Waking the Bear (B): "Danonizing" the Bolshevik Biscuit Factory

Direct foreign investment in Russia was only 1% of GDP in 1999, and Russian industry was only half as productive in that year as in 1992. Not surprisingly, the prevailing opinion is that privatization has only aggravated Russia’s economic problems, and that foreign firms should avoid investing in Russia for the time being. This case study argues that, on the contrary, Russian companies can be successfully integrated within a multinational organization. It shows that an Anglo-Saxon-style revolutionary change process is not always the best way to proceed in Eastern European organizations; that the commonly accepted goals of rapid change, employee empowerment and a flatter hierarchy are not necessarily appropriate in these organizations in the short-term; and that even the definitions of trust, strategy and leadership can differ according to cultural context. The challenge lies in understanding the complexities  the lingering influence of the Soviet planned central economy, as well as the Russian culture and management systems.

This case describes the process of transforming a Russian organization, still run as if it were part of the Soviet-era planned economy, to one with the leadership and mentality to operate as part of a global organization in an open market. There are three main themes in the case: • The complex cultural and economic context that has stifled privatized organizations in Russia. • Similarities of the Russian and French leadership style and corporate culture; and the choice of Jacques Ioffé, a completely bi-cultural leader, to take control of Bolshevik. • The transformation process at Bolshevik. The objective of this case is to analyze these themes to illustrate: Culture-specific leadership • The charismatic and architectural leadership roles in the context of Russian organizations. • The definition and development of trust in Russian organizations. • The related cultural concepts of authoritarian leadership and risk-avoidance. The different concept of time in these organizations • “la permanence du passé”, • long-term strategic vision. Managing change processes within Russian (and by extension, other Eastern European) organizations • importance of the “cultural fit” of managers’ styles and backgrounds, • influence of the national culture on the corporate culture and change process dynamics