What Businesses Must Learn from Russia-Ukraine Conflict
On 24 February 2022, Russia began an open military invasion of Ukraine, in a major escalation of the Russo-Ukrainian conflict that had begun in 2014. While people are suffering this invasion and the conflict, there are some key points that I wanted to highlight for business leaders and the lessons that we all must take away.
The Russo-Ukrainian war is an ongoing war between Russia (together with pro-Russian separatist forces) and Ukraine. It began in February 2014 following the Ukrainian Revolution of Dignity, and initially focused on the status of Crimea and parts of the Donbas, internationally recognized as part of Ukraine.
As of today, Russia continues to illegally occupy Ukraine’s Autonomous Republic of Crimea (26 081 km²), the city of Sevastopol (864 km²), certain areas of Donetsk, and Luhansk regions (16799 km²) — in total 43744 km² or 7,2% of the territory of Ukraine.
Russian forces are besieging five cities, according to British intelligence: Chernihiv, Sumy, Konotop, Kharkiv, and Mariupol. Hundreds of thousands of people are trapped in these locations without food, water, electricity, or medicines.
Although this is not a political blog, I am addressing this conflict for a few important reasons. First of all, where I am coming from, we always had a conflict, war, and instability as the results of so many reasons that are outside of this blog.
However, I am and always will be interested in the political landscape of how the world is changing and what does this means for businesses and startups.
It is very important for business leaders to follow the changes and see how they can have more impact for good reasons.
This is one of those key moments perhaps in human history.
Regardless of the outcome, you can see how in 2022 some countries are trying to push their agenda by force to the rest of the world.
This is an unfortunate fact.
The question is, what we should learn from this conflict?
Lesson one: Never put all your eggs in one basket
First of all, many businesses are now evaluating their existence and business operations in Russia.
What businesses are keen to follow is stability.
If country leaders are seeking war to establish themselves as the dominant force, this will not be very helpful to the people in those regions and as the result, businesses will shy away from instability for good reasons.
Many of the consumer goods such as cigarettes, beer, yogurt, etc. have big operations and manufacturers in Ukraine. This war brings an unlimited and unpredictable pause to the operations which means that the supply and demand will be affected. For those businesses that are relying on these goods and services, they should immediately seek new suppliers.
Lesson two: Proactively shoot your supply chain
Several major automakers have operations in Russia, with some deciding to pull back in light of the conflict, and others warning of disruption to their businesses.
Volvo Car AB and truck maker Volvo AB have both halted business in Russia until further notice, with the Swedish autos brand citing “the potential risks associated with trading material with Russia, including the sanctions imposed by the EU and U.S.”
Daimler Truck Holding AG has said it would suspend deliveries of truck components to its Russian partner Kamaz in the wake of Russia’s invasion of Ukraine.
The lesson here is to always be prepared to see a shock in supply chain operations.
Businesses should learn not to wait for something to happen and impact their supply chain, they must proactively force shocks to their supply chain on an ongoing basis to find out blind spots and think of different ways how to improve.
Lesson three: Always find new partners!
The fallout from the invasion has led dozens of countries to ban Russian airlines from entering their airspace, triggering reciprocal prohibitions from Moscow. While Russia is a busy route for some Western carriers, the bigger disruption comes from the restriction of Russian airspace, which is used to connect most flights between Europe and Asia.
The political airspace bans come in addition to restrictions over safety concerns. The European Union Aviation Safety Agency has instructed airlines to avoid Ukrainian airspace, as well as that of neighboring Moldova and Belarus. Aircraft also have been restricted from flying in Russia’s southwest Rostov region and in airspace within 200 nautical miles of Ukraine’s border.
The lesson will be to always look for new partners! Especially when things go south for reasons that are outside of your control, you need to have alternatives on your fingertips right in the key moments.
If you were relying on your Russian partners for your business, good luck funding new partners now.
Lesson four: Safety comes first
Global pharmaceutical companies are looking to ensure that their medicines and vaccines can continue to reach Ukrainian patients. Ukraine relies heavily on medicines from overseas: Imported medicines and vaccines were worth $2.5 billion in 2020, according to United Nations trade data. The biggest share of that comes from Germany, where many large Western drugmakers have plants.
Make sure that you keep your staff safe.
Especially in the countries that are experiencing conflict.
If you see movements and activities in the direction of a war, make sure you provide facilities for your team to leave the country if possible.
If this is not an option, make sure you work with NGOs, government, local police, or any other good forces to keep your people and their families safe.
This must the priority number one.
Lesson five: Give back
Try to find ways to give back to the areas that are impacted by war.
Do whatever you can to help the impacted people and also whatever you can to punish the invader.
We have seen a good positive movement from many private companies to ban their activities and operations in Russia. This will help and apply extra pressures hoping to change the situation.
War is ugly.
Unfortunately, this is a reality we are living in now.
I truly hope this will come to an end soon.