Operational Resilience Trumps Strategy in Volatile Markets

The hidden friction of global enterprise: Why operating in volatile markets demands more than just capital and strategy.

This conversation with Jeff Kazin and Mike Rohlfsen, former Cargill executives and co-founders of AgrisAcademy, peels back the veneer of international business to reveal the profound operational and human challenges of navigating politically and economically unstable environments like Venezuela and Ukraine. Beyond the obvious risks of currency devaluation and infrastructure decay, the core revelation is the intricate web of dependencies and the sheer ingenuity required to maintain even basic commercial operations. The non-obvious implication is that true competitive advantage in these arenas stems not from anticipating market shifts, but from mastering the art of sustained, operational resilience against systemic headwinds. This analysis is crucial for any executive or strategist considering expansion into emerging or distressed markets, offering a stark, experience-based counterpoint to theoretical business models and highlighting the critical, often overlooked, human element of operational persistence.

The Unseen Mechanics of Doing Business in Extremis

The prevailing narrative around operating in places like Venezuela and Ukraine often focuses on the macro-level risks: political instability, currency collapse, and the specter of conflict. However, this discussion with Jeff Kazin and Mike Rohlfsen, veterans of Cargill's global operations, illuminates the granular, day-to-day friction that truly defines business in these environments. Their experiences reveal that the most significant challenges are not the headline-grabbing crises, but the persistent, almost mundane, operational hurdles that compound over time, creating a unique form of competitive advantage for those who can endure them.

When Mike Rohlfsen first arrived in Ukraine in 1995, the landscape was one of immense post-Soviet optimism, a stark contrast to the current reality. Cargill, then a nascent commercial presence, was built from the ground up through sheer entrepreneurial drive. The initial calculation was simple: harness the potential of a vast agricultural sector. Yet, the reality was a complex dance with a still-developing, often opaque, state apparatus.

"There was an insane amount of chaos, but working in a regimented, ethical way got you business by by, you know, in another route."

This quote encapsulates the core tension. While the system was chaotic, a commitment to structured, ethical operations--a rarity in itself--became a differentiator. This wasn't about exploiting loopholes, but about building trust in an environment where it was scarce. The immediate payoff was not necessarily profit, but the ability to conduct business at all, laying the groundwork for future, larger investments. This required developing infrastructure, like the Danube River system’s transshipment points, which, while less efficient than modern elevators, proved resilient when primary export routes were disrupted. This highlights a key system dynamic: investing in less obvious, more robust infrastructure can yield outsized returns when the expected pathways fail.

Jeff Kazin’s experience in Venezuela, particularly during the hyperinflationary spiral under Maduro, offers a different, yet equally challenging, perspective. The fundamental collapse of the currency, the Bolivar, transformed the business from a focus on logistics and sales to a desperate, daily hunt for U.S. dollars.

"So now you have a dollar generation team. And that can that can play out all over Argentina before Malay. I don't know what the situation is now. Was like that also. When you have hyperinflation, you get into the situation where you have to have a team that's just hunting dollars."

This reveals a profound consequence of currency collapse. The business’s core function shifted from selling food products to generating hard currency, often through unconventional means like exporting salt or wooden pallets. This wasn't a strategic pivot; it was an existential necessity. The "dollar generation team" became the most critical operational unit, a testament to how systemic economic failure forces a complete redefinition of business priorities. The delayed payoff here is the survival of the operation itself, and the knowledge gained in dollar generation can be a powerful, albeit painful, competitive asset in other hyperinflationary environments. Conventional wisdom, which focuses on market demand and efficient supply chains, fails utterly when the very medium of exchange breaks down.

The conversation also touches upon the immense human cost, particularly the brain drain from Venezuela. As basic necessities like water and electricity became unreliable, and even essential industrial equipment required dollar-denominated spare parts, the most skilled individuals sought opportunities abroad. Cargill, like many multinationals, became an informal re-employment agency, absorbing Venezuelan talent into operations in Mexico and elsewhere. This exodus, while devastating for Venezuela, created a unique talent pool for companies willing and able to navigate the complexities of international HR and legal frameworks. The advantage lies in acquiring highly educated, resilient talent that has already proven its ability to operate under extreme pressure, a workforce that understands the value of stability and reliable operations intrinsically.

The Hidden Costs of 'Ethical' Operations

In environments rife with corruption, adherence to U.S. anti-bribery laws (like the FCPA) presents a significant operational challenge. While Cargill instilled a strong compliance culture, this meant foregoing "facilitation payments" or bribes that others might use to expedite processes. For Mike in Ukraine, this meant dealing with governmental influence at multiple levels, often requiring a more circuitous route to move grain, relying on direct relationships with farmers and building out less conventional infrastructure.

"Most of the infrastructure, and there were gatekeepers at various stages that could easily be catalyzed, shall we say, to get grain out of the door at very reasonable numbers and trade at at at at large scale."

The "catalyzed" gatekeepers represent the pervasive informal economy. By refusing to engage, Cargill created a slower, more deliberate process. The consequence? A deeper understanding of the agricultural sector from the ground up, fostering direct relationships that built a more sustainable, albeit less immediately explosive, business model. The delayed payoff is a more robust, less compromised operation, less susceptible to the systemic risks associated with corruption. This requires patience, a virtue often scarce in fast-paced business environments, but one that builds a durable competitive moat.

Actionable Insights for Navigating Volatile Markets

The experiences of Jeff Kazin and Mike Rohlfsen offer critical lessons for any multinational contemplating operations in challenging geographies. The insights gained are not about market analysis, but about operational fortitude and strategic patience.

• Prioritize Expertise Acquisition: Before committing significant capital, invest in deep, on-the-ground expertise. This means hiring trusted local talent or partnering with individuals who have navigated the specific complexities of the target market. This isn't just about cultural understanding, but about understanding informal systems and navigating bureaucratic mazes.
• Start Small and Iterate: Launch with a smaller, more manageable business unit (like a portable feed mill, as suggested) to serve as a "tuition payment" for learning the local operational realities. This allows for mistakes to be made with lower stakes before committing to large, fixed capital assets.
• Develop Dollar Generation Capabilities: In environments with unstable local currencies, proactively build mechanisms to generate or access U.S. dollars. This might involve exploring export opportunities for local commodities or services, even if seemingly minor, to secure vital hard currency for imports and spare parts.
• Build Resilient, Redundant Infrastructure: Recognize that primary infrastructure may fail or become inaccessible. Invest in alternative, potentially less efficient but more robust, logistical pathways. This could include developing riverine transport or local distribution networks that are less dependent on centralized, state-controlled systems.
• Cultivate Trust Through Ethical Consistency: In corrupt environments, a steadfast commitment to ethical conduct, while potentially slower in the short term, builds a reputation for reliability. This can become a significant competitive advantage, attracting partners and customers who value predictability and trustworthiness. This pays off over the long term by insulating the business from the systemic risks associated with corruption.
• Leverage Human Capital Strategically: Be prepared for significant talent migration. Proactively identify and recruit skilled individuals fleeing unstable regions. These individuals, having operated under duress, can bring invaluable resilience and problem-solving skills to your global operations, often at a competitive cost. This is a mid- to long-term investment in a unique talent pool.
• Understand the "Security Tax": Factor in the pervasive costs associated with security, theft, and logistics disruption. These are not incidental expenses but fundamental operational realities that must be accounted for in pricing and planning. This is an immediate consideration that impacts all operational costs.