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Sanctions in Action!

17.03.2022 6 Min Read
Nino Kalandia

Strategic Communication Lead

Sanctions in Action!

Ukraine has been defending its homeland and freedom for 22 days now, with the rest of the world virtually involved in the war. Activation of mass media enabled bringing more clarity about the ongoing war in Ukraine to all parts of the world. It is obvious that the world has already shaped out the winner of this war and this is Ukraine.


The world is descent and radical in its actions. Since the beginning of the war, Russia has been subjected to unprecedentedly high-ranking and large-scale sanctions, and the process has not yet stopped.


All the said above created an expectation that sanctions would have rapid and devastating effects and the war would stop immediately. However, the reality showed up differently – though the imposed sanctions are disastrous for Russia, the war is still going on.


Winged Sanctions Against Winged Missiles


As defined by experts, the purpose of the sanctions is twofold - in the short run, they would cause an economic shock to Russia and lead to the awakening of Russian citizens by exposing them to terrible discomfort, while the citizens in their turn are supposed to force their government to step back.


In the long run, the sanctions aim to derail the Russian economy in order to completely tip the economic balance for an extended period of time, through reducing Russia’s military strengths as its key priority – distracting Russia’s military reinforcement, and killing the ambition of rebuilding the Soviet Union.


Default at Russia's Doorstep


Let us see how did both of the above goals translate into the results: the Russian economy is already facing a technical default. According to Fitch (www.fitchratings.com), the risk of possible Russian default in 2022 constitutes 71%. Default is of technical nature as Russia cannot be able to meet its foreign liabilities promptly, not because of lack of finances (at this point) but because of its inability to manage its existing finances as the country's central bank accounts are frozen.


Russia has considered 175 billion of its reserve fund as a security cushion. Part of the money preserved in this fund is placed in the bonds of the countries that imposed sanctions on Russia, therefore, it is inaccessible. The rest part is kept in gold, while the current image of Russia makes finding its buyer in today's market almost unthinkable.


Russia, trying to maintain a spark of optimism at least within the country, started discussing the Ministry of Finance’s "smart plan", according to which certain new accounts will be set up to accumulate the sums required for the payment of debts in Rubles. Russia plans to address its "debtors" telling them that “the requested money is in place but it is in their national currency (though Rubles are not accepted anymore). The challenge is that if they want to receive it in other currency, then they need to unblock foreign currency accounts for Russia."


Experts of the Russian ‘Empire’ believe in this plan, while independent Russian experts, on the other hand, clearly realize that these tricks cannot help the country to avoid its nearing economic collapse. As the independent experts predict, the economic downturn is inevitable, where Russia's economic indicators may drop to that of the early 90s.


The Domino Principle


The sanctions have already born their short-term consequences in Russia - the production chains are broken; the manufacturers depending on imports of products from other countries have to stop or rush to find alternate suppliers. Reassembling the chain may take time but experts believe the sanctions will affect this process as well, and here’s why: If earlier, Russia could choose the most lucrative of several offers, now the reality has changed considering the new restrictions and the country is forced to choose whatever is accessible, while that option can be far more expensive. In supplement, each delayed or unsuccessful chain will lead to a drop in production and raise the unemployment in the country.


The long-term perspective looks even more hopeless for Russia. It is expected that after the end of the war, the sanctions will not be lifted for yet undetermined period of time though even in case they are lifted, the risks now exposed will be necessarily taken into account while planning any financial transactions. This, in turn, will hinder possible major investment or partnership opportunities.


Georgia – as an Economic Parking Zone


As a result of the sanctions, any economic activity in Russia will become more expensive, and people will face more and more poverty. Certainly, such a prospect does not look attractive to those already anticipating the effects of sanctions.


This is why some Russian citizens decided not to lose time and immediately flee from the country, some trying to escape poverty and others to maintain their financial status.


According to the Minister of Internal Affairs of Georgia - Vakhtang Gomelauri, up to 25,000 Russian citizens crossed the Georgian border in the last two weeks, of which 3,000 are still staying in the country.


Shortly after the start of the war, Levan Kiladze, the founder of one of the largest real estate platforms in Georgia (ss.ge), presented data stating that "the number of website visitors from Russia increased sharply after the start of the war in Ukraine." Furthermore, more than 300 companies owned by Russian citizens have officially registered in the National Agency of Public Registry of Georgia.


The following question arises: Why did Russian citizens decide to use Georgia as “an economic parking zone”, the country they are in a long-term conflict with (20% of Georgian territory is currently occupied by Russia). What is the reason? Could it be the effect of a position “not to join the sanctions” and the declared list of “non-friendly countries to Russia” (where Georgia is not listed)? With this in mind, could they get the impression that Georgia can serve as a cozy nest for Russian "migratory birds"?


We do not have a clear answer to this question, though we own the reliable data confirming that 7 out of 10 residents in Georgia assume that the flow of people wishing to move to Georgia from Russia will definitely increase.



According to the research, the biggest concern of the population is the possible prospects and plans of Russian citizens for staying in Georgia. In total, 70% of the population stands in favor of imposing at least one or more restrictions on Russian citizens with regard to entering the country.



When Caution is the Parent of Safety


The aforementioned cautious attitude seemingly formed within the country of Georgia is not accidental. Russia's actions push those civilized countries under the potential Russian threat, to be more cautious due to Russia’s habit to “track” Russian citizens living in other countries and, based on fake threats proposedly they are exposed to from the host country, invades the foreign country’s territory to “liberate” Russian citizens. Having said that, the authorities of many countries keep imposing cautious restrictions on Russian citizens, on one hand, for security reasons, and on the other hand, in order to avoid collaboration with the aggressor.


„At the moment, Russians are not much-desired guests here”, said the State Secretary for Asylum and Migration in Belgium – Sammy Mahdi, referring to the restriction of visas for Russian citizens, and called on the European Union to do the same.


Later on, the Baltic states - Estonia and Lithuania - also restricted tourist visas while as an exception, only those who travel to their relatives or for medical treatment are allowed.


Sanction - an Effective Weapon in Hybrid Warfare


The people of Georgia agree that the sanctions imposed on Russia by the Western countries are effective. According to ACT poll, 70% of citizens consider these sanctions to be very or somewhat effective.



Believing in the effectiveness of sanctions and taking into account the impending threats, the population of Georgia demands protective mechanisms, specifically those allowing to impose more control over the property issues and strict filtering of inflows from Russia. International demand is to impose sharing sanctions which could become a clear signal coming from a country standing at the doorstep to EU membership.


Those who believe in the effectiveness of sanctions, keep in mind the old Chinese proverb - If you wait by the river long enough, the bodies of your enemies will float by. Let us remind you what the ACT survey shows: 84% of the Georgian population is well aware of who is expected to show up in the river.

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10.03.2022

The air had long been filled with the smell of gunpowder, and the whole world was anxiously waiting for what would happen, but in the morning of February 24, it came as a surprise - Russian troops invaded Ukraine and launched the large-scale hostilities. The last drop of hope that common sense would prevail over ambitions of "big-country", was lost. The "demilitarization and denationalization" of Ukraine, dubbed as a special operation, tuned out a ruthless and aggressive war against a sovereign country for two weeks now.


The war in Ukraine is of the highest interest and excitement in Georgia, where the protests in support of Ukraine, the organization of humanitarian aid, and various acts of solidarity keep continuing. On the one hand, the perception of sharing a similar fate and common threats and on the other hand, the unprecedented fighting spirit and heroism of individual people vastly demonstrated by the Ukrainians have brought this war very close even to ordinary Georgians and made it a part of everyday life.


ACT could not stay away from the hot topics in the country and polled the population with regards to the Russia-Ukraine war. The research aimed to find out how our fellow citizens see this war, what are their expectations like, and how can be valued the level of solidarity towards the parties involved in the war. The telephone survey was conducted on March 4-6, 2022 and it covered 809 respondents. The sampling error is 4.2%.


Though we are accustomed to the endless polarization of views of the population regarding current internal issues and events, The war of Russia with Ukraine revealed the unanimous and clear position of Georgians. The consensus regarding this war is being demonstrated in a way never seen before.


And yet, who is Russia?


The vast majority of the population - 84% - openly state that "Russia is the enemy." The number of those who do not share this opinion does not exceed 11%. Russia is perceived absolute unanimously in Georgia, which leaves no questions about its aggressive nature. A surprisingly large number of people sharing this attitude leads us to the thought that this issue overgrew the internal controversy and united the people having different views.  



The vast majority of the country's population (91%) has no doubt that the developments taking place in Ukraine are nothing but a war crime committed by Russia. It is clear, that the position of Georgians is unanimous and solid regarding where the truth rests.



How can things develop in Ukraine?


The survey shows that at least half of the country's population (49%) did not expect Russia to start a war and invade Ukrainian territory. 17% expected hostilities only on the territory earlier occupied by Russia or in their vicinity, and one out of three respondents expected that the war would extend to the entire territory of Ukraine, including Kyiv (31%).


Every 2 out of 3 respondents predict the victory of Ukraine in this war (63%), while 12% seem more pessimistic for Ukraine and expect that Russia may win. One out of five respondents is confused and has no decent answer to this question (20%). Some believe that there cannot be any winner in this war (5%).


9 out of 10 respondents strongly support Ukraine and wish to witness Ukraine‘s victory in this war (88%). The extremely small number of the country's population - 1% - is wishing Russia’s victory.




How may the Russian-Ukrainian war impact Georgia?


The results of the research prove that the war initiated by Russia on the territory of Ukraine is the most sensitive and painful topic for Georgians. Almost all respondents believe that the current developments taking place in Ukraine are completely or partially related to Georgia (96%). According to the research, it is difficult to argue that when answering this particular question, the respondents meant any political, economic, military, or another type of impact on the country, although it's clear, that for them this war is not a thing happening somewhere far distanced from their country having no links and echoes.



The more specified questions answered by the respondents with simply expressed agreements or disagreements showed that:

  • 87% of the country's population thinks that "the war in Ukraine is our war as well."
  • 72% of the country's population expects that "if Russia wins over Ukraine, then Georgia is the next target." In addition to human solidarity, the research plainly demonstrates the highest importance which the respondents attach to Ukraine's victory in this war.


Half of the surveyed respondents (51%) expect the forthcoming problems from Russia in any case. In their view, "regardless of how events unfold in Ukraine, Russia may still invade Georgia." Russia does not need any extraordinary reason or favorable environment to invade the country with tanks.


Georgian people are watching closely the hostilities being continued in Ukraine and are looking for a glorious victory of Ukraine. Time will show to what extent the existing drive of the population may transform into adequate actions and attitudes, though the messages for decision-makers are completely clear and unambiguous.

22.12.2021

Manage the cause, not the result – this phrase belongs to the founder of Total Quality Management, William Edwards Deming. Total Quality Management is a concept, designed to create such an environment for the entire organizational staff, where the employees are given the floor to continuously develop and build their capacity and skills in order to born valuable products and services for their customers. Even though this phrase sounds short and simple, it dramatically transforms the behavior paradigm dominating nowadays.


Literary, in almost every organization we find a manager who does not like to hear about problems, and the employee bringing that issue to the agenda is usually doomed to be placed off. The way how a Manager behaves, in this case, serves as a sign to others meaning that talking over the issues is supposedly far not appreciated. Accordingly, all the employees use to try to represent any point in a positive context and whenever an issue arises due to mistakes made or due to an unaccomplished project, the Manager rebukes the employee, in another case, detains part of his salary or even dismisses him altogether. All the said above serves as a good example of Managing the Result and the way how to combat it. In some organizations, such behavior is so much appreciated, that rebuking the employee and/or posing sanctions on him is considered a “good management” example so far. Such behavior, as a rule, restrains from identifying a real cause, meaning that the issue cannot be solved and it will inevitably show up again.


Transformation of the existing paradigm actually starts when a process becomes the main target, instead of assessing the employee’s fault. The processes taking place within the organization are the very place where the causes keep generating while leaving the space for the employees to make mistakes and perform their work inefficiently. Any process within the organization should serve to the creation of values for the customers and/or to the reduction of the risks of making mistakes at least. Thus, any process or any part of the process which does not serve to achieve either of these two goals mentioned above can be qualified as a loss. This kind of loss being accumulated through the flow of the processes usually causes a decline in the efficiency of the company and hampers the accomplishment of major goals.


To identify and manage the losses found in the processes it is necessary to learn the opinions of the employees actually involved in those processes, as they are carriers of the valuable information required for finding the actual causes. The fact is that whenever an employee is scared by the “follow-up punishment”, he tries to share possibly less information in consideration that each extra word uttered can eventually lead to more severe “punishment”. Therefore, the first priority of the company is to give the employees a sense of security. To achieve the above, we need to openly announce that mentioning the deficiencies and losses existing in the process will in no way lead to the punishment and setting off the employees concerned. It is most important to each employee to know that his voice is heard and he can express his opinion freely without any restrictions. It is significant that this process should not be shaped into the talks about winning the mark and endless complaints, though each deficiency or deviation discussed should be grounded and based on actual facts.


While having the said discussions it is important to depersonalize the processes and the steps undertaken. This approach can easy the way the employees talk over any action or when a certain employee refers to a specific action or a part of the process as a loss. It never causes a sense of discomfort or does not lead to conflict situations in most cases. It is important that everyone agrees on that if any action undertaken in the process is acknowledged as a failure, it does not inevitably mean that the employee who made it, is of no good.


As a rule, discussing the processes and the conversations around the topic take place in the meeting room or at the Manager’s Office. This is where the employees often dispute over the ways of the flow of the processes. To avoid such meaningless and ineffective disputes would not it be better if simply everyone just starts observing the process and agrees that the process is like the one that everybody sees. This behavior may even help the Manager sitting in his office to see and feel what are the challenges his employees have to deal with. While “overseeing” the processes the questions put by the Manager should in no way imply the threat within but indicate the readiness to show support and compassion. The openhearted and sincere gratitude expressed by the Manager to his employees for their answers and their time will significantly grow the confidence of the employees towards the process.


As soon as the agreement on the process and the losses identified within is achieved, there comes the necessity of making changes. It is important to ensure the involvement of the employees in planning for the changes as this will make them feel more responsible for the process is a part of it and when the process is successful they even may feel proud of it. Fear of changes is common to all humans and you can often hear the accompanying words like “it is of no good,” “it will not work” etc. To avoid such an approach, it is important that the employees involved in the process understand that everybody is “on board” (“in the same boat”) and they all share the responsibility for its success or failure. Make efforts to promote the way of thinking, where the questions like “how it could be done?”, “What is needed to make this possible?”, “What is the cost of this getting accomplished?” or “let us try and then discuss will it work or not” dominate.



The next powerful enemy to the possible changes to be made to the process and a spot generating causes for losses definitely - is the inheritance of the actions within the process. We often come across the mechanical actions performed by the employees unconsciously. This is peculiar to the kind of organizations where putting of the question “Why?” is not much appreciated. The organization’s aim is to ensure that each employee is motivated and encouraged to put a constructive question “Why?” To put this question in a due manner and to appreciate it means that everyone in the organization is constantly watching and finding the losses and brainstorming on how to correct the issue.

General Diagram of the constant process of identifying the losses and making improvements looks like the one below:


On the long way of constant changes to the process we should always remember the following:

Acknowledgment of the problem means getting it solved by 70%

99% of the problems are caused by the poorly organized process and not by the employees

Wisdom and experience of the many weigh way too much rather than that of one man

Make a try first and only then say whether “it does work or not”

There are no limits, improvement of the process can be endless


According to Heraclitus: “The only constant in life is change.” Today these words make more sense than ever. The changes can be painful but they are inevitable.


Relying on the support of the executive branch, a united effort of the employees on the way towards the improvement of the process is actually the key to a successful accomplishment of the company’s goals. Research and Consulting Company ACT tested this concept first within its own organization and only after shaping it into the unique transformational and management model PWR3, which is widely offered now to the company’s clients. Back in 2021, the company launched a great transformational process, where the main three forces – Managers and their philosophy, employees and the organizational culture, and well-administered processes collaborated to make the common mechanism work. It is obvious, that rearrangements to move to the said mode of thinking and starting transformational processes will not be that easy, though everybody agrees that changes are needed for moving forward and achieving greater goals.


If you get the same results as last year and you guess you need improvements, we are here to remind you, please, could you appraise: how actual is the point of view of Heraclitus today, regarded as The New Norm.

17.12.2021

„Culture is not just one aspect of the game – It is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.“
Lou Gerstner, Jr. – IBM


We often come across of such a statement, in today’s world a transformation is not a choice, it is a new norm and whether you want it or not, the companies could not survive without it. But when is the best time to really transform an organization? Is it enough just to look at and look through the future of the industry and develop a new vision of the company to meet a new reality? Obviously, taking steps without having the right vision is more like wandering blindly in the forest, though in line with the vision it is most important to guess how sufficiently equipped we are; how much our values, competencies, skills, systems, or any other resources are capable to support us to follow the path to our future company with minor losses and essential creativity.


It is probably no news to anyone to say that the real transformation begins with one’s self. By realizing and analyzing the company's own leadership qualities, values, limiting beliefs and thoughts, and feeling its role and importance in the new vision of the company, the internal shifts that lead us to the first steps on the path of the change begin.


The key questions in the transformation process sound like this - where am I today and where do I want to be? What prevents me from getting where I want to get? What will help me to walk this path with minor losses and an environmentally friendly way? What are my leadership qualities and skills and what is my leadership energy like? In which role can I best demonstrate them?



These questions are quite difficult to answer, and if the company could not afford to create a field where the internal search process is invigorated, then the answers might also be superficial. Creating this field is the basis of a transformational organizational culture, and only on such a basement can a culture be built that can breathe with live, create and make a system shape accordingly to ensure the realization of a company's vision through the realization of individual human capabilities. The values in such a culture have a leading role where there is a vivid consensus in understanding them. All this is translated into the language of common game rules in daily activities, which is one of the major conditions to achieve the best results.


In today's fast-paced and unforeseeable world, revision of the structures and positions of the companies that have been successful for years but have lost their flexibility is now even more urgent and can no longer adequately respond to the challenges faced in the surrounding environment. Today it can be that in the same position, in the same company, different competencies and skills are prioritized for different time periods and that too is never enough. That is why it is extremely important to understand the roles together with the positions, to strengthen the team leadership along with the individual leadership, to meet the expectations instead of writing the detailed descriptions of functions and duties, to bring in the best results, to create projects to be done and to execute them as it is supposed according to project rules.


Too often in the companies where hierarchical systems are strictly determined, employees feel like being trapped within their own positions, often finding it difficult to see and recognize that the organizational vertical limits their ability to fully express themselves and their interests, while the brilliant results are achieved through flexible systems based on teamwork principles. In such hierarchical systems, the rules are canonized while the employees do not understand their importance, and the rules are followed without any enthusiasm, where it is forced, or even ignored, while horizontal arrangement and team principles vitalize the rule. The rule and the system can be understood not as a punishment, or as a hindrance, but as a support in order to do our job best. These are the changes that ACT underwent in the first stage of its transformation, as a result of which the organizational culture in the company today is a clear example of a living order.


Team play is seen as an integral part of a transformational organizational culture. It requires understanding and respect for your own and team members’ strengths and weaknesses. Successful team play is impossible without the ability to open up, recognize failure and success, share and self-reflection. It is also important to know how to speak a common language so that we do not lose our uniqueness; how to balance each other and overcome a task, the success of which often depends on the competence, skill, responsibility and concerted work of many people. Team leadership also implies the understanding of the fact that even the best qualities of a person can become a barrier if he is not in the right place and in the right role, and that all qualities are equally important for a magnificent success.


The Companies where equal importance is given to both the results and the way in which these results are achieved; as well as the Companies that are equally centered on the outside and the inside environment, achieve more glorious results, are innovators, and are resilient to storms threatened from the outside world.


ACT's unique management model, named The Power of Three, allows us to simultaneously see and implement the need for management and transformation in three areas. A real transformation is possible only if you have a clear vision of where you are going, and share the relevant values needed to realize that vision while they should come right from your heart. This could be done best through the development of systems and enforcement mechanisms. In such a model, the culture is congruent and organic to each employee of the company and ensures the maintenance of vitality and sustainability.

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