06.10.2008
Oleg Boyarin: Benchmarks in the New Environment
“We will launch a project only when we are sure it will hit the Top 3 and will be efficient in the market and will impact its growth”, says Oleg Boyarin, Chairman of the Board of Atoll Holding CJSC.
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“The goals set when establishing Atoll Holding seemed to be promising and a bit far-reaching”, says Oleg Boyarin, Chairman of the Board of Atoll Holding CJSC. “It was a long-term strategy that could allow us to achieve those ambitious goals. In the end, knowing what we wanted and how we saw the corporate development in a long term allowed us to focus on the core and knowingly discard some business lines”. In an exclusive interview with Oleg Boyarin, we talked about the policy of how to manage successful business projects and about the effective benchmarks.
— What have been the milestones in your business development?
— Our first step in the auto business was the foundation of Avanti in 1993, which name in Italian means "ahead". As such, no auto market existed at that moment. Yet we understood that people were trying to save their highly depreciable money by purchasing a car. The main challenge was where to get one. A car would be purchased no matter whether it was operative at all, and there was hardly any maintenance service available. Thus, in those times cars had to be sold as means of transportation. Nonetheless, we came up with a set of high requirements to be followed: The car was to be new and serviced before sales and well fitted, so that the owner would have no problems with it. Of course it cost the company more, but from the very beginning we relied on the quality of services provided.
In 1995, we established Autotrading JVC jointly with a Russian partner, which became a further business foundation. We were one of the first to start selling cars supported by after-sales servicing. And in just three years our market share of new car sales in Ukraine grew up to 25%. Although Autotrading was actually the key actor in the market of Russia-manufactured cars, we understood that the future is with international brands meeting the highest quality requirements, so we started searching for an alternative. In the end, we made our choice on the brand such as Skoda having much higher consumer qualities. So we have been offering this brand in the domestic market since the crisis point of August 1998. The main thing we have learned throughout this period is how to work in a rapidly changeable environment.
The next stage was the dealer network development in regions. In parallel, we made re-arrangements across business sections, for we were becoming less flexible and responsive to the market alterations because of the complicated structure. Prague Auto and Autotrading as well as a number of other projects so emerged. Besides, there was the necessity for a top structure that would pool each company into a single unit. Thus, Atoll Holding was incorporated in 2000.
I would like to note that unlike most car selling companies seeking to market as many cars as possible, we followed a different way, improving the quality of services and products offered to the market. Selling a car is just the first step followed by after-sales service, spare part sales, financial services, etc. To some extent, we were the first to generate demand for such services. That was possible due to the product-related opportunities used by us, analyzing the range of services required by our customers. For instance, in 1998 we were the second in Ukraine to offer leasing services, but the banking market was not ready to it, so we dropped that line in order to resume it later. Thus, it made sense that we embarked upon the auto manufacturing in Ukraine.
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Currently Atoll Holding covers, apart from the automobile sector (which is represented by car and component manufacturers such as Eurocar CJSC, car importers such as Eurocar Ltd, Formula Motor Ukraine CJSC, Vipcar Ltd, and Autotrading distribution network), the financial sector (Euroleasing, Auto Finance (lending), and Budget Ukraine (rental)), tourism, and construction & development.
Certain segments originally emerged as supporting businesses. For instance, after large development companies had actively moved to the housing construction, commercial property was left overboard. It was rather hard to find a contractor for the construction of a factory or conceptual auto center. So we assumed the function of developing such facilities with a prospect of entering the foreign market. By the way, our firm position with regard to any holding’s business is based on market orientation. None of the companies should parasite on one another. Each company must survive in the rigid market environment and sustain the companies' business as well.
— You have an experience in succeeding in a new project or business line. What requirements does a new project or company have to meet for you to embark on it?
— We clearly see that the company must be the leader and not just an actor in the market. I will not start up a new business if I can see that it is not going to be the leader in its segment or on the market in the nearest future. This means that the new company must hit the top 3 and be efficient in the market and impact it. All three components are requisite, as leadership in the market does not always suggest efficient operation. A new line development opportunity in the long term is as important to us. We conduct thorough market segment research before deciding on a start-up. If the prospective growth is less than 30% p.a. for ten years, we will not go for it.
At this stage, the company is growing by at least 100% annually. This growth rate requires that the management system be regularly adjusted, so we have faced the necessity to transform the company as follows: A managing company responsible for investment strategies, sub-holdings in charge of specific business lines, and business units operating immediately in the company's markets.
— Regular modifications are a fairly complicated process. What benchmarks do you use to keep up with the course?
— It is the systemic approach that remains constant. We build up patterns which make the modifications comprehensible, controllable and manageable. One should not make modifications chaotically, for the sole reason of a change in the market. We make transformations either before or once a need therein has arisen. Thus, every transformation process is planned in advance, with due regard to the long-term goals and strategies designed for 20 years. Now we are staking on new business lines. A strategic project for us is tourism for example. I believe that Ukraine has large capacity for the recreation infrastructure development within the upcoming 20 years.
— Speaking about the people working with you and implementing the company's strategy, how much has your team changed?
— The team moving along with me has hardly changed. 90% of people who were the founders of the company are now working with us in different offices. I distinguish ambitious people willing to evolve and accomplish something. Fortunately, the corporate growth rates allow each employee to face new more complex challenges every time. I stake on the upstream professional growth of each employee. But when we employ someone from outside, our requirements are rather high: The person has to understand and share the corporate values and to maintain the corporate culture.
All I require from everyone else so as I do from myself is commitment. This is my basic principle. I am devoted to my business, and any matter is important to me. I like what I do and I know the directions.
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— Knowing the directions, how do you communicate them to your team?
— Of course people need to know what awaits them ahead, where to go and what for. A team of completely different people is built up for the implementation of a project, and each person requires an individual approach. I rely on those who are the best experts in their fields, and it is difficult to keep such individuals in a bunch. I guess I am able to do this because I strive to help them show their best qualities to the greatest extent possible and to choke those that hinder team work. This is a complicated process because in all situations the circumstances can change dramatically.
At present, we are at the stage of creating efficient communication. It is hard to imagine how the business with the three-level management – holding, sub-holding, and business unit – is going to exist without it. One of the key objectives is thus to create a clear communication channel that will integrate all the employees with the holding whatever their office is. I hope we can implement this project by the end of the year.
— What is your view of your role with the company? What stages have you had to go through personally as a manager?
— I am the person who generates and integrates ideas and encourages others to share and put them into practice in due course. I am involved in drafting the company's strategy and development plans. Certainly I had no idea of how to implement the projects I am working on now 15 years ago. To do it you need to educate yourself and expand your outlook every day. I believe that such knowledge can be gained only empirically, but the values I adhere to remain throughout a lifetime. I am sure that new opportunities and money do not alter the intrinsic human essence but let it go.
— What has impressed you most in the recent month?
— Vacation. Every year I and my friends will select a difficult-of-access point on the globe, arrange an expedition and leave for a couple of weeks. We take with us only the most necessary stuff: A tent, sleeping-bags, food, and clothes. Such a lifestyle allows being unbiased about the environment and knowing the true value of life. Value perception in that environment and here is absolutely different: No credit cards or cell phones, and mutual assistance, trust and friendship are so important like nowhere else.
Read article at: http://www.strategy.com.ua/article.aspx?column=7&article=973
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