Feature

How do you face the unknown?

Nature abhors a vacuum. Air invades emptiness. Water floods open space. What happens when a wall is breached and markets are allowed to enter countries where they’d previously been banned? In the 1990s, Rosemary Ripley participated in the infusion of private enterprise into former command economies.


By John Zebrowski

Right about the time the Berlin Wall came down, unleashing a wave of capitalism upon the former Soviet bloc, Rosemary Ripley ’80 was settling into her new job searching for potential acquisitions for Philip Morris. Working out of Vienna, her group moved aggressively to develop the company’s food business in Central and Eastern Europe, evaluating industries being privatized in Poland, Hungary, and Czechoslovakia. She quickly got a view of what life had been like under communist rule. “I remember one of the first factories that I went through, in Hungary,” she says. “Usually when you walk through a factory and you make eye contact with people, you can smile and say hello, and sometimes have a brief little conversation. Walking through the factory, nobody even looked at me. It was as if we were ghosts and people didn’t see we were there. They were just on automatic pilot.” There were also some issues with workers actually being on the job. “Attendance wasn’t really enforced.”

Philip Morris, which had recently acquired Kraft and General Foods, determined that some of its best opportunities for growth were in new and developing markets, like the former Soviet satellites. This meant coming to understand an environment that had recently had no markets other than black markets and had outlawed private enterprise. Looking back, Ripley notes, “People who do well working in developing markets have to be people who are comfortable with some uncertainty, because, as I say to people who ask why I went into the field, there is no blueprint.” She adds, “Were there a blueprint, I would have done something else. To work in developing markets, you have to be willing to throw out your rulebook and listen to how things are done there. You can’t be successful unless you take the time to understand the hot-button issues.”

In the case of the former Soviet bloc, 70 years of communist rule had altered nearly every aspect of life. Buying factories there required huge investments to bring them up to Western standards and ingrain new business practices into management and workers alike.

“Around this time, I heard Margaret Thatcher speak, and she said something that really struck me,” Ripley says. “Given the amount of time that these countries had been under communist rule, it would take in her estimation a generation to change the cultures. Only after the older people died off could a new generation come up and become comfortable with capitalism.”

The pronouncement made sense. But in practice, Ripley found that change on some levels could happen much faster. “Within a year of working with many of these companies, we saw that they were hungry to do things differently,” she said. The company fixed up its new factories, instituted sound financial practices, brought in new leadership, and people responded. “They wanted an opportunity to grow and contribute, and be recognized for contributing. Ultimately, the communist system is a way of treating everybody the same. It doesn’t reward performance. And we found that across the world people performed really well knowing that they would be recognized for individual achievement.”

Ripley started at Philip Morris (now Altria) after nearly a decade on Wall Street learning investment banking and the mergers and acquisitions trade. Like many on the Street, she had lost her job after the crash of 1987. She learned a lesson from the experience: go with the strongest company. She spent 15 years at the multinational, making deals in markets from Latin America to Asia to Europe (she brokered the first hostile takeover of a Norwegian company by a U.S. entity).

Ripley was initially a little wary that Philip Morris — a giant tobacco,brewing, and food conglomerate with operations in 170 countries — wouldn’t be entrepreneurial, but was pleasantly surprised to be proven wrong. “We were extremely active,” she said. “The job of running corporate development can be interesting or it can be deadly, depending on the company. A large company that is committed to growing through external means and has a sizeable checkbook, numerous industries, and some issues that complicate its life makes for a very interesting place to work.”

Eventually, though, she felt she needed a change. After she helped broker a deal for the last piece of open space on a stretch of highway near her home in northwestern Connecticut, she got interested in the environment as a business. Two years ago she cofounded an investment group with nine other women (Circle Financial Group) and then in 2006 took a position as entrepreneur in residence at NGEN, a venture firm that invests in energy and efficiency technologies such as green buildings, water purification, and pollution abatement. And while there are many differences between acquiring businesses for a worldwide conglomerate and investing in cutting-edge technologies, in both cases, Ripley says she has to learn the details of a new market in order to succeed in it. “The value-add of a seasoned businessperson is judgment. That’s what these years of experience help give you. You develop the judgment to pay attention to the issues that matter in any situation, and that’s especially critical in new and emerging markets.”

Managing Director, NGEN