The case of NJSC Naftogaz of Ukraine: exclusive presentation of “Book of Reforms” on LvBS Alumni Leadership Day
“Let’s think what would have happened if the changes in Naftogaz had not been made: the country would have remained critically dependent on Russian gas, Stockholm arbitration would not have been won, and therefore, we would have owed Russia $ 81.4 billion, no gas market reforms would have happened. These processes are determined by specific Key Success Factors and quality education is, of course, among the most important ones,” Yurii Vitrenko, the CEO of NJSC Naftogaz, said at the annual meeting of LvBS Master’s Programs alumni – LvBS Alumni Leadership Day 2019
These days, within the framework of Leadership Day LvBS, preliminary presentation of the collection of training cases entitled “Book of Reforms” took place, which was elaborated by the UCU Center for Leadership in collaboration with Lviv Business School (LvBS) of UCU. Alumni of LvBS Master’s Programs were the first to receive a book containing 12 training cases and describing the processes of changes that have taken place in the public and private sectors of Ukraine since the Revolution of Dignity in 2013–2014.
The participants of the meeting worked on one of the cases contained in the collection – “NJSC Naftogaz of Ukraine: a Model of Effective Management” together with the CEO of the UCU Center for Leadership Andrii Rozhdestvenskyi, the author of the case and the vice-president of the TASK investment group Dmytro Vlasov, and the CEO of NJSC Naftogaz of Ukraine Yurii Vitrenko – the character of the case.
Situational exercise “NJSC Naftogaz of Ukraine: A Model of Effective Management” describes the large-scale process of changes initiated and conducted by the management of NJSC Naftogaz of Ukraine for 3 years, from March 2014 to March 2017, with a further description of the events in the epilogue taking place from March 2017 to April 2018. The case shows how top executives of NJSC Naftogaz of Ukraine Andrii Koboliev and Yurii Vitrenko entered the largest Ukrainian company, which faced many serious problems and lagged behind in development, but due to radical changes made by their team, adoption of a new strategy, appeal to Stockholm arbitration tribunal, corporate governance reform, cooperation with Western partners and diversification of gas supply sources, they managed to change Naftogaz.
“Ukraine’s victory in Stockholm arbitration tribunal has become a major success of the state and the largest process in the history of commercial arbitration. However, simultaneously with the process of defending national interests on the international platform, approaches to the use of natural resources in the country should have been changed. The CEO of NJSC Naftogaz Yurii Vitrenko commented on these events: “At first we just responded to the attack from Russia, it was a defense, we stood against it with dignity because the truth was on our side. Only then did the understanding emerge that we need to think for the future, in the long term. This meant the need to reduce gas consumption. The infrastructure upgrade yielded a near-zero result. Then the only option was to raise prices and eliminate hidden subsidies, only then people would consume less.”
Alumni of LvBS Master’s programs, as participants of the meeting, had a unique opportunity to hear insights about the processes of changes in Naftogaz, which are rarely talked about in public. So, Yuri Vitrenko confesses: “Communication is my biggest failure. All this is because information struggle should have been conducted not only within the country, but also to oppose Russian propaganda. Now I understand that if a person has a well-established judgment, such as “cheap gas”, then you may persuade him/her with all the rational arguments that you were taught to in business school. It will seem to you that since this is true, people should believe and listen. But you will only face rejection. Do not be frightened, a successful MBA can also effectively communicate with people, but you need to know exactly how and what the arguments should be. They should not necessarily be rational. This is all the complexity of “real” governance, which is always inscribed in a particular social, cultural, political context”.
The participants of LvBS Alumni Leadership Day 2019 discussed not only the case itself, but also the role of business education in the modern world and a case as a learning tool. “There is a lot of talk now that business education is not needed. I got an MBA degree at INSEAD Business School [France, Singapore]. Frankly speaking, without the business school, not only would I have not been able to get a job, I would not have done any of the things that we managed to implement in Naftogaz. It may look like boasting, but you may go into detail. For me, the big question is whether it is generally possible to take on the task of implementing reforms without proper education,” Yurii Vitrenko comments.
“The founder of Alibaba Group and AliExpress, Chinese billionaire Jack Ma criticized business education at the Kyiv International Economic Forum because according to him MBA students study solely on the basis of success stories. But he’s not right: not all cases are based on success stories. The case describes a real management situation, it is not always about success, it is about decisions that were made at that moment, in that context, in those circumstances. This is a chance to put yourself in the place of a character and to think what you would do, “- the author of the case Dmytro Vlasov said.
Collection of training cases entitled “Book of Reforms” will be available for free at public events in different cities. Follow the web-site and Facebook page of the UCU Center for Leadership for updates.
Background information:
“Book of Reforms” is a collection of twelve cases, each describing comprehensively the specific case of the transformation process that took place in Ukraine after the Revolution of Dignity in 2013–2014. More than twenty authors and editors have been involved in the work on collection, including from the Ukrainian Catholic University, the Center on Democracy, Development and the Rule of Law of Stanford University, Ian O. Ihnatowycz Institute for Leadership, Richard Ivey Business School, University of Western Ontario.
Dmytro Vlasov is a candidate of economic sciences, vice-president of TASK Investment Group; received an MBA degree at London Business School, a board member of the Professional Government Association of Ukraine.
Yurii Vitrenko is the Ukrainian economist and financier; the CEO of NJSC Naftogaz of Ukraine; Chairman of the Supervisory Board of PJSC Ukrnafta; Member of the Supervisory Board of the State Concern “Ukroboronprom”. He got an MBA degree at INSEAD Business School (France, Singapore). He is a former senior consultant at PricewaterhouseCoopers.
