Oleg Popov talks about SCM as an investment business and the trust of Rinat Akhmetov

Oleg Popov talks about SCM as an investment business and the trust of Rinat Akhmetov


SCM CEO has outlined the objectives the company had back in 2000, seeking to be a transparent and legitimate business that can efficiently manage the investments of Rinat Akhmetov. The team went on to become trailblazers in Ukraine. In his interview with Forbes as part of its special project, 30 Years of the Ukrainian Business, Oleg Popov has given more insight into the topic and the challenges the business faced at the time. 

As the print version of the interview only featured select bits of the answers, we share the full comments of SCM CEO. 

Forbes: Mr Popov, what was the main idea behind the investment company? What was the strategic design of SCM?

Oleg Popov: By 2000, Rinat Akhmetov had invested in several very different companies and enterprises. He wanted to look into all his assets and figure out how efficiently each one was managed, in order to possibly improve this. So he invited me and Ihor Prasolov. 

We started to review the actual financial standing of businesses and streamline certain basic processes, such as managerial accounting and bookkeeping to the international standards. 

After that, we measured the potential of each business, and then began to develop strategies.

Forbes: When you joined SCM, did you have any specific task? Or was the task just to work things out?

Oleg Popov: Initially, we had to work out what was available, make the process flow streamlined and efficient, and improve the efficiency of his investments. In particular, we were to build a progressive corporate governance system.

A lot was unclear, so we had to learn as we went. We were a kind of trailblazers in Ukraine. We neither had any business education, nor any ready answers to even the basic questions. 

Essentially, we were turning a production and trade business into an investment one. We got a tremendous help from our colleagues at PricewaterhouseCoopers (they helped us figure out the real state of affairs and set up the accounting), McKinsey (they were incredibly helpful with the strategy), and other consulting companies. Their international expertise was extremely valuable to us. Some people from PwC and McKinsey eventually joined the SCM team and even headed the entire lines of business.

Forbes: How did you structure the businesses under SCM umbrella? Did you follow any role model?

Oleg Popov: We didn't have a readily available role model. We built our considerations on the common sense and used an industry-based approach when structuring our assets. We looked at the industries our businesses operated in and analysed their outlooks. 

At the very beginning, we tried operational management. Then we realised that it was impossible to manage all the businesses from within SCM. In our case, it was inefficient. Thus, we created dedicated teams for each business, the industrial holdings independent from one another. We introduced civilised approaches to corporate governance. And SCM became an investment company.

Forbes: Whose experience aided you in shaping the industries?

Oleg Popov: We didn't copy anyone, but definitely studied the best international practices. We looked at General Electric and Investor, a Swedish company run by the Wallenbergs. In general, we researched the process architecture of multi-sector businesses. Ultimately, we created our own model, which we think is one of the best in Ukraine. 

Forbes: What challenges did you face? What was the hardest?

Oleg Popov: We had large enterprises in our portfolio: Yenakiieve Steel Plant, Azovstal, Khartsyzsk Pipe Plant, Avdiivka Coke and Chemicals Plant. They had their own executives, directors with a strong reputation. Initially, it was hard to win their trust, as we had no such rich management expertise back then. It took a long time. Probably, this was the hardest. Finding right people for the team was also a challenge. 

Forbes: What would you have done differently if you had the opportunity to return to 2000-2001?

Oleg Popov: I could not have done it otherwise. The time was different. Had we more theoretic business knowledge, we would have kept ourselves in blinders. We would have seemingly had all the answers. Instead, we needed to think quickly, creatively, outside the box. In this regard, the shareholder's position was very helpful. He trusted us and believed in our ability to make right decisions. This helped us build a very strong management team. 

Forbes: What are the main things that helped it work out at that time?

Oleg Popov: I can give you three most important things that made everything work out. 

First, we have put transparency and legality of our business at the forefront from the very beginning, from the ownership structure to taxes. This is what gave us access to international money, the best talent, and good partners. 

Second, we have built a strong team. Our shareholder generally holds to a stand that the team should be the smartest and most efficient, smarter and more efficient than him (laughing). 

Third, the shareholder tolerates our mistakes. We have always had a right to make a mistake. We can admit mistakes and learn our lessons. Ultimately, this has borne fruit.

Forbes: What do you personally associate the year 2000 with? Music, movies, books?

Oleg Popov: Millennium, the apocalypse, were buzz words at that time (laughing). But for us, 2000 was the start, the inception.