The Picasso of Business

By Ksenia Klepcha, EXPERT Magazine, Issue #35
August 28, 20

Entrepreneur and economist Jaroslavs Kaplans describes why a creative approach is vital in business.

Jaroslavs is the president of Kaplan Research Company and an expert in the fields of sustainable business development and the discovery of new sources of growth.

Statistics tell us that only three out of ten businesses live to celebrate their ten-year anniversary. To be part of this “elite few” who survive, entrepreneurs need to be ever vigilant and perceptive about factors in the environment – factors beyond the walls of their companies.

Sometimes referred to as The Picasso of Business for his ability to perceive problems from different viewpoints and perspectives, entrepreneur, economist and author of Business IQ Jaroslavs Kaplans offers advice on how companies can survive in our turbulent times in his exclusive interview with Expert magazine.

BUSINESS INTELLECT

— Why doesn’t every business survive?

— I asked myself this question back in 2015. To draw an analogy between business and medicine, I wanted to find the reasons and the cure for a “disease” causing such a high mortality rate among various companies and enterprises. I compiled and published my findings in a book.

In the life of any business, the time comes when the company is no longer growing and expanding. There are indicators we can use to predict a decline. Most often, such a downturn happens to companies where executives are not able to take into account trends occurring outside of their companies, and where owners live “in a world that no longer exists,” to frame it in the astute words of philosopher Eric Hoffer.

In order to predict and understand the future of your business, it is necessary to create a development forecast or “development vector,” as I like to call it. To do so, we need to analyze what the company was like in the past, what it is today, and how it envisions itself in the future.

Looking at the Fortune 500 list from 1955, we see that the average lifespan of a company from that list was 60 years, but today it is 15-20 years. According to my predictions, very soon this lifespan could be no more than 10 years. Remember Xerox, that juggernaut which towered above many others with its great volumes and power? Yet today its statistics are dropping by 35% yearly. Why? Because no one is using copy machines anymore – today, people turn to smartphones for the same functions that copy machines performed before. The company did not take current trends into account and shunned the market of digital solutions. At the same time, Dropbox, Doc2scan and many others came into being.

Unfortunately, this is not a solitary example. As far back as the 1970s, Kodak was already in possession of the first digital camera prototype. However, they chose not to walk down that path, fearing that the demand for film cameras would drop to zero.

But Fujifilm did catch on to the trend when the time was right and was able to fill the niche of digital photography.

— Why aren’t companies aware of these trends, why don’t they notice the impending downfall?

— 20-30 years ago, the environment was relatively stable. One could draw up various graphs and charts, write expansion plans for 50 years ahead, and put together complex supply chains.

But today’s environment is something I call the DEST world. DEST is an acronym that stands for Disorderly, Egocentric, Suppressed, and Turbulent.

Traditional management tools no longer work in this new reality.

Let me give you an example. Imagine that you’re driving a luxury car down the road, and that is just fine. But then you approach the sea, and here it would be best to park your car and jump into a speed boat. That is the very moment when you need to put your business intellect and entrepreneurial thinking to use.

— How do you define “business intellect?”

— It means exactly what I just said – getting out of your car to see what lies ahead: is it a paved road, a thick forest, or a raging sea? In other words, it’s the ability to perceive the environment in which you’re operating your business and use those tools that fit the environment. The ability to recognize new opportunities is the first component of business intellect.

The inability to recognize new opportunities is equivalent to a disease I call “organizational diabetes.” Let me explain. In medicine, there is a concept known as “insulin resistance.” It is characterized by a large quantity of insulin molecules next to the cell, coupled with the inability of insulin to get in. So, the cell, unable to absorb insulin and therefore glucose, goes hungry. In medicine, the condition where there is no exchange of particles between the cell and the environment outside the cell is called diabetes.

Using the same analogy, if the entrepreneur is not able to perceive information from the environment, their thought processes will zero in only on things within their own “aquarium.” The entrepreneur and their company are surrounded by an ocean of vital information, but they are completely unable to absorb this data or let it into their sphere of activity. This leads to certain important events in the environment going unnoticed by the entrepreneur.

According to my observations, organizational diabetes is very widespread, and most organizations contract this disease regardless of their size. For example, there was a time when Facebook did not recognize the opportunities offered by a new category, short TikTok videos, which they deemed to be just mini-YouTube. And so they missed out on grand opportunities in that niche. But it seems they made certain conclusions. judging by their new social network – Threads.

When the environment is rather turbulent from things like sanctions, state regulation, various pandemics and so on, a person drops down into an apathetic frame of mind. Goals and motivation fade, and the old toolbox is of no avail. The entrepreneur has to have an inner source of energy that allows them to bring their intention to life. That is what I would call “resilience.” The second component of business intellect is the desire and the willingness to use the resources available.

— This is somewhat different than the traditional outlook on management…

— If you ask me, modern business is ubiquitously ill with the obsession to manage. Everyone is managing something, they just don’t quite know what precisely they’re managing. I am not downplaying the role of managers – they are important to companies. But at times, it happens that we come upon a problem with a worm’s-eye view and grope around blindly, trying to find the way. Managers confront problems from too close up. And when that is the case, this management problem is beautifully described by the words of Peter Drucker: “There is nothing so useless as doing efficiently that which should not be done at all.”

Emphasizing management allows one to organize the structure and processes, but at the same time the function (the company’s purpose in the environment) is nearly always ignored. Hence, the true meaning of the company’s activities is lost. In the Three Musketeers by Alexander Dumas, Porthos (one of the musketeers) utters this phrase: “I am going to fight because I am going to fight.” This illustrates well how the purpose and the means of achieving that purpose collapse down to one point. Little has changed in the last 180 years since Dumas, and many entrepreneurs continue to simply “fight because they fight.”

Yet the entrepreneur can perceive any problem from a totally new viewpoint, distancing themselves from the company and taking an outside view. At times, it is enough to take a small side-step, to adopt another viewpoint in order to see new possibilities. And that is the art of seeing opportunity where others see only problems. Today more than ever, large businesses need a generation of leaders with this sort of thinking.



The Business Tale of Goshio the Goldfish

— Your business tale of Goshio the Goldfish has been translated into 15 languages. Why did you approach this subject in such an unorthodox fashion?

— It is easier for people to perceive and absorb complex ideas if you present them as a metaphor or in the format of a fable or tale. In my story, I compared entrepreneurs and their activities with a little fish in its aquarium. When the environment inside and outside of the aquarium is stable, the heroine is happy, does what she wishes and deems herself a true queen. But at some point, it turns out that the aquarium has its own motion and can move in any direction, taking its inhabitants along.

This is revealed when in our tale Goshio decides to swim south, yet the aquarium unexpectedly starts moving north. As a result, unable to fight the current, our goldfish freezes to death in the icy waters of the Arctic – as Xerox and Kodak once “froze.”

I use this business tale during my seminars because it is a great illustration of situations real companies come up against. For me, it was important to not only describe the problem but offer a solution as well. That is what I did in my more “serious” book, Business IQ. The book is not replete with fantastical metaphors, but it does offer readers practical advice they can use in their professional lives.

In my viewpoint, when companies create product value, they need to take into account the environment, the context of interaction with consumers that they find themselves in.

Take flowers, for example. You can give a bouquet of flowers to your wife as a token of love and attention, you can use them to decorate a festivity, or you can weave them into a funeral wreath. These are absolutely distinct product values, adapted to different contexts of interaction while the product itself remains the same.

— Your book Business IQ is meant for a broad audience. Do you believe that anyone can develop their business intellect?

— Yes, to some degree. However, if we take two students in the same classroom and teach them using the exact same method, results could vary dramatically. One of the students might achieve stellar results while the other remains a “C” student.

Some people have more aptitude toward entrepreneurial thinking, and they make successful businesspeople. But others may well find tools in my book that suit them in their personal lives or to grow professionally and in their careers.

Business is a philosophy to a certain degree. The entrepreneur becomes part of the product, playing a role in the screenplay of the product’s interaction with the consumers.

The product is no longer a thing in itself, but now a link, a connection used by the entrepreneur to interact with the consumer. In this business system, we could say that the product is a “quantum” of interaction – its main purpose being to help build a relationship between the entrepreneur and the clients.



Anticapitalism

— You mainly studied American sources. How workable is it to apply the American capitalistic philosophy to Russian business realities?

— In a way, my philosophy is actually that of anticapitalism. Capitalism is about exploiting various assets, and in today’s new realities this philosophy loses its advantages.

In my books and at my seminars, the advice I give is: “Let’s change our thinking!” There is no use in someone changing their “doing” without shifting their mentality as well. You’d agree, I think, that it makes little sense to give an alcoholic a liver transplant unless they change their lifestyle.

— But Russia has its own unique particularities…

— This is hard to disagree with. Look at the changes Russian business experienced in its environment. All of a sudden, the role of Russian entrepreneurs in international logistic supply chains up and changed. They were simply removed from many such chains. This is like the example with our automobile arriving at the seashore. Final stop! Time to switch your vehicle.

— What gets in the way? What hinders our business sector from transforming today?

— Imagine that you have a certain physical ache. This problem can be attacked by various means: surgical intervention, pills, naturopathy, diet, fitness, etc. Let us say you chose aromatherapy. Then you come to your session and see that the aromatherapist has a scalpel in their hand. I doubt you will want to use their services. And the fact that they read a few books on the art of surgery will hardly put you at ease.

Why? Well, because an aromatherapist with a scalpel in hand is an oxymoron. You feel this intuitively without the need of getting a master’s degree to understand this fact.

The body isn’t a set of organs existing all on their own and isolated from each other. It is a system. Now, it all comes down to this: each specialist perceives the body differently, each sees their own system. To the surgeon, the aromatherapist, the fitness trainer, the body is not the same system.

Hence, their outlooks on the body’s functions, structure, limitations and possibilities, processes and elements are different. And so it turns out that the body is the same, yet there are an infinite variety of perspectives on what this body is and how it works.

Right now, we’re not discussing who is right or wrong – that is not for us to discuss. We’re talking about the fact that a myriad of viewpoints and perspectives can exist about the same object (in this case, the human body). Each of these perspectives (viewpoints) will entail its own order, its own classification of information.

And so we have a scenario where there are different perspectives about the same thing, and each of these viewpoints belongs to different fields of knowledge or “categories of meaning.”

If we talk about various viewpoints in business, we need to understand that different specialists – like managers, finance staff, production workers and executives, marketing experts, HR personnel, etc. – will perceive the organization as a different “beast” – just like in our example with the human body. But actually, it all comes down to how consumers perceive our company, not the experts.

Don’t be like the “aromatherapist” above!

When the market takes an abrupt turn, the context of interaction with clients also radically changes. Using old methods or methods inappropriate for the new context will cause the business to crash and fail.

Consumers no longer perceive the old meanings, and no one is providing new ones. We could draw an analogy here with the caterpillar and butterfly, claiming that the caterpillar already possesses all the traits that will later turn it into a butterfly. But you’d agree, I think, that a larva is not the same as a butterfly. The latter is not just a perfected caterpillar but something fundamentally different, with some elements of the old.

Providing clients with new meanings is a vital ability for the entrepreneur. Russia is at a crossroads right now. Either new meanings for consumers will be created in sufficient quantities over a short period of time, or there will be a stage of exploiting old resources and old meanings, which will inevitably bring about a decay.

— What is bad about the second route?

— In the conditions of a closed-off market, exploiting old set-ups may stretch out for decades. And then the economy could grow into a much too primitive one, based only on resources and putting them to use. New resources come only from new meanings.

Entrepreneurial tasks are always creative ones because tasks revolving around interaction always have more than just one right solution. Narrow and non-creative tasks more often than not do result in only one right solution. Today, this is the challenge before Russia, but then your country has many talented creative people.

— Creativity always has some mystery in it…

— Absolutely! Creativity is the bridge between entrepreneurship and art. There is a crucial principle having to do with creativity: creativity is not bound by the limits of known human experience or by generally established algorithms. It is based on neither logic nor mathematics, and it exists, first and foremost, in the realm of imagination – the Muse of all art.