The Performance of a Lifetime
October 01, 1996
by Teresa Acklin
A former music student directs OGO, Russia's largest private grain trading company.
By Jennifer Morrill
A bright 37-year-old, Arkadiy Zlochevsky makes running Russia's largest private grain trading and feedmilling company look easy. Once upon a time, he might have ended up performing the works of his favorite composers — Rachmaninoff, Tchaikovsky or Bernstein — as he studied music composition and performance during Russia's years of Communist rule.
But a 1988 decision sent his life in a different direction. At the urging of Vladimir Klimov, the company's 31-year-old president, Mr. Zlochevsky joined the OGO company as chief executive officer. OGO was founded by Mr. Klimov and two other investors who pooled 500 rubles total, or about U.S.$810 at the time.
Opportunity came quickly when the Soviet Ministry of Grain Products was dissolved later that year and Mr. Zlochevsky and his partners realized Russia's huge grain market would be open to private entrepreneurs.
By his own admission, it might seem like chance that he has ended up as c.e.o. of this company, whose name translated from Russian means "WOW!"
"We began purely as a trading company, merely as the middle man in trades," Mr. Zlochevsky said. "By 1991, we came to the conclusion that grain trading could be a specialty, and we set out to make a name for OGO. Now we are moving into grain processing — purchasing elevators, feed and flour mills. Our function is to move grain all over Russia and to import and export feed grains."
It takes 150 personnel in Moscow and 3,200 nationally working at a feverish pace to run his company. Each year, OGO moves 2.7 million tonnes of grain, or about 1,000 tonnes of flour and 3,000 tonnes of feed a day.
If hours of music practice instilled the ability to look at a piece of music and perform it or to take elements, themes and ideas and compose a work, the hours also instilled in Mr. Zlochevsky the ability to analyze, interpret and perform in different arenas.
"The challenge is not 'knowing what to do,' it is how to do it," he said. "Success is also about solving challenges."
The spirit of solving challenges has helped OGO grow geometrically from its beginnings in general trading. To others in Russia unwilling to analyze and approach private entrepreneurship in this way, the road from survival to success has been much rougher.
With a growing trading and feedmill-ing business, what is the likelihood that OGO and other private companies might import grain from the United States or elsewhere? OGO considers the United States as a potential supplier of much needed feed grains and protein meal, but conditions to enter the international market are not right.
"We never use banks, we use our own capital," Mr. Zlochevsky said, adding that U.S. credit programs in particular were frustrating because they forced Russian companies to work with approved banks that did not offer competitive terms.
"We take no comfort in the allowable banks," he said. "No one backs the line of credit at the Russian bank, so they can charge enormous interest rates." When people have a chance to meet Mr. Zlochevsky, they are struck by his decision-making skills; for example, he only adds technology if it is efficient and profitable.
Visiting the sparsely furnished OGO offices provides clues about the corporate culture and an opportunity to learn about the business concepts implemented by Mr. Zlochevsky, who draws a salary fixed to OGO's financial results. His top personnel earn U.S.$15,000 to U.S.$20,000 a month on a commission basis.
OGO personnel are no strangers to competition because each staff member earns 10% of the profits he makes for the company. Traders with the overall lowest 10% profit margins, or less than U.S.$500 a month for two straight months, are fired. When there is a job opening, 200 people will line up on the street to apply.
"I do not have a specific system for hiring (personnel), I don't evaluate their trading knowledge, rather I evaluate their potential," Mr. Zlochevsky said.
It is typical of him to see how an applicant will approach a challenge by asking the applicant to argue that smoking is good for health. OGO personnel do attend outside training classes in trading, feedmill management and other topics at the U.S. Feed Grains Council-Intenskorm Business Training Center in Samara, Russia.
Mr. Zlochevsky also thinks competition is good for his company.
"Competition makes you alert, and we need that," he said. "If no one else came into my business, there would be no one to have cooperative efforts with, no one else to make good business with."
In the future, Mr. Zlochevsky and his business partners say that although the exact path is undetermined, they hope to create a business "that is a chain from field to consumer. We are just reaching the middle link now in buying grain elevators and feed, sooner or later it is likely that closer links to consumers will be forged."
As OGO expands, Mr. Zlochevsky is just one private trader who is confident that Russia will need to import maize. In 1995 he said, "We are reaching a demand level that has nearly depleted the maize stocks built under some 1992 purchases. Soon, we will need to bring in maize." With a dismal 1996 grain harvest, the need for maize is more pressing.
In 1988, the theme and variations in the life of a young musician named Arkadiy Zlochevsky changed; he realized "a crumbling empire can only mean opportunity" and joined OGO. Improvisation — the ability to solve challenges in an ever-changing business environment — has fueled Mr. Zlochevsky into literally living his corporation's name — "WOW!"
Jennifer Morrill is manager of communications for the U.S. Feed Grains Council, a producer-funded organization that promotes U.S. coarse grain exports. This article is based on Ms. Morrill's 1995 interview with Mr. Zlochevsky at his OGO offices in Moscow.
Arkadiy Zlochevsky studied music composition and performance before becoming a grain trader.