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Unit One -- Sample Journal

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January 5, 2003

Somewhere on the road between Baku, Azerbaijan and Xhachmaz,
on the border between Azerbaijan and Russia


Thanks for the gift of Kets de Vries' THE LEADERSHIP MYSTIQUE. You can't imagine how much I've needed it & found it useful on this trip. What I thought would be just a routine consulting assignment with the goal of designing marketing materials for a fledgling agricultural credit / lending organization has turned out to be very complicated, and not just about marketing, promotional material design, or sales.

The Scope of Work bears very little resemblance to what it now appears I'm expected to do. I'm supposed to take a leadership position in this, but I'm still not sure what they want. Are all such assignments so ambiguous?

The irony is that I do not consider myself to be any sort of leader. But, leadership occurs in unexpected times and places, right?

Here's my leadership dilemma: They're expecting the marketing materials to pull off some sort of miracle. I just wish I knew what kind of miracle they want.

Kets de Vries has given me an approach. I'll look for the irrational elements of the organization - the emotional dynamics. Then, I'll seek a way to create a kind of grass-roots, bottom-to-top positive transformation through a series of concrete actions and steps. They will be disguised as "marketing" but make no mistake - it's all about organizational leadership and change.

This three-hour drive is giving me a chance to ask some of the questions. Right now, we've just driven by the turn-off to Sumgait, which was a huge petrochemical center during Soviet times. Since Azerbaijan became independent in 1992, the factories have shut down, due to obsolescence and lack of markets. That means 300,000 out of work. They've been out of work for ten years now. There is "employment" of a sort, but it's in the area of services, small-time trading and bartering, and small-scale agricultural activities. The situation is the same throughout Azerbaijan. Azerbaijan, which used to be the fruit and vegetable provider for the entire Soviet empire has lost most of its fields, its juice and canning factories, its agri-industry. Sure, in Moscow, they accuse Azerbaijan of maintaining a kind of "fruit mafia," but that's pretty exaggerated, from what I can tell. People desperate for work go to Russia, work in the markets, send money back home. It's what keeps many
of the rural towns alive.

Now, the international aid community is trying to help people get back on their feet by offering loans. They're not particularly low-interest loans, but they're loans. Dev-Bank is one of these lending institutions. Their goal is to be a viable, profitable business within five years. They're on year 5. They've made great strides, but they have big challenges ahead of them. The managers of the branches are making loans, but some have had some serious disasters. Others are too cautious. The have 100% repayment, but aren't lending much. The managers help clients develop business plans, project cash flow, develop marketing strategies. That sounds good on paper. In practice, it's not so smooth. In fact, it's not smooth at all.

So, they've asked me to come in and help produce the materials and provide advice that they're not able to obtain in Azerbaijan. I've been to Azerbaijan more times than I can remember, and have done this sort of thing in other parts of the world. If it's marketing materials they want, I can do it.
I'm looking at the Caspian Sea which lies to the east. On the west are the jagged edges of old volcanics, which make very attractive mountains, but not as dramatic as the Caucasus ranges. Xhachmaz lies in the foothills of the northern Caucasus mountains, the home of very rugged individuals who speak Russian, Azeri, and their own dialects. Dev-Bank has a total of nine offices, most in very remote parts of Azerbaijan. They don't have reliable phone service. Electricity is restricted to 2 hours per day. There is no gas. Water is rationed or unavailable in the summer. It's not easy to keep everyone on the same page. Dev-Bank employees make trips to all the regions on a regular basis. They drive in old Russian jeeps like this Neva we're in now. It's rugged but uncomfortable - always in 4-wheel drive, a heater that bakes your feet while your arms and torso are freezing.

"My wife worries about me when I'm on the road. She says she never knows if I will come back alive," says Azer. I understand her worries. Not only is the highway an incredibly hazardous place, with potholes, one lane, sheep & goats wandering around, and crazy drivers who do not use headlights - there are also checkpoints at every county ("rayon" in Russian) line. The Rayon Militia can be very difficult. Depending on their needs for cash, they can find fault with any number of things, and completely clean you out of cash. Usually, it's just a shirvan - around $2 - and you're back on your way. Azer is a bright 30-year-old manager who is charged with increasing profitability. I've been able to talk to him, and he's very informative.

But, now that I'm here, it's obvious that they need me to develop a strategy to accomplish the following:
1) improve organizational efficiency
2) establish trust, mutual respect, team-building attitudes, a shared mission and core values
3) develop a corporate image, "brand presence," and general awareness of what Dev-Bank is all about
4) inspire trust and "buy-in" from large, influential companies and entities throughout Azerbaijan and in international aid circles
5) encourage "sponsors" to take out ads or to contribute funds
6) develop a very positive image with the U.S. Embassy, the UN Development Fund, and the World Bank.

They don't want to have awkward meetings, or direct approaches - they prefer an indirect approach. I don't really understand why. Isn't it better to organize everyone in some sort of "retreat" where you put everything on the table?

I suggest this. It is met with awkward silence.
That's when I realize that there's more to this puzzle than just getting all nine branches on board and coordinated through effective communications.
There is poison at home, as they say.
I should have realized this the minute I stepped foot in the Baku office. The atmosphere was different from when I was last here - in October. There were new people, others had gone. The office had been rearranged. Within a day or so, I was able to find some of the underlying reasons:

  1. There had been a theft in the office, and several thousand dollars were taken from the office safe. Instead of embarking on a program of extensive forensics, which I thought was pretty standard (that shows you how American I am! I watch CSI and the FBI Files as often as I can!), the Soviet-era secret police-trained police immediately turned to the tried-and-true techniques of character assassination and trumped-up charges based on "informants." They immediately pointed a finger at a woman of Russian descent. Russians are disliked in Azerbaijan because of years of domination - and, it doesn't matter if you were born in Azerbaijan - if your ethnicity is Russian, you are disliked. "She has had 31 boyfriends," they reported. With that kind of power over men, why would she need money? I thought to myself. They also produced thick dossiers on each person, which had been kept in the central records office, which were maintained on each person. I didn't actually see them, but some were fairly thick - holdovers from the day when every third person was a paid informant, who had to file a report on his or her neighbors, teachers, employers, etc. and report any "suspicious" activity. Needless to say, this little "déjà vu" back to Soviet times absolutely destroyed morale in the office. No one spoke to anyone. Tatiana, the accountant, had a birthday. She brought her own cake, deposited it in the coffee area. Over the course of the day, people slipped over to the cake, cut off a piece, then slipped back to the safety of their cubicles or desks.

2) Long promised raises were not forthcoming. This was blamed on the cost overruns incurred by an Irish ex-pat employee hired through the sponsoring organizations' head office in Washington. Apparently, upon arriving in Baku, he had instantly turned into a pretty good imitation of American and British oil company employees, who insisted upon living in $2,500 / month apartments, having chauffered Range Rovers, eating at exclusive 5-star restaurants, and being members of the Hyatt Regency's health club. They claimed it cost almost $8,000 per month to maintain him. This was in contrast with the $300 - $500 per month that the average Azerbaijani Dev-Bank employee earned. He had been reassigned to Tbilisi, Georgia, but it was too late. The damage had been done. It was believed that almost every Dev-Bank employee had his or her resume out, as they looked for alternative employment. You can't promise people raises, and then take it away. Okay. You can, but they get mad.

3) Some of the bad loans in the regions had been made to relatives of the branch managers. It was hard to collect. This created a great deal of resentment and frustration, as plans were put in place to confiscate the collateral.
We have pulled into the town of Xhachmaz. It is a far, far cry from the boom-town glitter of downtown Baku, where oil wealth possessed by the upper 5 percent has resulted in the construction of high rise luxury hotels, offices, and apartments. More boom times are expected as construction of the main export oil pipeline proceeded. It is designed to take oil from the north Caspian fields of Tengiz and Aktau, and transport them through Azerbaijan, Georgia, and Turkey - completely circumventing Russia.

Xhachmaz is coated in gray mud. There are some signs of new business - ads for Azercell (cell phone service), roadside stands filled with bottled soft drinks. The people are milling around the streets. It looks bleak, but it isn't as desperate as southwestern Azerbaijan. Here, at least, one can bring one's goods to market in Baku, only 2 or 3 hours away. And, the border with Russia creates another trading opportunity. With the closure of the giant "kolhaz" collective farms and processing, every individual has become an entrepreneur, by default. For that reason, access to loans or credit is important. But, more importantly, clients need to understand what credit is all about.

Far from the internal politics of the main office, I can see the main issues at work. We go into the office and met the branch director. We do not take off our coats. There is no electricity, and it is cold. We are offered hot tea which had been prepared on a wood-fired stove. Water is not running. Instead, they have a 100-liter tank from which they took water for boiling, etc. After we meet and have tea, we will go to a restaurant for a late lunch.

Fearing the "not comfortable" outdoor hole-type bathrooms one usually finds in restaurants, I ask to use the ladies' room. It had a Western-style toilet. But, no paper, no running water (thus no flush). I have Kleenex. But - what to do with it??

I start to feel a bit overwhelmed. We speak in Russian, and I ask questions about the types of brochures, flyers, posters, etc. that the branch might find helpful. It is obvious that whatever I have to offer, it had better start addressing some of the issues.
According to Kets de Vries, organizational health is a combination of irrational, emotional dynamics, as well as structural, action-oriented steps that allow one to transcend the negative factors that may be present.

Here is a breakdown of "urgent" issues:
1) Internal issues. Find a way to develop marketing materials to help overcome the internal problems. Could this be possible? How?
2) Short-term emergency "fixes" - develop some marketing materials that would have high-impact results. In other words, generate new business, new revenues, and high-profile recognition from people in high places as quickly as possible.
3) Identify key barriers to Dev-Bank's success and figure out a way to develop materials that would eliminate at least one or two of those.
The branch manager's assistant arrives. He looks to be about 18 or 19 years old. It is explained to me that he was hired because his father was well-connected in the community. He had been the director of the bank during Soviet times. His father had recently passed away, and his son was opening some businesses - a restaurant, a hotel, a water bottling firm. The idea is to have a director who was a technical expert in banking and lending, but to have a deputy assistant who was well-connected. This would assure that community members would pay. In theory, they would be afraid to offend a member of a powerful family. At least that is the theory. It seems very practical to me.

I'm starting to gain a better idea of what they want. Here's how I propose to solve the urgent issues listed above:

1) Internal issues - improve communications, re-establish trust.
a) a newsletter for internal distribution which describes policy, recognizes achievers, details "lessons learned," provides support information
b) new office policies - absolutely no back-biting, "informant" mentality with be tolerated, and it certainly will not be rewarded. Can this be done with marketing pieces???? I think that it has to do with developing core values, missions, and then coming together to solve an urgent issue. Sales goals are good, as is the planning phase for a big revenue-raising event. Public relations and volunteerism can keep people busy in productive ways, rather than sitting around smoking, drinking vodka, and generating paranoid rumors about each other.
2) Short-term emergency "fixes" - developing a newsletter for outside distribution; a company logo, posters and information flyers for each branch. Make sure that everyone has the same information, and follows the same procedures. Community outreach can help branch offices establish a positive image - one idea is to develop materials for children. Specific example: a coloring book. It's fun, it's cute, it encourages literacy, it encourages artistic self-expression and creativity, and it's informative. Further, there is a shortage of materials for children because schools are required to use the Azeri language (not Russian), and they are required to use a regular Western (Latin) alphabet, not Cyrillic.
3) Key barriers to Dev-Bank's success - lack of information, lack of forms. This can help. Also - lack of public presence. Solution: develop press releases that involve this sort of literacy.
It's getting late. We're on the road again, and darkness is falling. I am having difficulty writing.
I just wanted to thank you for the Kets de Vries book. It has given me a methodology and approach for solving a problem.

More than anything, I think that it helped me recognize that many tasks that masquerade as something else are, in reality, all about leadership.

I hope you had a great New Year. Mine was outstanding - I was at a small gathering at the apartment of a French diplomat in the old, medieval walled city part of Baku, in the shadow of the ancient "Maiden's Tower." It was fun. Lots of children running about while the adults danced to old Motown classics. Later, there was an Azerbaijani jazz band consisting of a bass saxophone, conga drum / snare drum, upright acoustic bass, keyboard, and an "oud" - a traditional Azeri mandolin. Very cool. At midnight, we sipped champagne, made toasts. By 1:00 am, we were all out of there. It was interesting.

Okay - darkness is falling fast. More soon & thanks again for the great book!!
All best,