Lean Lessons from Soviet Supermarket Failures

I came across the story of How the Supermarket Helped America Win the Cold War while catching up on past episodes of the Freakonomics Radio podcast. It tells of the role the American supermarket played in the downfall of communism in the USSR. There are some interesting lessons here for lean leadership.

The Supermarket as Cold War Weapon

The cold war was a mostly non-military struggle between two economic and political systems. In one way, it was the battle of pull versus push. One of the areas of competition was agricultural production and food supply. The Americans invited the Soviets to come see their farms, food factories and supermarkets. The hope was to convert them to the American Way through a display of abundance.

To everyone’s surprise, Khrushchev said yes. He sent a delegation in 1955. According to the episode

They saw how contour farming worked. They saw the wonders of hybrid corn. They saw the chicken breeders. 

And Khrushchev himself visited in 1959. Over the following years, several communist states including the Soviets tried to copy some or all of what the American showed them. But they were neither successfully converted to market-based economics nor to fully modernized food supply chains. Visitors from the West to the Soviet block routinely found bare shelves, or an oversupply of the odd item.

Seeing May be Believing, But Not Understanding

The communist visitors came, saw and studied, but weren’t able to successfully copy the American supermarket system. They built the buildings, stocked the shelves, and opened the doors to shoppers. It doesn’t seem like this should be very complicated. But it never took hold.

Going see examples of excellence. Believing it’s the right thing for you. Trying to put it in place. And failing. This is a story familiar to anyone who has been around lean management for any length of time. What seems like a simple system turns out to have deeper roots, practices, assumptions and disciplines. Success require more preparation, understanding and willingness to change.

The Superficial Market

The supermarket is the artifact at the very end of the food supply chain. It’s the most visible part to consumers. The straightforward display of abundance was no doubt attractive to visiting leaders on the other side of the iron curtain. Yet this may have focus on the superficial and limit their understanding.

What was behind the American supermarket? There is the industrialized food supply chain connecting the farms, to trucks, highways, warehouses and eventual grocery shelves. Decades of work had gone into making the farms, factories, transport networks efficient and safe. This process is not visible in the supermarket itself. That building is only its end result of these efforts.

Long-term Investment in Excellence

We may celebrate the supermarket as a triumph of American capitalism, rugged individual efforts and free market innovations. But the truth is there was massive government investment for decades to improve the quality of crops and livestock, raise industrial productivity and lower costs. There were government price controls to support farmers, when supply outpaced demand.

The modern food supply chain is only possible because the U.S. government built it. According to the episode

There was a need for better transportation from the farms to the cities. So, U.S.D.A. had a unit that did engineering research on the best road materials and road construction methods. The Rural Electrification Administration was part of the New Deal U.S.D.A. The private electrical companies didn’t see a profit in expanding out into rural areas, and that was taken on by U.S.D.A.

For better or for worse, free market capitalist incentives alone would not have created the food supply chain we have today. This took some degree of top-down planning by the central government. It was the years of investment in the science and technology that enabled the productivity of American agriculture. The Soviets would have found this idea familiar.

What Beliefs Do We Cling to Stubbornly?

In another pitfall that is familiar to lean practitioners, the Soviets attempted to change physical systems without changing mental paradigms. In the end, it was a leadership problem, not a technological problem. According to the episode

The fact is they were unable to modernize Soviet agriculture with the economic structure and strategy that they were following.

The supermarket is a pull system. The Soviet style planned economy’s agricultural supply chain was a push system. There was a huge gap between what consumers wanted and what the managers of the big state farms were told to produce. They overproduced, underproduced, and lacked a system of demand signals to make corrections. It’s no surprise they were unable to take advantage of best practices they saw. They may have been able to adopt advanced agricultural science and technology, but put them to work in service of flawed beliefs.

Don’t Repeat Khrushchev’s Mistake

The study of history allows us to avoid repeating mistakes. What can lean leaders learn from the role the American supermarket played in the Cold War?

First, we mustn’t commit to results without understanding the process to get them. The results are superficial. The underlying processes are what bring the results. They are often invisible. When going to see examples of excellence, leaders must look for insights beyond the superficial.

Second, the investment in building up the capability to deliver simple yet robust systems often requires years of commitment. Leaders who only plan to stick around until something better comes a long, a few years at best, can’t make such a commitment. When this is the case, it’s better for them to aim for something achievable in the short-term, like improving crop yields, rather than modernizing the entire supply chain.

Third, we need the courage to identify our fundamental beliefs that may stand in the way of success, and change them.

The Usual Suspects for Lean Failures

Lean failures are often attributed to “lack of leadership support” or “poor leadership” or even “leadership resistance”. There’s no doubt that good leadership is essential, and poor leadership can be stall changes. But naming leadership as the top reason for success or failure seems too broad and vague. The lean lesson from the Soviet struggles with supermarkets suggest that it’s not a lack of leadership will to change. Failures result from leaders who don’t fully understand what they are trying to build, the scope of the challenge and what level of commitment this requires.

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