August 3, 2012
I recently returned from a trip to Moscow where I was working on a project with a team of Russian investors and advisors. As one would expect when travelling in a foreign country, language can sometimes be a barrier to understanding or conveying ideas. The project we were working on was particularly complex and had several moving parts, many of which were entirely new approaches to providing a particular product into a new market. After a day of productive but somewhat frustrating meetings, I was resided to the notion that some of our language and cultural barriers would prevent us from having the project we were working on fully understood and subsequently valued.
On the second day of meeting we all agreed that we would dive into the financial model of the project and what I experienced next blew me away. It seems, at least when doing business in Russia, the Financial Model transcends language and culture. Everyone clearly was coming from the same page when examining revenue, costs and especially the assumptions and logic behind how we were going to execute our business plan. Everyone had a common framework from which to judge the validity and assumption of the model. The questions and references points could all be related back to one spot, The Model.
What I learned on this trip may seem obvious, but the power of it in the context of the language and cultural barriers was so immense that writing about it seemed appropriate.
1.) A good model is understood across culture and language barriers; numbers are universal and provide the basis to work through cultural and language differences.
2.) A model that is to be universally understood needs to be top down and bottom up, with one approach validating the other.
3.) Personal assumptions are not important.
4.) Referenceable assumptions, (applicable assumptions that can be referenced and have been used successfully in the past) are very important but not critical.
5.) Having definable logic behind your assumptions is very important.
6.) Testing your logic with others so that it is defendable is critical.
7.) Russians like logic.
8.) Russians like logic.