Russia's real world MBAs

By bne IntelliNews June 30, 2009

Ben Aris in Berlin -

The Moscow School of Management Skolkovo has big plans. Russia's leading oligarchs banded together to create a world-class business school just under three years ago and pledged half a billion dollars to make the project work. The school will take in its first batch of full-time MBA students in January and Dean of the school, Wilfried Vanhonacker, says that within the next 20 years he hopes to make Skolkovo one of the top schools in the world. And Vanhonacker is the man to do it: he already set up China's first business school a over a decade ago, which is now one of the world's 10 best schools.

The original idea for the school came from the CEO of the investment bank Troika Dialog, Ruben Vardanyan, one of Russia's most respected businessmen. The school is an extension of Vardanyan's "2012 club" - a group of self-made businessmen who have been working together to create a Russia that their children would want to live in (Vardanyan's son graduates from university in 2012, hence the name).

And the school is badly needed. A recent study by consultants McKinsey found that up to 80% of the gap between the US' productivity and Russia's was simply due to poor management. Virtually all of Russia's top companies complain that the lack of good managers is the single biggest impediment to business.

So Vardanyan found he was pushing at open doors when he did the rounds to raise money for the school. The list of Skolkovo's founders reads like a Who's Who of Russia's elite and includes luminaries like the founder of EvrazMetal Alexander Abramov and Russian tycoon Roman Abramovich. The then-president Vladimir Putin personally opened the school in September 2006 and current Russian President Dmitry Medvedev is on the advisory board.

Executive training courses were launched almost immediately for top managers at leading companies across the region. The student roster includes employees from most of Russia's blue chips as well as several regional administrations who are struggling to improve the quality of their management.

But the schools catchment area is not just Russia. Vanhonacker, who set up CEIBS (China Europe International Business School) in 1993, ranked number eight in the world last year by the Financial Times, says the plan is to attract a third of the students from Moscow and St Petersburg where the biggest Russian companies are found. Another third will come from the Russian regions and other countries in the CIS. And the final third will be drawn from the rest of the world, from young entrepreneurial people who see a future in the fast moving emerging markets of the region.

The executive training course is part time and last only a few weeks, but this January the school launched its "Executive MBA" course, which requires a bigger commitment as well as €90,000 in fees. Students are largely 40-something senior executives living in Moscow, but there are some students from other countries in the CIS as well as a few expats who live in Russia. The schedule is tough, with classes from Thursday through to Sunday once a month for a year and a half.

Full-time MBA

The school will become fully operational at the start of next year when the first 45 full-time students enroll for the €50,000 MBA course. "We call the programme an MBA, but the product is unique and it needs explaining. It is not a typical MBA for the typical applicant," says Vanhonacker. "We are looking for a more entrepreneurial type of person with energy and the desire to make a difference, as you need these qualities in the fast moving emerging markets."

Business schools like to bandy about clichés such as out-of-the-box thinking, but at the end of the day most simply repackage the same traditional ideas. Vanhonacker argues that developed world schools are orientated towards developed markets and this means an emphasis on the internet and Wall Street. This bias has crept into the rankings metric and so perpetuates the style of teaching.

What Vanhonacker has done is throw the box away completely and try to build a curriculum that is relevant to the fast moving emerging market economies. As a result, nearly everything about the course is unusual. Rather than stay on campus and pour over case studies, Skolkovo students will spend the first 12 months of the 16-month course on five projects that throw them into the real world. Their "exercises" are to solve real world problems in real world companies.

The emerging-market orientation is nowhere clearer than in their first project, which is a placement with a federal or regional government body in Russia. "This is a key project and is very important for their career, as government plays a much bigger role in the emerging markets so understanding how it works and how to work with it is an essential element of any successful business," says Vanhonacker. "It is an experiences that will play a very important part of their career."

The next three projects are spent with companies in one of Russia, India, China or the US to get some hands-on experience. In the final project, each student is expected to come up with a business idea and put it into practise. But here again the school shows its commitment to the real world and has a $100m venture capital fund to finance the ideas. If it turns out to be a good one, the company is put into an incubator and grown as a real business, which the student can take over after graduation.

The directness of the schools approach is also reflected in its marketing campaign. As it's looking for unusual students, the school has eschewed advertising in the mainstream international press (apart from a few ads in the Financial Times) and spends most of its time looking for students through social networking sites and similar forums on the internet.

Still, Vanhonacker has not abandoned tradition altogether. The school has hired 12 full-time academics, including two star lecturers from France's INSEAD, one of the two most famous business schools in the world. The difference is that these lecturers are not tenured and have an unprecedented freedom to experiment.

The real world emphasis means Skolkovo is verging on the edge of being a consultancy. For example, it already works closely with several regional administrations and counts the prime minister of Tatarstan, Rustam Minnikhanov, amongst its students, who has been taking courses in leadership and strategy. "We work very closely with governments like those of Tatarstan, where we have members of the administration on courses. The goal is to raise the general level of competence in the regional government," says Vanhonacker.

But typically for the school, the course also has a practical goal as well, as the Tatar administration is hoping to improve the republic's ability to raise money on the international capital markets.

Much of what the school is proposing to do is a pretty radical experiment in new teaching methods. And given Vanhonacker's track record, established schools are following Skolkovo's progress closely. "We are being closely watched by other schools, especially in the US, as we are doing things they would like to do but can't," says Vanhonacker.

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