A story of the challenges McDonald’s faced when entering Russia 20 years ago, just before the fall of the USSR. Building restaurants and getting customers wasn’t enough. There were no suppliers! It illustrates how:
- The existing economic system and structure dictates what and how innovation can happen. In an economy accustomed to central planning and intense vertical integration (one establishment makes all of it’s own materials), McDonald’s initially had to create it’s own vertically-integrated system.
- Eventually McDonald’s was able to recreate the type of business structure it has used in the rest of the world: a horizontal structure where it buys all of it’s components (beef, fries, lettuce, buns, etc) from contracted suppliers.
In the process they have made some other people rich.