Dr. Axel Kniehl, Whirlpool General Manager for Russia and CIS, clarifies his point of view concerning values in business and private life and explains which ones are crucial for him.
1. What values do you have in your business and private life?
First of all, I think the values in business should be no different from the values in your private life. They should be unilateral because otherwise you have split personality. It is very difficult all the time, it is really tough. There are four values that for me are really crucial. The first one is respect. Respect is basically where it all starts. If I don't respect my counterpart, my business partner, my private partner and if that person does not respect me, it is very difficult to engage him in any type of decent conversation or deal or business activity. Respect is the basis for doing things without prejudice. This is number one. Number two is diversity, in the sense that we continuously should be open for a different point of view and a different idea. It basically makes us much better. As for me I came to Russia knowing nothing about Russia. If I'm not open, if I'm not able to listen to what other people think - and it might be completely contradictory to what I always had in mind - I will fail because the market and the people are different. The same is true for shaping your personality, being open-minded to other countries, other people, other background, other personalities - it's basically what makes life exciting and enriches life. The same is true for business - it basically makes business better and it will ultimately lead to better decisions.
2. What are the rest?
The third one would be trust, which is a very tricky one because there is always a thing between trust and control. The most tricky thing about trust is that it's like a prepayment on an order because you don't know if the trust that you are giving will be responded equally. So you are paying for something and you don't know what is going to happen. As a matter of fact trust needs endless amount of time to be built up and it can be destroyed in a second. The best example is the financial crisis. If I go back to one year from today, after the Lehman break-down, it took a long time to eliminate any trust in the business environment. We didn't know if we would get the money, if we would be able to pay. Everything just flew apart in a split second. And ever since everyone is working on rebuilding somehow the trust because otherwise we will never come back to the flourishing times. Trust is crucial. And the last but not the least is integrity. And integrity is actually very simple; it means that you would never compromise on any of these values at any moment in time, no matter what situation you're in, no matter what business difficulty or private difficulty you are in. You would never compromise on respect, trust and diversity. If you are willing to do that, the values have actually no value. Thta's why integrity is like a shell around the three core values.
3. Can you provide an example when your values helped you to overcome difficulties?
First of all, we make ten decisions every day and three of them are probably completely wrong. We will have to adjust them the day after. And that's okay, that's much easier to do that in a market like Russia than in any other markets. As long as there are more right decisions than wrong ones it's okay. Concerning the conflict with the values, it is crucial that you understand for yourself exactly what is the moment when you say "no". Let me give you a very concrete example. We had a partner who let us down even before I came to Russia. He walked away and was never seen again with a significant amount of bad debt behind. That partner has come back now and wants to re-engage the business under great conditions: prepayment, high margin ability, high profitability for us. Of course, it's tempting, especially in a situation when a market isn't in a great condition and you are suffering from what everybody is suffering. But you have to draw a very clear line for yourself in that respect. For me it was very simple, the answer is "no". I will not compromise on trust and integrity just for the sake of making some additional money. I will never ever be able to trust that company again. I took a decision that I will not re-engage in that type of business.
4. What challenges is your company facing right now?
The challenges that we are facing do not differ much from those of any other industry, for example, low demand. I think our industry has been hit significantly harder than the average, probably similarly hard as the automotive industry. Why? Because if you are tight with money the first thing you do is you stop replacing your refrigerator if it's still working. You will not redo your kitchen; you will redo it a year later. Same with the car - you won't buy a car, you'll do it a year later. We were hit very strongly from the demand side. It was clear due to the financial distress that the receivable side was not improving; it was deteriorating significantly, increasing the risk of bad debts. It leads to pressure on the profitability. It is a very nasty picture; it hits you from one moment to another. And there is no time when you can prepare for it. There are two things that are important. One thing is how you react as a leader. As a leader I think I need to be able to give our staff stability and insurance. The first mistake is to get hyper nervous about it and to start overreacting and trying to adjust left or right every five minutes in a different way. That creates a lot of uncertainty, instability and people don't like that. We spend a lot of time talking to the staff, reassuring them that we are here for the long term and we won't get completely distressed by what is happening today.
5. Do you have anything to add?
The second point is what the corporation thinks and it is closely linked to it. Whirlpool is so far the biggest home appliance maker in the world. It is almost twice as big as number two. So we are much less vulnerable to these extern effects as a cooperation than smaller players in our industry or even other industries. You can balance between the different regions, the U.S. market is already coming back, Asian, Latin American, South American markets are quite well. Even if you have problems and some distress in Europe, especially in Russia, you can counterbalance. It's important not to lose eyesight on the long term. For us Russia is one of the top three-four markets worldwide for the next five years, ten years. I'm absolutely positive it is going to come back faster than we all believe. Also it is driven by the mentality of people in Russia. We need to continue to work for being ready for that turn to come and to be basically with the market and not to turn away from it just because it is difficult right now. We need to tackle all these issues; we are getting tougher on credit limits, etc. But we should never lose eyesight on what we are really here for. We are here for the big win and not for managing a short-term issue.
6. Can you say a few words about responsible risk-taking?
The responsible risk-taking for us over the last year was related to starting our own warehouse and on-shore business in Russia. It is much better to have everybody picking up with their own trucks or own containers, directly at our factories around the globe, importing themselves, dealing with customs themselves and paying to us in euros. It's great way to do business. It was clear that as our retailers become more professional, more European and get more advanced, they will not be willing to do that for a very long time. They will require us to go and sell to them in Russia with Russian pricing. It's tough to decide but at the end of the day it's responsible to take that risk and to go bring the goods here with the right conditions. We worked a lot on how to do the pricing, how to make it work in a way that the risk for the company is not extraordinary, how to make a phase in to have a chance to learn as we go along. At the end of the day if we are not taking that risk, if we had not moved it, we would now be in a very difficult situation. You need to take the risk. You need to make the transformation, but you need to do it with eyesight, you cannot just run into it and say "okay, tomorrow we open a warehouse and then I'll see how it is going to happen". It has to be done with the right approach and the right people. We hired some people who had knowledge in this field just to be much better prepared.
7. Can you give a short and simple explanation of a business model of your company?
If you are a football player, you want to be at every football match. If you are a football fan, you want to be at every football match. We're Whirlpool. I want to be the oven in every kitchen where your Mum cooks and I want to be the fridge in every kitchen where you pick your coke, I want to be the washing machine where you put your dirty dress. I want to be in every home. My job is to make sure that in Russia everybody in every home has a Whirlpool oven, a Whirlpool fridge and a Whirlpool washing machine. That is very simple. My son, who is only four, every time when we are passing a big logo in front of the office, asks me "Daddy, what do you do?" and I answer that I sell washing machines. Kids like washing machines, they like to look into the tumble. Then he looks at me and says "Okay, can you get me one?" - and that's what I do. I get people washing machines.
