HOW TO EXPAND A RUSSIAN MOBILE TECHNOLOGY BUSINESS

Background- Moscow Russia

The history of VimpelCom started when its co-founders, Dr. Dmitry Zimin and Augie K. Fabela II, came together to pioneer the Russian mobile industry.

At the invitation of MAK Vimpel, a Russian defense contractor, Mr. Fabela first visited Russia in 1991. It was during this period that he saw the significant opportunity for wireless in Russia. It was also when he met his future partner, Dr. Dmitri B. Zimin, a senior scientist at the Mints Radio Technical Institute, a division of MAK Vimpel. Inspired to do what everyone said couldn't be done; Mr. Fabela and Dr. Zimin set out to accomplish their vision of bringing basic wireless communications to Russia. A young American entrepreneur who was only 25 years old and spoke no Russian and a 63-year-old Russian scientist who spoke no English, were determined to build an independent company with an entrepreneurial and pioneering spirit--which led to the founding of VimpelCom in 1992.

One year later, VimpelCom launched its first commercial network, a five base station system in Moscow, limiting sales to only 1,000 mobile phones in order to ensure quality of service. The commercial service was launched under the Beeline brand, a brand created by Mr. Fabela in late 1993 to differentiate the company as a youthful and fun company, rather than a technical company. Very soon, the Beeline brand became the choice for admirers of state-of-the-art technology and mobile fans. By its first anniversary, Beeline became the largest operator in Moscow, and its trademark was well-known in 20 Russian regions.

Together, VimpelCom’s founders built a successful company forged out of cultural diversity and based on a common passion to dream the impossible and to succeed. VimpelCom has since continued its long tradition as a leading innovator in communications, evolving to address changing industry dynamics and to capture growth opportunities. In the 1990s, the Company introduced two digital cellular communications standards to Russia and built a dual band GSM-900 / 1800 cellular network. In November 1996, our predecessor OJSC VimpelCom became the first Russian company since 1903 to list shares on the NYSE.

 In 1999, VimpelCom led the emergence of the mass consumer market for wireless communications in Russia by introducing a prepaid packaged product solution. Then, in 2000, the Company continued to innovate with new technologies such as WAP (wireless application protocol) and BeeOnline – a multi-access Internet portal offering its customers a wide variety of wireless information and entertainment services.

 

Objective

In 2001 Vimpelcom was planning for further expansion inside Russia to leverage its success in pre-paid. In order to do so they needed to refresh their billing and customer care solutions and supporting provisioning solutions to cater for the expansion.

The COO of Vimpelcom, Mr Jere Calmes, who was the project sponsor at the time, had described the project like performing open heart surgery. The patient was either going to live and thrive, or die. 

3 biggest challenges

Challenge Number #1

The growth in mobile phone penetration was unprecedented. It was a challenge to forecast quarterly and monthly subscriber growth rates. This led to flow on underestimates for computer equipment, floor space, staff and budgets.

The facilities manager and I had worked on securing a lease in a new office building for the expansion of call center staff. We had negotiated hard and secured a good rate per square meter as well as funding for fit out. The deal was below bench mark rates available for real estate in Moscow at the time and we felt confident that the contract and deal would be approved at the next board meeting. In hindsight we should have thought differently. The COO's counsel prior to the board meeting was that we were not thinking big enough and we should go back and rent the whole building.

Challenge Number #2

Resources. Resources. Resources. This was never going to be a successful project if it was driven and controlled by external consultants who did not appreciate the Russian cultural background, incredible work ethic and technological competency.

The key project leaders were all Russian full time employees who had been carefully selected to be involved in the project as part of a career development path. External consultants including myself as the program director were partnered up with key full time employees who would act as change agents as well as learn skills and experience as they delivered the project.

Challenge Number #3 

The replacement of the OSS (Operational Support Systems) and BSS (Business Support Systems) was a significant undertaking and involved an extensive program of work. The overall project was scheduled to take more than 18 months. During that time it was important to maintain staff morale and engagement in the project. As all projects do it involved some long hours and of course weekend work to meet tight schedules and deployment dates. However the project team made sure that achievements were celebrated and time was included in the schedule for down time and for external resources to fly home and spend time with families. In addition there were team building and social occasions which kept the team working together and gave them the necessary bond that a project creates to maintain the energy and commitment to finish what had been started.

The project was completed successfully, and Vimpelcom now has more than 57 million subscribers. The team has moved on, but the challenges and lessons learned have been useful in subsequent transformation programs as well as smaller start up projects.

Thanks for reading

Andrew Everett

This post was originally posted on the Coequity blog