Steen Hildebrandt: “The invasion also took companies by surprise”

Maersk is one of the companies that were quick to respond to the invasion and the subsequent sanctions. Illustration: Maersk

As Russian troops moved across the Ukrainian border on Thursday night, very few had seen it coming.

But now, five days after the invasion, the war in Ukraine has reached an international level that the world had not seen for many decades. Western countries have in turn condemned Russia and imposed sanctions that make it harder and harder for the country to deal in international trade.

As the days have passed, private companies have slowly begun to take what may seem like a political stance, although many were probably free of that predicate. But the world became different overnight, and that forced companies to make a decision about their future in Russia, says Steen Hildebrandt, professor emeritus in organizational theory and management at Aarhus University.

He has researched leadership for many decades, contributed to more than 400 books on the subject, and dedicated his retirement to raising awareness of UN’s Global Goals.

But even with decades of experience in management under his belt, it is difficult for him to comprehend the world change that took place on Thursday night last week.

“Fifteen days ago, you could do business in Russia. It was okay and maybe even commendable. And all of a sudden, it became the opposite; one is now looked down upon, criticized, shamed, or perhaps even forbidden to trade with Russia,” Steen Hildebrandt says.

“This really is a disruption and something we are exposed to extremely rarely. Therefore, it’s also a whole new situation for the leaders of the companies operating in Ukraine.”

Exposed on both fronts

Some of the largest Danish companies operating in the area have employees in both Ukraine and Russia. This is true for Danfoss and Vestas, among others. The dilemma of whether to continue operations concerns all Danish companies in Russia, but for the companies that have employees in both countries, it is a bit more serious, Steen Hildebrandt says. This is because they are, for example, contributing to the Russian government through corporate taxes, which is currently waging war against their employees in Ukraine.

Management expert Steen Hildebrandt has been researching management and organizational theory for decades. Illustration: Privat

“It's a crazy situation, that they will end up contributing to the financing of a war being waged against their own employees in Ukraine,” he says.

However, he fully understands that as a multinational company, one does not just pull the plug as the very first reaction but instead tries to understand the conflict and the sanctions as well as possible before making a decision.

“You don’t have an earthly chance of predicting it, and it’s a fact that strikes all of a sudden in the morning when you wake up to different world as a leader,” he says.

“The world has become different.”

Companies are pulling out

As time goes on, more and more companies are starting to report shutdowns, delays, production outages, and order cancellations as a result of the invasion and the subsequent sanctions.

On March 3, Vestas, which has orders for wind turbine projects in both Ukraine and Russia, announced that it was temporarily halting “all new commercial activity in Russia”. According to several media outlets, this is happening on the grounds that “Vestas [strongly, ed.] condemns the Russian government’s invasion of, and atrocities that Russian forces are committing in, Ukraine.”

So far, however, there are no reports on how Vestas will deal with the projects already underway in the two countries.

Danfoss has also closed parts of the company in Russia. In a reply to Ingeniøren, Danfoss announced on Wednesday that it has stopped all transport to and from Russia as well as a stopped receiving new orders, as they say, “before we have a better understanding of the sanctions.”

In addition to the two companies, Lego, Grundfos, and Rockwool, among others, have also to a greater or lesser extent halted their activities in Russia.

Maersk has made a clear choice

In the crazy situation, to put it mildly, that Europe suddenly finds itself in, it can be helpful to have someone to look out for and reflect on in order to get inspiration on how to best deal with the new situation. And to be inspired by the leading companies that are determining the direction to be taken.

To that end, Steen Hildebrandt highlights A.P. Moller - Maersk, which announced on Monday that it would not accept new orders to, from, and within Russia for anything other than food, medicine, and emergency aid.

And according to the professor, Maersk has approached the situation as well as one can, given the situation.

“If you want to make sense of it, you can look at Maersk, which has made a very difficult choice. However, they have wisely pointed out that this is a temporary situation, because one must also not forget that it costs a lot of money to shut down operations in a country like Russia,” he says.

He encourages corporate executives to think twice before making a decision, because as he says, there is a world on the other side as well.

“There is also a time beyond today. No matter what, this war will stop, and some kind of new normalcy will come at some point. So you have to decide for yourself how far you want to take it and ask yourself: Will we write off doing business forever as long as Putin is there?”