#Manufacturing #Food #Fashion #Retail
Management Consulting
Kim Balaschak lived in Moscow with her husband, Jim, from 1995 until 2008. During that time, she worked in several capacities. Her key roles included: General Director for Pure Sunshine, a start-up company that commenced production of Russia's first pasteurized orange juice, consultant to SOLO, a Russian manufacturer of swim and fitness wear, and Director of Marketing for Monsoon/Accessorize, a global British retailer of women's clothing and jewelry. During her time in Russia, she also amassed one of the world's most encyclopedic collections of Soviet antique holiday ornaments. That collection now resides permanently in The Museum of Russian Art in Minneapolis.
Management Consulting
Kim Balaschak lived in Moscow with her husband, Jim, from 1995 until 2008. During that time, she worked in several capacities. Her key roles included: General Director for Pure Sunshine, a start-up company that commenced production of Russia's first pasteurized orange juice, consultant to SOLO, a Russian manufacturer of swim and fitness wear, and Director of Marketing for Monsoon/Accessorize, a global British retailer of women's clothing and jewelry. During her time in Russia, she also amassed one of the world's most encyclopedic collections of Soviet antique holiday ornaments. That collection now resides permanently in The Museum of Russian Art in Minneapolis.
Daniel Satinsky: When did you first become interested in Russia, and then, how did you end up there, and then we can talk about that experience.
Kim Balaschak: In 1975, I was taking Russian literature and Russian language studies at the University of Arizona. At the end of the year, I applied for a grant to go to the former Soviet Union. That was the time when they were taking you to Kyiv, to St Petersburg and Moscow and it was six weeks. I couldn’t go because I could only borrow so much money, and then it wasn’t a grant, it was a loan. I was already borrowed out to the max so I couldn’t go. I continued to study some Russian literature; the language program only went two years so that was it. And then I moved on and never looked back, but never forgot “Kak vy pozhivaete?”*. It was so hard to get it that you never forget it.
Daniel Satinsky: Right. Like learning to say “Zdravstvuyte”* for the first time.
Kim Balaschak: Any culture that has one of the most difficult pronouncing words as its greeting “Zdravstvuyte,” you’ve got to give them credit.
Russia didn’t even come up again until Jim started doing some work in the former Soviet Union and new nuclear plants and all. He explained already how the opportunity developed (insert here a link to Jim’s interview) and I said: “Sure I’m game,” and he went on an initial look-see and came back. I’ll never forget it because I said: “So, well?” and he said: “It’s different!”
Anyway, I decided it’s fine, packed up and went over and started a new life. We sold our home, sold everything and moved.
Daniel Satinsky: You made a conscious decision to move into a neighborhood rather than a expat community?
Kim Balaschak: Yes, we did. We really wanted to live in a decent place, but not in a compound. The real estate market was totally nuts. It was 1995, the real estate market was not formed. The people who were showing you properties had never seen them, so they didn’t know anything, and it was pretty tough. But then we met a former General, who was the inhabitant, the owner of our first apartment, we felt comfortable with him as a person, and that’s where we lived, for the first time.
Daniel Satinsky: Just out of curiosity, who showed you that apartment, was it an American or real estate agent? How did you find that?
Kim Balaschak: That particular one was a referral from Jim’s driver at the time. He knew a woman who was setting expatriates up in apartments. Because he was a driver, he was linked in with expatriates, so he could bring her clients. That’s how that worked.
Daniel Satinsky: That’s interesting! Everything is networked in Russia.
Kim Balaschak: And our language skills were... Jim’s are more developed than mine, because he had taken the full Harvard three-year extension program, I took six months, when it became clear that this might be a direction we’re going to take in our lives. So, my skills were really pathetic. I remember the meeting with other expats when we got there, and one guy like: “Oh, I’ve been here four years,” and he was still on the first list of words that his instructor had given to him. And I said: ‘Oh my gosh, this is going to be another project: finding an instructor in Russian language.” I found a linguist of the Russian language, a Russian lady who didn’t speak English, she taught me like you teach a baby.
Daniel Satinsky: You probably learned faster, as a result, I would assume.
Kim Balaschak: I think so and living there I didn’t have an excuse to not speak, except for your own timidity. I am considered a fluent non-native speaker. I worked in the language. I worked for a Russian company eventually. I could type. I could look at a legal contract and say: “That’s not what we agreed to.” I got to that level of proficiency. I’ll never forget, we were out at the Moscow Country Club, and this woman, she’s been there for five years, she said: “Oh, I wish I could speak Russian,” and I said: “Well why can’t you?” And she said: “I just don’t have anybody to speak it with. Everybody around me wants to speak English,” and that floored me. There are 11 million people around you, for crying out loud!
Daniel Satinsky: I think adults don’t like to make mistakes and look or sound stupid. That’s something that you have to get over with, trying to speak a language like this.
Kim Balaschak: One of Jim’s colleagues at Deloitte, he was a Russian, perfectly fluent in the Queen’s English, and he said to me: “Kim, we don’t have time for you to sit and go over in your head and get it grammatically correct, blurt it out!”
Daniel Satinsky: Did you get to the point where you could write in Russian?
Kim Balaschak: Oh absolutely. I had to write. I taught in Russian. There was an entrepreneur, Greg Thain. I worked with Greg briefly. He had the franchise for a program called “Store Wars” and it was a simulation, but it’s not all simulated. There was a lot of live negotiation to give retailers and manufacturers an idea of how it is to work with each other. I became a certified trainer, and I became certified to teach it in English and teach it in Russian. It was required for anybody going into management for all the major cigarette companies, beer companies and I’m not sure if the soda people were there. It was mandatory for Philip Morris and for Baltic beer*.
Daniel Satinsky: Let’s go back to the beginning, you arrived, and at that point you didn’t have a job, you were looking for work?
Kim Balaschak: I didn’t have a job, and I wasn’t looking for work yet. I wanted to study. I wanted to get a little bit of a command of language.
Daniel Satinsky: So, you used the time to study Russian. To find the Russian teacher and get reasonably proficient.
Kim Balaschak: I wanted to be at least competent, if I see a building, I knew it’s a bakery, it’s a bar. To get a little more grasp of the Cyrillic alphabet, of the language itself, just start talking. And I studied. Jim was working really long days, so I studied at least six hours a day by myself. My Russian teacher would give me grammar books, and I would study. I would go out, and be amongst people, and get the rhythms of their speech in my head. I couldn’t understand what they were saying. And I just started to speak.
And then in January 1996 I started working. Through the United States foreign commercial service, I had met Vladimir Grabowski, have you interviewed him?
Daniel Satinsky: No. Every time I talk to someone, I get good suggestions of other people I should talk to.
Kim Balaschak: Grabowski’s one of them, I know he’s a member at Hazeltine in Minnesota. I think he’s a good friend of Tom Lehman, a golfer. He was a very early-on entrepreneur, and he had a number of USAID grants. He had a meat processing factory just outside the outskirts of Moscow. When I met Vladimir — he’s of Ukrainian descent, but he’s American — he was looking to set up production of pasteurized orange juice. In the former Soviet Union, there was no pasteurized juice, there were juice drinks. There wasn’t orange juice, unless you managed to get your hand on the oranges, on the mandarins, and squeezed it. He hired me and we had a grant from USAID to buy Florida’s Valencia orange juice concentrate. He hired me to run this thing.
Daniel Satinsky:
When you say you had a grant from USAID to buy juice concentrate, you got like finance to start the business, from USAID?
Kim Balaschak: Yes. You could use the grant money to buy the juice, in this case. I don’t know how he got going with the meat plant, that was prior to my coming on board. I shared an office with the meat plant guys. And we shared some staff, so there was a receptionist we shared, but then I got my own assistant.
Grabowski for the orange juice project had a partner, and that was Schwan’s, Schwan’s frozen food. They financed getting the business going. The idea was that we would get this pasteurized juice going all over the country. In the meantime, and a parallel universe a company called Wimm Bill Dann developed a sterilized juice. Sterilized juice has no enzymes, it’s dead. That’s why it can sit on the shelf for a year or more. Nothing’s going to grow in this environment. However, sterilized juice still has vitamins, and it was still better than a powdered juice drink.
And they were able to use standard distribution, meaning non-refrigerated trucks. They were able to produce at their plant, and then distribute it everywhere. The same way that you would distribute ketchup, or canned soup.
We were going the other way. Our product was not dead. There were enzymes in it. As a result, it needs to be held at a refrigerated temperature and the infrastructure for refrigerated distribution was marginal. It became known to us really early on that we would have to produce in a large number of plants and have the product distributed with the milk. We did get the first authorization of pasteurized juice product, which was pretty exciting.
Daniel Satinsky: So, you had to get the ministry to certify?
Kim Balaschak: Government, yes, we did, and that was an incredible process. We were able to get a two-week shelf life on it. After that, it would blow up.
We got production going into two plants. One was in Podolsk, which is about 30 or 50 kilometers south of Moscow. There we produced a quart size, liter size actually, with a gable top, that was amazing. The second plant was further down in a town or city called Serpukhov and in Serpukhov we produced these little polyethylene bags. Interestingly, if you did surveys of people, they thought that whatever you would buy in these ethylene bags was fresh, so the perception was good. And our bags actually cost less than a can of coke to sell. But they did blow up — the distribution was not always refrigerated. The bacteria and everything that was in there would blow up.
Grabowski and Schwan’s decided that the with the competition from Wimm Bill Dann it wasn’t going to make sense. I did hear, however, that the knowledge we imparted to those plants stayed in with them, and they did end up continuing to produce juice for the local people there, which is really great.
Daniel Satinsky: But they weren’t importing orange juice?
Kim Balaschak: Probably not Florida’s Valencia juice. They were probably getting their concentrate from somewhere else.
Daniel Satinsky: But the knowledge that they got of the product development, packaging, and so on, was efficient for them to continue on.
Kim Balaschak: They continued, at least for a period of time, I don’t know how long.
Daniel Satinsky: How long did it take for that project to go its course.
Kim Balaschak: That took a year and a half.
Daniel Satinsky: A year and a half, wow! I’m sure it was a lot of ups and downs during that period of time.
Kim Balaschak: It was a really strange time from the beginning of ‘96 through the middle of ‘97. Because that that brings you almost to the crisis time.
Daniel Satinsky: Do you have memories from the Yeltsin election, was that part of your frame of reference, or was it something in the background? That was a ‘96 election.
Kim Balaschak: I don’t think I have anything special to offer. I was busy working.
Daniel Satinsky: I understand that, I think for some businesses it was critical, in finance it was critical, but in others it was background noise.
Kim Balaschak: It was nothing for us.
Daniel Satinsky: Where did you go from from the orange juice?
Kim Balaschak: I’m trying to think, because I think I went to work with another — not Coopers & Lybrand, that was later — another company, that had gotten a grant to help a pharmaceutical factory in Nizhny Novgorod get its ISO 9000 certifications, so that it could export its pharmaceuticals into Europe.
And the part that I was working on, and I may have to do the research and get the name of the consultant company… It was an acronym, and I don’t remember it. So, we had a small part of it. Our responsibility was to get the distribution and the sales arms of the company, and we ended up doing a bunch of the same thing. That happens in companies, they do the same sorts of things and then one doesn’t know what the other is doing. We just looked at what they were doing and then helped them to separate out the pure distribution function and the pure sales function, and then figure out where they should overlap in order to free up some labor. There was another German team and they’re working on production, standardization of the production.
Daniel Satinsky: So, this was a Soviet enterprise that was making a transition?
Kim Balaschak: Yeah, they wanted to export not just to India, but into Europe, and they needed ISO 9000 certification. That was a nine-month project. After that I went to work for Korn Ferry. I was working for Korn Ferry when the crisis hit in 1998.
Daniel Satinsky: What happened when the crisis hit?
Kim Balaschak: Nothing good. There was just nothing for us to do, we lost all our client base. I don’t know the number, Dan, but apparently like two thirds of expats left.
Daniel Satinsky: I was going to ask you: do you have any rough idea how many expats there were in 1998?
Kim Balaschak: In total expats? No, I don’t.
Daniel Satinsky: In Moscow, I have a memory of greeting the Moscow Times around that time, saying that there were 250,000. But then other people, when I’ve asked the same question, said maybe there were 10,000, maybe there were 15,000. I haven’t been able to find any...
Kim Balaschak: There were more than 10,000 or 15,000. We were members of Moscow Country Club at the time and the membership at Moscow Country Club was about a third, a third, a third – Russian, Asian and then everybody else. There were a lot of Japanese and Korean business professionals in town and their families. And people from all over Europe. Finland was heavily represented, Germany… They were much more represented than the U.S., we were in the minority. So, I don’t know. I don’t have a number.
I ended up eventually working for a British retailer. We ended up an operation in Russia, but I remember that when I went to England, they said there were a quarter of a million Russians living in London.
Daniel Satinsky: I’m not remembering correctly, but I do know that there was a huge exodus in 1998.
Kim Balaschak: Some people just don’t like to embrace change. And they’re not moving in their 20s. They’re moving there when they’re already a little more successful. They’ve got something behind them. It can be difficult. I didn’t need to hear people complaining, “I can’t find osso buco.” Oh, then go home! We just embraced it. Jim and I just embraced it.
Daniel Satinsky: That’s the impression that I got from the interviews as well. But you also had one foot in that expat community. You were part of the people who embraced it, but also part of the people who didn’t. And it’s harder for me to interview the people who didn’t. Either they weren’t successful, or they didn’t want to stay there. It’s just much harder.
Kim Balaschak:
They probably didn’t make the same kinds of contributions in order to make any sort of an impact. You yourself have to be impacted.
Daniel Satinsky: Could you tell me a little more about the women’s organizations? Because a lot of the stories, as I get it, are from men. And the experience of women in Russia in that period is quite different than many of the single young men who came there.
Kim Balaschak: Very different!
Daniel Satinsky: Were there the women’s organizations for social support and social life? What were those organizations? What was the purpose of that? What did they serve?
Kim Balaschak: There were primarily two, that I would have any association with at all. It was the International Women’s Organization, that was founded by the wives of diplomats. It was a way for them to all get together, and then it expanded to include other women. Although I do understand that you had to be the wife of a diplomat to be the president of that organization. It was huge, there were hundreds and hundreds of members of that organization. And they would put on cultural events. I didn’t attend those as much. I was working. They had fashion shows. Honestly, Daniel, I wasn’t very active in that organization. But there’s a lot online about that organization if you wanted to learn more about that.
The one, though, that I did attend, and I did it, because even though I was working, I’m still an American woman. You put yourself out there. I’d be working out at a dairy plant in Podolsk trying to set up orange juice, walking in, and the guys who were cleaning the tank at the top have their feet dangling in the tank! Oh my God, no! Anyway, I just needed that camaraderie. And in the early days, the American women just met in each other’s homes, twice a month. We had coffee and pastries, and whoever was hosting it, would put out the coffee and the pastries. I hosted it, and it was really, really nice. You just kind of got together, that was basically it. I wasn’t on the board or anything like that. I would just meet up with the ladies. I know that they had other activities like fundraising things, and things that I couldn’t attend. But then it grew, and being in people’s homes no longer was feasible. We started going to the Hard Rock Cafe on Old Arbat. And if you walk in there and keep walking, you didn’t even have to ask where the ladies were. There’s a certain sound to a group of American women gathering. It was on the second floor. They often had at these events a speaker, and that was really nice. I was a speaker once. I gave a presentation on my ornament collection.
That would always be something interesting at these meetings, once they got to the Hard Rock, because you had a screen and a sound system. That organization evolved as well. I really loved it, and that’s where you really got to know people. Then some of the American businessmen were marrying Russian women. And then the Russian women would come to the American Women’s Organization. It became, if you want to call it “diversified,” you could call it.
Kim Balaschak: In 1975, I was taking Russian literature and Russian language studies at the University of Arizona. At the end of the year, I applied for a grant to go to the former Soviet Union. That was the time when they were taking you to Kyiv, to St Petersburg and Moscow and it was six weeks. I couldn’t go because I could only borrow so much money, and then it wasn’t a grant, it was a loan. I was already borrowed out to the max so I couldn’t go. I continued to study some Russian literature; the language program only went two years so that was it. And then I moved on and never looked back, but never forgot “Kak vy pozhivaete?”*. It was so hard to get it that you never forget it.
Daniel Satinsky: Right. Like learning to say “Zdravstvuyte”* for the first time.
Kim Balaschak: Any culture that has one of the most difficult pronouncing words as its greeting “Zdravstvuyte,” you’ve got to give them credit.
Russia didn’t even come up again until Jim started doing some work in the former Soviet Union and new nuclear plants and all. He explained already how the opportunity developed (insert here a link to Jim’s interview) and I said: “Sure I’m game,” and he went on an initial look-see and came back. I’ll never forget it because I said: “So, well?” and he said: “It’s different!”
Anyway, I decided it’s fine, packed up and went over and started a new life. We sold our home, sold everything and moved.
Daniel Satinsky: You made a conscious decision to move into a neighborhood rather than a expat community?
Kim Balaschak: Yes, we did. We really wanted to live in a decent place, but not in a compound. The real estate market was totally nuts. It was 1995, the real estate market was not formed. The people who were showing you properties had never seen them, so they didn’t know anything, and it was pretty tough. But then we met a former General, who was the inhabitant, the owner of our first apartment, we felt comfortable with him as a person, and that’s where we lived, for the first time.
Daniel Satinsky: Just out of curiosity, who showed you that apartment, was it an American or real estate agent? How did you find that?
Kim Balaschak: That particular one was a referral from Jim’s driver at the time. He knew a woman who was setting expatriates up in apartments. Because he was a driver, he was linked in with expatriates, so he could bring her clients. That’s how that worked.
Daniel Satinsky: That’s interesting! Everything is networked in Russia.
Kim Balaschak: And our language skills were... Jim’s are more developed than mine, because he had taken the full Harvard three-year extension program, I took six months, when it became clear that this might be a direction we’re going to take in our lives. So, my skills were really pathetic. I remember the meeting with other expats when we got there, and one guy like: “Oh, I’ve been here four years,” and he was still on the first list of words that his instructor had given to him. And I said: ‘Oh my gosh, this is going to be another project: finding an instructor in Russian language.” I found a linguist of the Russian language, a Russian lady who didn’t speak English, she taught me like you teach a baby.
Daniel Satinsky: You probably learned faster, as a result, I would assume.
Kim Balaschak: I think so and living there I didn’t have an excuse to not speak, except for your own timidity. I am considered a fluent non-native speaker. I worked in the language. I worked for a Russian company eventually. I could type. I could look at a legal contract and say: “That’s not what we agreed to.” I got to that level of proficiency. I’ll never forget, we were out at the Moscow Country Club, and this woman, she’s been there for five years, she said: “Oh, I wish I could speak Russian,” and I said: “Well why can’t you?” And she said: “I just don’t have anybody to speak it with. Everybody around me wants to speak English,” and that floored me. There are 11 million people around you, for crying out loud!
Daniel Satinsky: I think adults don’t like to make mistakes and look or sound stupid. That’s something that you have to get over with, trying to speak a language like this.
Kim Balaschak: One of Jim’s colleagues at Deloitte, he was a Russian, perfectly fluent in the Queen’s English, and he said to me: “Kim, we don’t have time for you to sit and go over in your head and get it grammatically correct, blurt it out!”
Daniel Satinsky: Did you get to the point where you could write in Russian?
Kim Balaschak: Oh absolutely. I had to write. I taught in Russian. There was an entrepreneur, Greg Thain. I worked with Greg briefly. He had the franchise for a program called “Store Wars” and it was a simulation, but it’s not all simulated. There was a lot of live negotiation to give retailers and manufacturers an idea of how it is to work with each other. I became a certified trainer, and I became certified to teach it in English and teach it in Russian. It was required for anybody going into management for all the major cigarette companies, beer companies and I’m not sure if the soda people were there. It was mandatory for Philip Morris and for Baltic beer*.
Daniel Satinsky: Let’s go back to the beginning, you arrived, and at that point you didn’t have a job, you were looking for work?
Kim Balaschak: I didn’t have a job, and I wasn’t looking for work yet. I wanted to study. I wanted to get a little bit of a command of language.
Daniel Satinsky: So, you used the time to study Russian. To find the Russian teacher and get reasonably proficient.
Kim Balaschak: I wanted to be at least competent, if I see a building, I knew it’s a bakery, it’s a bar. To get a little more grasp of the Cyrillic alphabet, of the language itself, just start talking. And I studied. Jim was working really long days, so I studied at least six hours a day by myself. My Russian teacher would give me grammar books, and I would study. I would go out, and be amongst people, and get the rhythms of their speech in my head. I couldn’t understand what they were saying. And I just started to speak.
And then in January 1996 I started working. Through the United States foreign commercial service, I had met Vladimir Grabowski, have you interviewed him?
Daniel Satinsky: No. Every time I talk to someone, I get good suggestions of other people I should talk to.
Kim Balaschak: Grabowski’s one of them, I know he’s a member at Hazeltine in Minnesota. I think he’s a good friend of Tom Lehman, a golfer. He was a very early-on entrepreneur, and he had a number of USAID grants. He had a meat processing factory just outside the outskirts of Moscow. When I met Vladimir — he’s of Ukrainian descent, but he’s American — he was looking to set up production of pasteurized orange juice. In the former Soviet Union, there was no pasteurized juice, there were juice drinks. There wasn’t orange juice, unless you managed to get your hand on the oranges, on the mandarins, and squeezed it. He hired me and we had a grant from USAID to buy Florida’s Valencia orange juice concentrate. He hired me to run this thing.
Daniel Satinsky:
When you say you had a grant from USAID to buy juice concentrate, you got like finance to start the business, from USAID?
Kim Balaschak: Yes. You could use the grant money to buy the juice, in this case. I don’t know how he got going with the meat plant, that was prior to my coming on board. I shared an office with the meat plant guys. And we shared some staff, so there was a receptionist we shared, but then I got my own assistant.
Grabowski for the orange juice project had a partner, and that was Schwan’s, Schwan’s frozen food. They financed getting the business going. The idea was that we would get this pasteurized juice going all over the country. In the meantime, and a parallel universe a company called Wimm Bill Dann developed a sterilized juice. Sterilized juice has no enzymes, it’s dead. That’s why it can sit on the shelf for a year or more. Nothing’s going to grow in this environment. However, sterilized juice still has vitamins, and it was still better than a powdered juice drink.
And they were able to use standard distribution, meaning non-refrigerated trucks. They were able to produce at their plant, and then distribute it everywhere. The same way that you would distribute ketchup, or canned soup.
We were going the other way. Our product was not dead. There were enzymes in it. As a result, it needs to be held at a refrigerated temperature and the infrastructure for refrigerated distribution was marginal. It became known to us really early on that we would have to produce in a large number of plants and have the product distributed with the milk. We did get the first authorization of pasteurized juice product, which was pretty exciting.
Daniel Satinsky: So, you had to get the ministry to certify?
Kim Balaschak: Government, yes, we did, and that was an incredible process. We were able to get a two-week shelf life on it. After that, it would blow up.
We got production going into two plants. One was in Podolsk, which is about 30 or 50 kilometers south of Moscow. There we produced a quart size, liter size actually, with a gable top, that was amazing. The second plant was further down in a town or city called Serpukhov and in Serpukhov we produced these little polyethylene bags. Interestingly, if you did surveys of people, they thought that whatever you would buy in these ethylene bags was fresh, so the perception was good. And our bags actually cost less than a can of coke to sell. But they did blow up — the distribution was not always refrigerated. The bacteria and everything that was in there would blow up.
Grabowski and Schwan’s decided that the with the competition from Wimm Bill Dann it wasn’t going to make sense. I did hear, however, that the knowledge we imparted to those plants stayed in with them, and they did end up continuing to produce juice for the local people there, which is really great.
Daniel Satinsky: But they weren’t importing orange juice?
Kim Balaschak: Probably not Florida’s Valencia juice. They were probably getting their concentrate from somewhere else.
Daniel Satinsky: But the knowledge that they got of the product development, packaging, and so on, was efficient for them to continue on.
Kim Balaschak: They continued, at least for a period of time, I don’t know how long.
Daniel Satinsky: How long did it take for that project to go its course.
Kim Balaschak: That took a year and a half.
Daniel Satinsky: A year and a half, wow! I’m sure it was a lot of ups and downs during that period of time.
Kim Balaschak: It was a really strange time from the beginning of ‘96 through the middle of ‘97. Because that that brings you almost to the crisis time.
Daniel Satinsky: Do you have memories from the Yeltsin election, was that part of your frame of reference, or was it something in the background? That was a ‘96 election.
Kim Balaschak: I don’t think I have anything special to offer. I was busy working.
Daniel Satinsky: I understand that, I think for some businesses it was critical, in finance it was critical, but in others it was background noise.
Kim Balaschak: It was nothing for us.
Daniel Satinsky: Where did you go from from the orange juice?
Kim Balaschak: I’m trying to think, because I think I went to work with another — not Coopers & Lybrand, that was later — another company, that had gotten a grant to help a pharmaceutical factory in Nizhny Novgorod get its ISO 9000 certifications, so that it could export its pharmaceuticals into Europe.
And the part that I was working on, and I may have to do the research and get the name of the consultant company… It was an acronym, and I don’t remember it. So, we had a small part of it. Our responsibility was to get the distribution and the sales arms of the company, and we ended up doing a bunch of the same thing. That happens in companies, they do the same sorts of things and then one doesn’t know what the other is doing. We just looked at what they were doing and then helped them to separate out the pure distribution function and the pure sales function, and then figure out where they should overlap in order to free up some labor. There was another German team and they’re working on production, standardization of the production.
Daniel Satinsky: So, this was a Soviet enterprise that was making a transition?
Kim Balaschak: Yeah, they wanted to export not just to India, but into Europe, and they needed ISO 9000 certification. That was a nine-month project. After that I went to work for Korn Ferry. I was working for Korn Ferry when the crisis hit in 1998.
Daniel Satinsky: What happened when the crisis hit?
Kim Balaschak: Nothing good. There was just nothing for us to do, we lost all our client base. I don’t know the number, Dan, but apparently like two thirds of expats left.
Daniel Satinsky: I was going to ask you: do you have any rough idea how many expats there were in 1998?
Kim Balaschak: In total expats? No, I don’t.
Daniel Satinsky: In Moscow, I have a memory of greeting the Moscow Times around that time, saying that there were 250,000. But then other people, when I’ve asked the same question, said maybe there were 10,000, maybe there were 15,000. I haven’t been able to find any...
Kim Balaschak: There were more than 10,000 or 15,000. We were members of Moscow Country Club at the time and the membership at Moscow Country Club was about a third, a third, a third – Russian, Asian and then everybody else. There were a lot of Japanese and Korean business professionals in town and their families. And people from all over Europe. Finland was heavily represented, Germany… They were much more represented than the U.S., we were in the minority. So, I don’t know. I don’t have a number.
I ended up eventually working for a British retailer. We ended up an operation in Russia, but I remember that when I went to England, they said there were a quarter of a million Russians living in London.
Daniel Satinsky: I’m not remembering correctly, but I do know that there was a huge exodus in 1998.
Kim Balaschak: Some people just don’t like to embrace change. And they’re not moving in their 20s. They’re moving there when they’re already a little more successful. They’ve got something behind them. It can be difficult. I didn’t need to hear people complaining, “I can’t find osso buco.” Oh, then go home! We just embraced it. Jim and I just embraced it.
Daniel Satinsky: That’s the impression that I got from the interviews as well. But you also had one foot in that expat community. You were part of the people who embraced it, but also part of the people who didn’t. And it’s harder for me to interview the people who didn’t. Either they weren’t successful, or they didn’t want to stay there. It’s just much harder.
Kim Balaschak:
They probably didn’t make the same kinds of contributions in order to make any sort of an impact. You yourself have to be impacted.
Daniel Satinsky: Could you tell me a little more about the women’s organizations? Because a lot of the stories, as I get it, are from men. And the experience of women in Russia in that period is quite different than many of the single young men who came there.
Kim Balaschak: Very different!
Daniel Satinsky: Were there the women’s organizations for social support and social life? What were those organizations? What was the purpose of that? What did they serve?
Kim Balaschak: There were primarily two, that I would have any association with at all. It was the International Women’s Organization, that was founded by the wives of diplomats. It was a way for them to all get together, and then it expanded to include other women. Although I do understand that you had to be the wife of a diplomat to be the president of that organization. It was huge, there were hundreds and hundreds of members of that organization. And they would put on cultural events. I didn’t attend those as much. I was working. They had fashion shows. Honestly, Daniel, I wasn’t very active in that organization. But there’s a lot online about that organization if you wanted to learn more about that.
The one, though, that I did attend, and I did it, because even though I was working, I’m still an American woman. You put yourself out there. I’d be working out at a dairy plant in Podolsk trying to set up orange juice, walking in, and the guys who were cleaning the tank at the top have their feet dangling in the tank! Oh my God, no! Anyway, I just needed that camaraderie. And in the early days, the American women just met in each other’s homes, twice a month. We had coffee and pastries, and whoever was hosting it, would put out the coffee and the pastries. I hosted it, and it was really, really nice. You just kind of got together, that was basically it. I wasn’t on the board or anything like that. I would just meet up with the ladies. I know that they had other activities like fundraising things, and things that I couldn’t attend. But then it grew, and being in people’s homes no longer was feasible. We started going to the Hard Rock Cafe on Old Arbat. And if you walk in there and keep walking, you didn’t even have to ask where the ladies were. There’s a certain sound to a group of American women gathering. It was on the second floor. They often had at these events a speaker, and that was really nice. I was a speaker once. I gave a presentation on my ornament collection.
That would always be something interesting at these meetings, once they got to the Hard Rock, because you had a screen and a sound system. That organization evolved as well. I really loved it, and that’s where you really got to know people. Then some of the American businessmen were marrying Russian women. And then the Russian women would come to the American Women’s Organization. It became, if you want to call it “diversified,” you could call it.
Daniel Satinsky: How long did that organization exist, do you know?
Kim Balaschak: It was going when I got there in ‘95. And it was still going when we left. I don’t think it’ll go anywhere as long as you have American businesspeople there. Some of them will be American women and they will want to get together with other American women.
Daniel Satinsky: I was really taken by your guys with their feet dangling in the tank. You do you have other things, that you remember from that period, that were just unusual?
Kim Balaschak: That’s a good question. Maybe something will come to me right at the moment, because this dangling was something.
Daniel Satinsky: We’re coming from a different culture, a different business culture, a different outlook. You’re plopped in the middle of something, where people have no idea what your outlook is. Must have been difficult, and miscommunication of what each other meant even.
Kim Balaschak: At that time, I had hired somebody to work with me and he supposedly could speak a little bit of English. He was known to the director of Grabowski’s Meat Plant. His name was Kirill. In the beginning, Kirill would speak English, and I would speak Russian. That way you're at least hearing what the other person is saying in your own language. His English was terrible, my Russian was terrible. At least I got the idea of what he was trying to put forth. Then it evolved, and by the time we finished the project, we were speaking Russian.
Something did come to mind about skillsets. I was on the Consumer Goods Committee of the American Chamber of Commerce. I happened to meet a representative from DuPont, and he had said that he was working with a Russian manufacturer of fitness wear and that they were at this inflection point where they could use some assistance. He put us in contact. After Korn Ferry, I contacted this company called “Solo.” Indeed, they were making some fitness wear and some swimwear, and they had no idea where they were going. They asked me to come in and take a look at their organization. They had a factory north of Moscow. They had started off just making stuff at home and bringing it in those great big bags down to sell them at the open markets on the weekends. But then they thought they might have something a little special. There was a growth in fitness awareness and health, Vladimir Putin brought that. He doesn't drink. He’s doing judo. So, that kind of starts to grow. I went there and said that if you want to put a brand name on any of these products, you going to have to make them more consistently, because they were a mess. You'd have black and blue pants, front and back sewn together. You'd have things put on inside out. You'd have blue thread on black pants. Quality control was done after somebody bought it and then returned it, because they did have a small, limited network. I ended up going to work for them. I worked for them for four years. This was really serious, and I became a vice president of the company.
First, I was trying to get a handle on production. Then when you start to work on production, then you realize, people do what they get paid for. It's logical that the pants should get turned inside out at his stage. But this person just passes them on to the next stage because she wants to get more pieces and more piece count, get paid more. It was hard to figure out what's going on. There were bags of everything. All the place was… Trash bags laying there with bags of unfinished goods. And when you are going to get thread to put on the sewing machines, it was every which way. They didn't know how much of anything they had. Sometimes they didn't have it: “I guess we can't make that now; I've got to order some more thread.”
Daniel Satinsky: This was not a Soviet enterprise making a transition. Was it a new enterprise?
Kim Balaschak: You can say it's Soviet. They started making the swimwear during Soviet times. Used clothes that nobody else wanted and they turned them into swimwear and then for children. Then they started making a little money. They wanted to get some new fabrics, that's how they came into contact with DuPont because of the Lycra products, the fabrics that are made with DuPont Lycra.
Daniel Satinsky: But this disorganized production was bankrolled somehow?
Kim Balaschak: There were the husband and the wife who just kept pouring everything they had back into the business.
Kim Balaschak: I had several projects at Coopers & Lybrand. In fact, the first year that I was working with the swimwear manufacturer, I was doing it on a part time basis. I was still working on some projects with Coopers & Lybrand. We had a project with Unilever, then there was one with a factory that makes candy. I was still doing housing, because I could speak Russian. I needed to finish those two projects. So, during my time at Coopers I learned a new way of thinking about operations and how things get done. I was an operations gal that’s why I think everything, even marketing, you can draw it back to how it gets done. The way that we were looking at things is if you’re going to do something, what are the inputs, what are the controls, what are the supports and what’s the output and where’s the output going?
I got the management at this swimwear company, Solo, to start thinking like that. It transformed their business. It allowed them to transform their own business. I didn’t go in and say: “This is what you need to do now, do it!” I got to know what they understand. I’m pointing out things through a process to show them that this output’s garbage. If this output’s garbage, it’s going to be an input or control on another step and that’s going to be garbage too. They were so excited. They said: “We don’t want you to come back for a month.” I came back. I got goosebumps. The entire sewing floors was cleaned up. In the hallway they had shelves, where they had all of their tags, and zippers, and threads. Everything was completely color coded and labeled. That was amazing! Then the other big change that they made is: when a seamstress would go in to start working, she’d have to go out, get the thread, thread the machine. It was taking about 37 minutes. It’s pretty simple, you just start asking questions. Can somebody else thread? Yes.
Kim Balaschak: Do you need any special skills for that? No. Can somebody else clean the area? Yes. Can somebody set up what she has to do: her instructions, so she doesn't have to go find the supervisor to get her instructions and then look into it? Yeah. Can anybody else stitch these pants together? No, only she can do that. I said okay, there you go. All of a sudden, the seamstress comes in, she's ready to go. She starts sewing because she's a skilled worker.
Daniel Satinsky: And she's happy because her piecework goes up?
Kim Balaschak: Yes. Although we got rid of that system. We moved towards more of a reward by the overall. They added a second shift. It was overall output. And then we also established new management trainings, other ways to give people opportunity and pride. I heard from the owners, that they got a contract quite a few years ago, after I had left. They were so excited, because they think about everything that way in the process. They got a contract to produce children's swimwear for Metro Cash & Carry. That's the Costco of Europe. That is really cool!
Daniel Satinsky: What you brought to them was a business process understanding that you got from Cooper's and your own experience. And it allowed them to take their entrepreneurial drive and focus it on a new way.
Kim Balaschak: Absolutely. And I got a work permit. They got a work permit for me because they said: we have convinced a ministry or whatever it is, that you are the only person who have the skill we need.
Daniel Satinsky: The significance of that is you were being paid by Russian organization? If you are working for Coopers & Lybrand, you didn't need a work permit because it was a foreign company?
Kim Balaschak: I did not need a work permit at Coopers & Lybrand. But to go to work for a Russian company, I needed a work permit.
Daniel Satinsky: This is really this is interesting to me because I'm trying to look what is the long-term impact of having had so many foreigners there. Clearly, you've had an impact because it was a set of skills that they needed, that allowed them to do what they're doing now as a Russian enterprise.
Kim Balaschak: I think your question is really good and it goes deep into what all of us may not have thought that we might have been doing. We did have something that the Russians did not have, and that is business experience. By imparting that, I can speak for myself in the way that I did. We would spend hours over these diagrams of inputs, outputs and controls, arguing! It was so heated, and some people were just walking out. This is what was really difficult.
But that company then embraced that way of thinking and was actually really progressive too, because it was brand new even at Coopers & Lybrand. And I was part of the pilot of this way of thinking. I wasn't even a full time Coopers & Lybrand person. I was a contract worker when they had Russian companies. Then they merged with Price Waterhouse and that did change a few things. But in any case, I finished out those projects. To go back, they have this knowledge, they use it. They use it to improve their business. They use it in their business processes. Then, they're able to export. The whole perception of Russian production is in some way elevated. It's shifted. It's all kind of building up from the bottom.
Daniel Satinsky: They started exporting only a few years ago?
Kim Balaschak: Well, no, much more than that. I was still in Philadelphia. I think maybe 2010, I don't know.
Daniel Satinsky: But it goes against the stereotype that Russia doesn't have any consumer goods to export.
Kim Balaschak: Exactly.
Daniel Satinsky: This was a Soviet era factory that this couple got control of through privatization?
Kim Balaschak: No, they built the business themselves by sewing in their own home.
Daniel Satinsky: Okay. They got to the factory stage, and they were way beyond their capabilities.
Kim Balaschak: That's exactly what it was. They were beyond their capabilities to…Like, you know get the production in order, who are we producing for? Then over the course of those four years, we identified our consumers, who we want to be to whom? Probably one of the most interesting projects that I did with Solo was when we hired one of these focus group companies to help us identify what people want in a swimsuit or in their fitness wear. And we came up with two types of women. Those women that like to show off themselves and those women who like to show more about who they are from their core. It's a difficult thing to grasp. But for example, they hired a new designer, and she was putting all these doodads on everything. There it is: women who like to attract attention to themselves, or women who like to just simply express themselves. And there's a difference. There's a fine line, because a lot of women who say they are just expressing themselves, even though they're really attracting attention to themselves. And it helped guide our design process. Because you got to produce, got to design, you got to distribute, and got to market. It helped with design because we got rid of all the doodads. Just that little simple…
Daniel Satinsky: How did you develop your distribution? You were distributing to retailers, or?
Kim Balaschak: We were distributing to one major retailer, which was Sportmaster in Moscow.
Daniel Satinsky: I remember that name!
Kim Balaschak: Yep, Sportmaster was there, and we distributed to them directly. But for the rest of Russia, we had distributors. I spent some time out in Novosibirsk because we had a distributor out there. That distributor had sub distributors that covered the cities around Novosibirsk.
Daniel Satinsky: Did you develop in the same way the culture of processes for being a distributor?
Kim Balaschak: We did not have a chance to do that. We couldn't spend the amount of time with the distributor. We just determined the terms and then worked out what would be the objectives and the goals.
Daniel Satinsky: I know that in some spheres of business, small businesses were at the mercy of bigger customers who would sometimes take advantage of them, either in delaying payment or refusing payment or generally pushing the financing costs off onto their smaller supplier, because they could. Did you have that kind of a problem at all? With Sportmaster or anybody?
Kim Balaschak: No.
Daniel Satinsky: So, those relationships were relatively smooth once you sorted out your internal processes?
Kim Balaschak: Yes.
Daniel Satinsky: Is Solo a unicorn or a one-off? Or are there lots of other “Solos?”
Kim Balaschak: No, there may be other “Solos”. There's a company called Solo Club, but no.
Daniel Satinsky: In terms of the process, they went through. Are there other companies that learned this either, not in your methodology, but sorted themselves out in a consumer sphere to make competitive goods?
Kim Balaschak: I'm not sure I understood.
Daniel Satinsky: You helped this company to transform themselves into a company that standardized their production, understood their market, was able to sell into that market and be competitive?
Kim Balaschak: Yes
Daniel Satinsky: Are they unique in that transformation or do you know other companies who made a similar transformation?
Kim Balaschak: I am sure that Russia is replete with stories of companies that have made transformations. But in the fitness and swimwear… Yeah, there was other competition. They were developing in different ways. And then, of course, there's always international competition. Also, you've got name brand competition and then you got no-name brand competition. There wasn't a whole heck of a lot of loyalty in swimwear, just wasn’t. You just have a nice swimsuit on the rack and it had to appeal.
Daniel Satinsky: So, the brand didn't sell it? Did you have the Turkish competition? Chinese competition?
Kim Balaschak: I don't specifically remember Turkish, but I definitely remember Chinese competition.
Daniel Satinsky: Would you say this experience was like the most memorable for you and your business career there?
Kim Balaschak: It was one of them. Every experience I had was wonderful, I'm not I'm not kidding you on that. The one that I had after Solo, I went to work for “Monsoon.” Do you know the company Monsoon? Here in the United States there's a retailer called Anthropologie. Monsoon is the predecessor to Anthropologie, the British company. They have two brands; they have Monsoon and they have Accessorize.
After I finished with Solo, I had a very brief period of time with Saatchi & Saatchi. They wanted to open a division called “Saatchi & Saatchi X.” That Saatchi & Saatchi X is a really interesting business, I had never even heard of it. Perfect example is, let's take, wine. When you see a billboard for wine, what are people doing? They're standing around laughing, hugging each other. They've got this beautiful glass of wine in front of them. When somebody goes to the supermarket or Walmart, goes to the wine department, they're standing there: oh my gosh. They're looking at a sea of labels. Sea of prices, and it's such a different decision making, such a different experience. Saatchi & Saatchi X was formed with one company that was trying to help Walmart understand that. And Saatchi then wanted to open up Saatchi X places everywhere.
So, I went to my training at Walmart in Bentonville. We studied in the greeting cards department and the optical department. I was there for my training, but part of training is doing. People were buying a greeting card. They're trying to think of a loved one, maybe a happy situation, maybe not. And you've got this bright light shining overhead and the racks are steel or like white aluminum. It's just not a good way to do it. And you study, and you do focus groups on how people are feeling when they're buying these certain items. Then Walmart completely redid the way that greeting cards are stocked. Shelves are lower, there's some wood, the lights are less bright. Same thing with the optical department. They had them organized by price here, the $10 frames and the $15 frames. Nobody wants to be seen over at the $10 frames. Also, you don't want some slouch sitting there at the desk. The results of that study: people there should have white coats on. There should be lots of mirrors around tables, which should look like an optical place where you sit down and try things on. You organize everything. You can have price, but it's got to be within style. So, you have your style categories: you have your contemporary, you have your classical, then you have the price in there, that's okay. Those are the sorts of things. I was briefly with Saatchi X, most of my job was in training, it was really great. Then I got a client, Monsoon. I worked with them for just a couple of months, and they wanted me to put a marketing plan together. They had 23 stores, total. When I left, we had 79 stores, so it was really amazing.
Daniel Satinsky: Moscow center?
Kim Balaschak: This is Moscow only. No, no, Russia! We ended up having 23 stores in Moscow, we had 9 in St. Petersburg, couple in Nizhny Novgorod, Yekaterinburg, Volgograd, Kaliningrad. They were all over the place. It was really great. Then the director, who's a Russian gal, she just said: “It's going to be much easier if you just come to work for me.” So, I did. I went to work there, and I worked there for four years. Then we left Russia. That was fabulous because we were opening, we had 500 employees: 496 women and four men, all in IT. And we were opening these Accessorize stores, that was the brand that was driving it. We were opening them all over the place and we were dealing with the magazines. We had worked with Elle Girl finally, because we felt that we had critical mass. We had developed a wonderful program when you do your very first store in a city, how do get attention… It was really, really a lot of fun. I had a lot of respect for the director of that franchise.
Daniel Satinsky: Where did that director come from? What was her background?
Kim Balaschak: She’s Russian, but she apparently had been married to an English chap, and she lived in the UK. When she came back to Russia, she opened the franchise. She was fabulous. I loved working with her.
Daniel Satinsky: She brought that outlook or sensibility with her?
Kim Balaschak: She was a great business lady.
Daniel Satinsky: She's still at it?
Kim Balaschak: I think she sold the franchise. From what I had heard she sold it. She sold the stores back to Monsoon, which is always really a nice thing. Then she was starting something else. But I'm here, it's tough. As you know, you have to track everybody down.
Daniel Satinsky: It's very tough. You have something ongoing, something you want to talk about?
Kim Balaschak: Well, I have the ongoing ornaments, of course.
Daniel Satinsky: Tell me about the ornaments. I know this is a passion of yours, so tell me about them.
Kim Balaschak: Well, the ornaments are definitely a passion. We moved there in ‘95, and then over the ‘98 holiday, we're going to be there. I'm a flea market rat, what can I say. I went to the flea market and voila, there are all of these ornaments.
Daniel Satinsky: Where was it, Izmaylovo?
Kim Balaschak: Yes, Izmaylovo, my favorite place!
Daniel Satinsky: Yeah, yeah, I could show you doodads I have from Izmaylovo, several rugs from Dagestan.
Kim Balaschak: There you go. It's just a grand place. In the early days, when you would come in the main entrance over to the right, everybody would have all these boxes, and just rags over the boxes, and then anything from their house that they wanted to sell. It was separate from the souvenirs and the jewelry and the icons and the rugs. It's completely separate. That's where you would see people selling their ornaments.
Kim Balaschak: It was going when I got there in ‘95. And it was still going when we left. I don’t think it’ll go anywhere as long as you have American businesspeople there. Some of them will be American women and they will want to get together with other American women.
Daniel Satinsky: I was really taken by your guys with their feet dangling in the tank. You do you have other things, that you remember from that period, that were just unusual?
Kim Balaschak: That’s a good question. Maybe something will come to me right at the moment, because this dangling was something.
Daniel Satinsky: We’re coming from a different culture, a different business culture, a different outlook. You’re plopped in the middle of something, where people have no idea what your outlook is. Must have been difficult, and miscommunication of what each other meant even.
Kim Balaschak: At that time, I had hired somebody to work with me and he supposedly could speak a little bit of English. He was known to the director of Grabowski’s Meat Plant. His name was Kirill. In the beginning, Kirill would speak English, and I would speak Russian. That way you're at least hearing what the other person is saying in your own language. His English was terrible, my Russian was terrible. At least I got the idea of what he was trying to put forth. Then it evolved, and by the time we finished the project, we were speaking Russian.
Something did come to mind about skillsets. I was on the Consumer Goods Committee of the American Chamber of Commerce. I happened to meet a representative from DuPont, and he had said that he was working with a Russian manufacturer of fitness wear and that they were at this inflection point where they could use some assistance. He put us in contact. After Korn Ferry, I contacted this company called “Solo.” Indeed, they were making some fitness wear and some swimwear, and they had no idea where they were going. They asked me to come in and take a look at their organization. They had a factory north of Moscow. They had started off just making stuff at home and bringing it in those great big bags down to sell them at the open markets on the weekends. But then they thought they might have something a little special. There was a growth in fitness awareness and health, Vladimir Putin brought that. He doesn't drink. He’s doing judo. So, that kind of starts to grow. I went there and said that if you want to put a brand name on any of these products, you going to have to make them more consistently, because they were a mess. You'd have black and blue pants, front and back sewn together. You'd have things put on inside out. You'd have blue thread on black pants. Quality control was done after somebody bought it and then returned it, because they did have a small, limited network. I ended up going to work for them. I worked for them for four years. This was really serious, and I became a vice president of the company.
First, I was trying to get a handle on production. Then when you start to work on production, then you realize, people do what they get paid for. It's logical that the pants should get turned inside out at his stage. But this person just passes them on to the next stage because she wants to get more pieces and more piece count, get paid more. It was hard to figure out what's going on. There were bags of everything. All the place was… Trash bags laying there with bags of unfinished goods. And when you are going to get thread to put on the sewing machines, it was every which way. They didn't know how much of anything they had. Sometimes they didn't have it: “I guess we can't make that now; I've got to order some more thread.”
Daniel Satinsky: This was not a Soviet enterprise making a transition. Was it a new enterprise?
Kim Balaschak: You can say it's Soviet. They started making the swimwear during Soviet times. Used clothes that nobody else wanted and they turned them into swimwear and then for children. Then they started making a little money. They wanted to get some new fabrics, that's how they came into contact with DuPont because of the Lycra products, the fabrics that are made with DuPont Lycra.
Daniel Satinsky: But this disorganized production was bankrolled somehow?
Kim Balaschak: There were the husband and the wife who just kept pouring everything they had back into the business.
Kim Balaschak: I had several projects at Coopers & Lybrand. In fact, the first year that I was working with the swimwear manufacturer, I was doing it on a part time basis. I was still working on some projects with Coopers & Lybrand. We had a project with Unilever, then there was one with a factory that makes candy. I was still doing housing, because I could speak Russian. I needed to finish those two projects. So, during my time at Coopers I learned a new way of thinking about operations and how things get done. I was an operations gal that’s why I think everything, even marketing, you can draw it back to how it gets done. The way that we were looking at things is if you’re going to do something, what are the inputs, what are the controls, what are the supports and what’s the output and where’s the output going?
I got the management at this swimwear company, Solo, to start thinking like that. It transformed their business. It allowed them to transform their own business. I didn’t go in and say: “This is what you need to do now, do it!” I got to know what they understand. I’m pointing out things through a process to show them that this output’s garbage. If this output’s garbage, it’s going to be an input or control on another step and that’s going to be garbage too. They were so excited. They said: “We don’t want you to come back for a month.” I came back. I got goosebumps. The entire sewing floors was cleaned up. In the hallway they had shelves, where they had all of their tags, and zippers, and threads. Everything was completely color coded and labeled. That was amazing! Then the other big change that they made is: when a seamstress would go in to start working, she’d have to go out, get the thread, thread the machine. It was taking about 37 minutes. It’s pretty simple, you just start asking questions. Can somebody else thread? Yes.
Kim Balaschak: Do you need any special skills for that? No. Can somebody else clean the area? Yes. Can somebody set up what she has to do: her instructions, so she doesn't have to go find the supervisor to get her instructions and then look into it? Yeah. Can anybody else stitch these pants together? No, only she can do that. I said okay, there you go. All of a sudden, the seamstress comes in, she's ready to go. She starts sewing because she's a skilled worker.
Daniel Satinsky: And she's happy because her piecework goes up?
Kim Balaschak: Yes. Although we got rid of that system. We moved towards more of a reward by the overall. They added a second shift. It was overall output. And then we also established new management trainings, other ways to give people opportunity and pride. I heard from the owners, that they got a contract quite a few years ago, after I had left. They were so excited, because they think about everything that way in the process. They got a contract to produce children's swimwear for Metro Cash & Carry. That's the Costco of Europe. That is really cool!
Daniel Satinsky: What you brought to them was a business process understanding that you got from Cooper's and your own experience. And it allowed them to take their entrepreneurial drive and focus it on a new way.
Kim Balaschak: Absolutely. And I got a work permit. They got a work permit for me because they said: we have convinced a ministry or whatever it is, that you are the only person who have the skill we need.
Daniel Satinsky: The significance of that is you were being paid by Russian organization? If you are working for Coopers & Lybrand, you didn't need a work permit because it was a foreign company?
Kim Balaschak: I did not need a work permit at Coopers & Lybrand. But to go to work for a Russian company, I needed a work permit.
Daniel Satinsky: This is really this is interesting to me because I'm trying to look what is the long-term impact of having had so many foreigners there. Clearly, you've had an impact because it was a set of skills that they needed, that allowed them to do what they're doing now as a Russian enterprise.
Kim Balaschak: I think your question is really good and it goes deep into what all of us may not have thought that we might have been doing. We did have something that the Russians did not have, and that is business experience. By imparting that, I can speak for myself in the way that I did. We would spend hours over these diagrams of inputs, outputs and controls, arguing! It was so heated, and some people were just walking out. This is what was really difficult.
But that company then embraced that way of thinking and was actually really progressive too, because it was brand new even at Coopers & Lybrand. And I was part of the pilot of this way of thinking. I wasn't even a full time Coopers & Lybrand person. I was a contract worker when they had Russian companies. Then they merged with Price Waterhouse and that did change a few things. But in any case, I finished out those projects. To go back, they have this knowledge, they use it. They use it to improve their business. They use it in their business processes. Then, they're able to export. The whole perception of Russian production is in some way elevated. It's shifted. It's all kind of building up from the bottom.
Daniel Satinsky: They started exporting only a few years ago?
Kim Balaschak: Well, no, much more than that. I was still in Philadelphia. I think maybe 2010, I don't know.
Daniel Satinsky: But it goes against the stereotype that Russia doesn't have any consumer goods to export.
Kim Balaschak: Exactly.
Daniel Satinsky: This was a Soviet era factory that this couple got control of through privatization?
Kim Balaschak: No, they built the business themselves by sewing in their own home.
Daniel Satinsky: Okay. They got to the factory stage, and they were way beyond their capabilities.
Kim Balaschak: That's exactly what it was. They were beyond their capabilities to…Like, you know get the production in order, who are we producing for? Then over the course of those four years, we identified our consumers, who we want to be to whom? Probably one of the most interesting projects that I did with Solo was when we hired one of these focus group companies to help us identify what people want in a swimsuit or in their fitness wear. And we came up with two types of women. Those women that like to show off themselves and those women who like to show more about who they are from their core. It's a difficult thing to grasp. But for example, they hired a new designer, and she was putting all these doodads on everything. There it is: women who like to attract attention to themselves, or women who like to just simply express themselves. And there's a difference. There's a fine line, because a lot of women who say they are just expressing themselves, even though they're really attracting attention to themselves. And it helped guide our design process. Because you got to produce, got to design, you got to distribute, and got to market. It helped with design because we got rid of all the doodads. Just that little simple…
Daniel Satinsky: How did you develop your distribution? You were distributing to retailers, or?
Kim Balaschak: We were distributing to one major retailer, which was Sportmaster in Moscow.
Daniel Satinsky: I remember that name!
Kim Balaschak: Yep, Sportmaster was there, and we distributed to them directly. But for the rest of Russia, we had distributors. I spent some time out in Novosibirsk because we had a distributor out there. That distributor had sub distributors that covered the cities around Novosibirsk.
Daniel Satinsky: Did you develop in the same way the culture of processes for being a distributor?
Kim Balaschak: We did not have a chance to do that. We couldn't spend the amount of time with the distributor. We just determined the terms and then worked out what would be the objectives and the goals.
Daniel Satinsky: I know that in some spheres of business, small businesses were at the mercy of bigger customers who would sometimes take advantage of them, either in delaying payment or refusing payment or generally pushing the financing costs off onto their smaller supplier, because they could. Did you have that kind of a problem at all? With Sportmaster or anybody?
Kim Balaschak: No.
Daniel Satinsky: So, those relationships were relatively smooth once you sorted out your internal processes?
Kim Balaschak: Yes.
Daniel Satinsky: Is Solo a unicorn or a one-off? Or are there lots of other “Solos?”
Kim Balaschak: No, there may be other “Solos”. There's a company called Solo Club, but no.
Daniel Satinsky: In terms of the process, they went through. Are there other companies that learned this either, not in your methodology, but sorted themselves out in a consumer sphere to make competitive goods?
Kim Balaschak: I'm not sure I understood.
Daniel Satinsky: You helped this company to transform themselves into a company that standardized their production, understood their market, was able to sell into that market and be competitive?
Kim Balaschak: Yes
Daniel Satinsky: Are they unique in that transformation or do you know other companies who made a similar transformation?
Kim Balaschak: I am sure that Russia is replete with stories of companies that have made transformations. But in the fitness and swimwear… Yeah, there was other competition. They were developing in different ways. And then, of course, there's always international competition. Also, you've got name brand competition and then you got no-name brand competition. There wasn't a whole heck of a lot of loyalty in swimwear, just wasn’t. You just have a nice swimsuit on the rack and it had to appeal.
Daniel Satinsky: So, the brand didn't sell it? Did you have the Turkish competition? Chinese competition?
Kim Balaschak: I don't specifically remember Turkish, but I definitely remember Chinese competition.
Daniel Satinsky: Would you say this experience was like the most memorable for you and your business career there?
Kim Balaschak: It was one of them. Every experience I had was wonderful, I'm not I'm not kidding you on that. The one that I had after Solo, I went to work for “Monsoon.” Do you know the company Monsoon? Here in the United States there's a retailer called Anthropologie. Monsoon is the predecessor to Anthropologie, the British company. They have two brands; they have Monsoon and they have Accessorize.
After I finished with Solo, I had a very brief period of time with Saatchi & Saatchi. They wanted to open a division called “Saatchi & Saatchi X.” That Saatchi & Saatchi X is a really interesting business, I had never even heard of it. Perfect example is, let's take, wine. When you see a billboard for wine, what are people doing? They're standing around laughing, hugging each other. They've got this beautiful glass of wine in front of them. When somebody goes to the supermarket or Walmart, goes to the wine department, they're standing there: oh my gosh. They're looking at a sea of labels. Sea of prices, and it's such a different decision making, such a different experience. Saatchi & Saatchi X was formed with one company that was trying to help Walmart understand that. And Saatchi then wanted to open up Saatchi X places everywhere.
So, I went to my training at Walmart in Bentonville. We studied in the greeting cards department and the optical department. I was there for my training, but part of training is doing. People were buying a greeting card. They're trying to think of a loved one, maybe a happy situation, maybe not. And you've got this bright light shining overhead and the racks are steel or like white aluminum. It's just not a good way to do it. And you study, and you do focus groups on how people are feeling when they're buying these certain items. Then Walmart completely redid the way that greeting cards are stocked. Shelves are lower, there's some wood, the lights are less bright. Same thing with the optical department. They had them organized by price here, the $10 frames and the $15 frames. Nobody wants to be seen over at the $10 frames. Also, you don't want some slouch sitting there at the desk. The results of that study: people there should have white coats on. There should be lots of mirrors around tables, which should look like an optical place where you sit down and try things on. You organize everything. You can have price, but it's got to be within style. So, you have your style categories: you have your contemporary, you have your classical, then you have the price in there, that's okay. Those are the sorts of things. I was briefly with Saatchi X, most of my job was in training, it was really great. Then I got a client, Monsoon. I worked with them for just a couple of months, and they wanted me to put a marketing plan together. They had 23 stores, total. When I left, we had 79 stores, so it was really amazing.
Daniel Satinsky: Moscow center?
Kim Balaschak: This is Moscow only. No, no, Russia! We ended up having 23 stores in Moscow, we had 9 in St. Petersburg, couple in Nizhny Novgorod, Yekaterinburg, Volgograd, Kaliningrad. They were all over the place. It was really great. Then the director, who's a Russian gal, she just said: “It's going to be much easier if you just come to work for me.” So, I did. I went to work there, and I worked there for four years. Then we left Russia. That was fabulous because we were opening, we had 500 employees: 496 women and four men, all in IT. And we were opening these Accessorize stores, that was the brand that was driving it. We were opening them all over the place and we were dealing with the magazines. We had worked with Elle Girl finally, because we felt that we had critical mass. We had developed a wonderful program when you do your very first store in a city, how do get attention… It was really, really a lot of fun. I had a lot of respect for the director of that franchise.
Daniel Satinsky: Where did that director come from? What was her background?
Kim Balaschak: She’s Russian, but she apparently had been married to an English chap, and she lived in the UK. When she came back to Russia, she opened the franchise. She was fabulous. I loved working with her.
Daniel Satinsky: She brought that outlook or sensibility with her?
Kim Balaschak: She was a great business lady.
Daniel Satinsky: She's still at it?
Kim Balaschak: I think she sold the franchise. From what I had heard she sold it. She sold the stores back to Monsoon, which is always really a nice thing. Then she was starting something else. But I'm here, it's tough. As you know, you have to track everybody down.
Daniel Satinsky: It's very tough. You have something ongoing, something you want to talk about?
Kim Balaschak: Well, I have the ongoing ornaments, of course.
Daniel Satinsky: Tell me about the ornaments. I know this is a passion of yours, so tell me about them.
Kim Balaschak: Well, the ornaments are definitely a passion. We moved there in ‘95, and then over the ‘98 holiday, we're going to be there. I'm a flea market rat, what can I say. I went to the flea market and voila, there are all of these ornaments.
Daniel Satinsky: Where was it, Izmaylovo?
Kim Balaschak: Yes, Izmaylovo, my favorite place!
Daniel Satinsky: Yeah, yeah, I could show you doodads I have from Izmaylovo, several rugs from Dagestan.
Kim Balaschak: There you go. It's just a grand place. In the early days, when you would come in the main entrance over to the right, everybody would have all these boxes, and just rags over the boxes, and then anything from their house that they wanted to sell. It was separate from the souvenirs and the jewelry and the icons and the rugs. It's completely separate. That's where you would see people selling their ornaments.
Daniel Satinsky: These are homemade ornaments?
Kim Balaschak: No, most of them are not. They were made in factories or what you might call artels. Some of the ornaments are little cotton figures. I'll use that as an example. So, a little cotton figure of, let's say, a little Uzbek dancer. People in the village would go to the factory, they would pick up all the supplies they needed to make that little figure. There would be complete instructions. They would get the cotton batting. They'd get the stick mould. They'd get the mica. They get the paints. They'd get any little doodads that needed to be attached. And then they would go home and make these things. Then they would bring them back and get paid. That's how that worked. Then you did have some factories where they were blowing glass. Some of my ornaments are glass, some are cotton, some are wire, some are cardboard, paper, papier mache.
Daniel Satinsky: And they're all for their New Year's tree.
Kim Balaschak: It's a New Year tree because in ‘36 was the first time the Russians, the Soviets were allowed to celebrate a holiday, and they only returned to New Year without Christmas.
Daniel Satinsky: That I didn’t know, ’36… So, from the time of the revolution until 1936, no holidays?
Kim Balaschak: They were not celebrating. There were some military celebrations, but nothing religious, immediately. I mean, people still managed to celebrate in their homes a little bit, but real quietly. I have this book; they had a plant downstairs, and they would decorate it during the day and then they would take the decorations off. Just in case they got raided at night or something.
My collection spans from around 1890, when rich Russians, who could afford ornaments from one factory in St. Petersburg, started putting them on their trees. Through the revolution, then the dark period, and then the birth of ornament production and the New Year from ‘36 to ‘40. Then there's a war that interrupted production. They still produce during the war, but they didn't use anything that was strategic. So, they made things from nuts and wire scraps and fabric scraps. After ‘45 production resumed. My collection goes through the mid-sixties until it became a mass-produced thing. And then it was no longer interesting for me.
Daniel Satinsky: How did you date them? When you bought them, how did you know when they were from?
Kim Balaschak: I developed friendships there with some of the other collectors. Then I was approached by the Museum of Applied Decorative and Folk Art from the video I sent you, that was the CNN video in 2002. In advance of that, I laid out all my ornaments in my living room. I had two experts in the field, Russian historians, came by and helped me separate those things that either are later in time, or that are not considered ornaments at all. I was able to do that and, of course, in that process, I'm learning a lot myself. As I was acquiring new items, then I had another exhibition that was sponsored by IKEA. I've got a really amazing collection, and it's one of the top five in the world. It is almost all now, with the exception of maybe about 400 items, in the Museum of Russian Arts permanent collection.
Daniel Satinsky: With the exception of 400 items, you kept them.
Kim Balaschak: That's only because I couldn't go this year. We've got to get those 400 accessioned into the collection this year. Then that'll be a 100%. Jim and I have a… Mark your calendar, I just got confirmation yesterday, December 16th. We will have a reception, commemorating this, and there will be a big exhibition and a reception.
Daniel Satinsky: That would be cool.
Kim Balaschak: I would not keep out anything. Somebody asked me: “Did you keep the best items?” I said: “Why would I do that?” No, I didn't.
In fact, the Ministry of Culture, when they gave me permission to take this out of the country, they said to me that they knew I had some items in my collection that other Russian collectors do not have. She said, we're not going to ask you to purge your collection. Because, she said, you've shared. You've shown that you share. Go back and share in the United States and show a positive side of Russia. And so that's exactly what we're doing, The Museum of Russian Art has an exhibition every year.
Kim Balaschak: No, most of them are not. They were made in factories or what you might call artels. Some of the ornaments are little cotton figures. I'll use that as an example. So, a little cotton figure of, let's say, a little Uzbek dancer. People in the village would go to the factory, they would pick up all the supplies they needed to make that little figure. There would be complete instructions. They would get the cotton batting. They'd get the stick mould. They'd get the mica. They get the paints. They'd get any little doodads that needed to be attached. And then they would go home and make these things. Then they would bring them back and get paid. That's how that worked. Then you did have some factories where they were blowing glass. Some of my ornaments are glass, some are cotton, some are wire, some are cardboard, paper, papier mache.
Daniel Satinsky: And they're all for their New Year's tree.
Kim Balaschak: It's a New Year tree because in ‘36 was the first time the Russians, the Soviets were allowed to celebrate a holiday, and they only returned to New Year without Christmas.
Daniel Satinsky: That I didn’t know, ’36… So, from the time of the revolution until 1936, no holidays?
Kim Balaschak: They were not celebrating. There were some military celebrations, but nothing religious, immediately. I mean, people still managed to celebrate in their homes a little bit, but real quietly. I have this book; they had a plant downstairs, and they would decorate it during the day and then they would take the decorations off. Just in case they got raided at night or something.
My collection spans from around 1890, when rich Russians, who could afford ornaments from one factory in St. Petersburg, started putting them on their trees. Through the revolution, then the dark period, and then the birth of ornament production and the New Year from ‘36 to ‘40. Then there's a war that interrupted production. They still produce during the war, but they didn't use anything that was strategic. So, they made things from nuts and wire scraps and fabric scraps. After ‘45 production resumed. My collection goes through the mid-sixties until it became a mass-produced thing. And then it was no longer interesting for me.
Daniel Satinsky: How did you date them? When you bought them, how did you know when they were from?
Kim Balaschak: I developed friendships there with some of the other collectors. Then I was approached by the Museum of Applied Decorative and Folk Art from the video I sent you, that was the CNN video in 2002. In advance of that, I laid out all my ornaments in my living room. I had two experts in the field, Russian historians, came by and helped me separate those things that either are later in time, or that are not considered ornaments at all. I was able to do that and, of course, in that process, I'm learning a lot myself. As I was acquiring new items, then I had another exhibition that was sponsored by IKEA. I've got a really amazing collection, and it's one of the top five in the world. It is almost all now, with the exception of maybe about 400 items, in the Museum of Russian Arts permanent collection.
Daniel Satinsky: With the exception of 400 items, you kept them.
Kim Balaschak: That's only because I couldn't go this year. We've got to get those 400 accessioned into the collection this year. Then that'll be a 100%. Jim and I have a… Mark your calendar, I just got confirmation yesterday, December 16th. We will have a reception, commemorating this, and there will be a big exhibition and a reception.
Daniel Satinsky: That would be cool.
Kim Balaschak: I would not keep out anything. Somebody asked me: “Did you keep the best items?” I said: “Why would I do that?” No, I didn't.
In fact, the Ministry of Culture, when they gave me permission to take this out of the country, they said to me that they knew I had some items in my collection that other Russian collectors do not have. She said, we're not going to ask you to purge your collection. Because, she said, you've shared. You've shown that you share. Go back and share in the United States and show a positive side of Russia. And so that's exactly what we're doing, The Museum of Russian Art has an exhibition every year.
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