Russia’s lessons in capitalism, Moscow vision, MBA

Date: 20 October 2008

Source: The Times

Oligarchs are funding an innovative new college, reports Des Dearlove

Nestled in extensive grounds to the southwest of the Russian capital, the Moscow School of Management SKOLKOVO is yet another sign of Russia’s growing confidence. Founded in 2006, it boasts a Who’s Who of Russian oligarchs on its board. This autumn the new school will start taking MBA applications and it will welcome its inaugural MBA class next year.

SKOLKOVO is the brainchild of Ruben Vardanyan, the country’s leading investment banker. His ambitious aim is to create a world-class business school by 2020.

“One of the key obstacles for those of us born in the USSR was always management,” he explains. “The Soviet educational system was high quality but it focused on sciences such as mathematics and physics. Economics was about studying the principles of the socialist system, and it didn’t give sufficient attention to how the capital market economy operates.

“Today in Russia there is a huge demand for managers and for a new type of business education. Our aim is to create a new educational center in Moscow that will train leaders and entrepreneurs for emerging markets and that will be known for its innovative approach to teaching.”

To make that vision a reality, Vardanyan persuaded 12 like-minded oligarchs and two non-Russian investors to fund the new school to the tune of $7 million (Pounds 4 million) each. Among them are Shiv Vikram Khemka, vice-chairman of the Sun Group in India and an MBA from Wharton Business School at the University of Pennsylvania; and Roman Abramovich, owner of Chelsea Football Club, who donated the land for the school. In June three more Russian investors joined the project as founding partners with a contribution of $10 million each.

“Many people who became successful in Russia in the 1990s were self-made,” Vardanyan says. “They realized that, with the economy growing, the lack of managerial talent was becoming a big obstacle for further development of their business; good managers were not easy to find. Many people who owned companies stepped down to become shareholders and hired professional managers. They didn’t actually have much choice: they hired either foreigners or Russians who had been abroad and then returned.”

SKOLKOVO aims to change that. It is already attracting national interest. The project has the support of Vladimir Putin, the Prime Minister, while Dmitri Medvedev, the President, chairs the advisory board.

Vardanyan is a role model for aspiring executives. He joined Troika Dialog, the largest private investment bank in Russia, in 1991, aged 22. He became chief executive in 1997 and chairman in 2004. In 2005 Vardanyan was named entrepreneur of the year by Ernst & Young.

The $250 million campus, scheduled for completion in September next year, was designed by the London-based architect David Adjaye, and inspired by the paintings of the Russian artist Kazimir Malevich. The architectural brief from the founders was to stress “world culture, inspired and informed by Russian ideas.”

The blueprint for SKOLKOVO’s MBA program is also bold. The accent will be on entrepreneurial leadership, emerging markets and experiential (action-based) learning. A number of founding donors have agreed to give annual masterclasses.

Between 45 and 60 students are expected to enroll on the initial 16-month full time program. Later the school plans to offer 160 to 240 full-time places a year, with an additional 75 executive MBAs. It is also developing a substantial executive education capability.

It is an ambitious agenda and one with clear targets. Within five years, the school hopes that 30 per cent of its graduates will start their own businesses; 40 per cent of its students and 50 per cent of its faculty will come from outside Russia; and 80 per cent of its curriculum will be based on action-based learning methods.

Vardanyan believes it is a model that is right for its time. “In Russia we are still a transition economy. Bringing change into this environment is not an easy task, but there are lots of people with high potential. We need to train these people.”

Des Dearlove