Revolutionary Management: The Role of the Fuerzas Armadas Revolucionarias in the Cuban Economy

Terry Maris, PhD and Michele A. Govekar, PhD

The disintegration of the Soviet Union that began in 1989 soon led to the virtual cessation of the substantial subsidies upon which Cuba had for so long relied. This historic event was the catalyst that produced the "Special Period in Time of Peace," the term coined by Fidel Castro to describe the onset of what were to become several years of severe economic hardship. In response to this crisis the mission and role of the Fuerzas Armadas Revolucionarias (Revolutionary Armed Forces or FAR) were boldly redefined giving the Cuban military leadership unprecedented power in the realignment of the economy. The architect of this modernization process was the Minister of Defense and Second Secretary of the Cuban Communist Party, Raul Castro.

This paper examines the effectiveness of the sistema de perfeccionamiento empresarial, the "business improvement system" that was implemented by the FAR under Raul's command. In pursuit of their goal to develop a totally new economic system leading to commercial revitalization, FAR senior officers were sent to prominent European business schools to learn modern management principles, policies and procedures. These Raulistas were particularly influenced by and receptive to the teachings of Peter Drucker and W. Edwards Deming.

In order to document the antecedents and consequences of this extraordinary venture, data was collected from United States and Cuban government reports and databases. Additionally, interviews were conducted with a select group of senior U.S. and former Cuban military officers as well as certain Cuban-American expatriates with first-hand knowledge and experience of this subject.

The results of this study revealed evidence of a well organized and executed process that, at least in part, produced the desired outcomes. The tourism sector in particular appeared to have benefited significantly from this Cuban version of "perestroika." The Gaviota Tourism Group was the most profitable of the FAR's numerous business enterprises, with earnings covering more than 30 percent of the total Cuba military expenditures.

The authors conclude that the FAR's actions led to the creation of a new class of Cuban military entrepreneurs comprised of Raulistas and technocrat-soldiers . Their demonstrated competence has increased their profile and economic influence within Cuba just at the time when the world is beginning to contemplate a post-Fidel era. It is apparent that their objectives were not only to navigate the Cuban economy through the Special Period, but more importantly to lay the foundation for a succession plan that will securely place Raul Castro at the head of the government as set forth in the Cuban constitution of 1992. Although such an outcome would not be popular with many world leaders and a substantial number of Cuban- Americans, it might, in fact, be the least disruptive and most efficient alternative in the near term.

(Presented at the Society for Advancement of Management Iinternational Business conference, Orlando, FL, April 6-9, 2006)