of course, is not without its problems – political, social, economic. The little tidbit that the CEO of this factory is the owner’s son comes out about 2/3 of the way down, as does the fact that the owner is a member of the Russian Parliament. Though I am sure that Mr. Gartung is sharp and competent, in general, this kind of thinking is not going to help Russian industry as a whole.

But rather than focus on them, take a look in the mirror. What is your productivity upside? What is your attitude about these economic times? Do you honestly believe your operation is as good as it can get? Or are you satisfied with 15 or 20% of what it could be?

Consider Toyota’s response to their first quarterly loss in decades – essentially saying treating the loss as evidence of a problem.

Remember that old definition of insanity: “Continuously doing the same thing, and expecting a different outcome.” If you don’t like the results you are getting, then dig in and try something else.

One thought to “Russia’s Factories Gear Up for Efficiency”

  1. And while looking in the mirror, ask yourself, do I believe in applying Lean manufacturing principles. Do I believe in it enough to take those 5 or 10 people that are being laid off and instead put them on some Lean projects full time……..

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