MOSCOW’S NEW SCHOOL LOOKS WEST
by Della Bradshaw

Financial Times
17 September 2006 Sunday 7:36:59 PM GMT

It is not often that a brand new business school sets up shop, let
alone one that has the vocal support of national government and the
financial support of local and international businessmen. But then,
not everywhere is Moscow and not every business school founder commands
the respect of Ruben Vardanian, chairman and chief executive of Troika
Dialog, the investment bank.

At just 38, Mr Vardanian, born in Armenia, is already head of Russia’s
biggest investment company, has been named Russia’s Entrepreneur of
the Year (2005) by Ernst & Young, and has even been the subject of
a business school case study on leadership, written by Manfred Kets
de Vries, the veteran Insead professor. Now he has decided that what
Russia needs is a world-class business school and he is going to make
sure it happens.

On Thursday, it is hoped that Russia’s President Vladimir Putin
will lay the foundation stone for the new school, to be called the
Skolkovo Moscow School of Management, in Skolkovo on Moscow’s western
fringes. Mr Putin is so pleased with the plan that he has declared
the school a "national project".

Mr Vardanian has not only wooed the Russian president. He has persuaded
12 like-minded Russian business oligarchs and two non-Russian investors
each to stump up $5m (GBP2.66m) to finance the school. These include
Shiv Vikram Khemka, vice-chairman of the Sun Group in India and an
MBA from the Wharton School of the University of Pennsylvania; and
Roman Abramovich, probably most famous outside Russia as the owner
of the English premiership soccer club Chelsea.

Mr Vardanian says his first reason for establishing the school was
personal. "My son is 11 years old. My kids should at least have the
choice of studying in Barcelona, London, the US or Moscow."

Second he says the main resource that Russia is missing is people:
"Russia’s future lies in its people, not its oil and gas." He believes
that emerging markets such as China, India and Russia are becoming
more interesting, not only for natives of those countries who want
to return home but for companies too. "More foreign companies want
to set up in Moscow," he says.

While Russian universities have a powerful academic reputation in the
sciences, they have no history in teaching western-style management.

About 110 MBA programmes are already taught in Russia, says Mr
Vardanian. "It’s name is an MBA, but…" he shrugs.

Mr Vardanian, a great bear of a man, visited 18 business schools
worldwide before deciding how he wanted the Moscow school to be run.

What he didn’t want, he says, is a school where professors taught
students in order to fund their own research. Instead, he decided on
a business school along the lines of IMD in Lausanne, Switzerland?

"very business-orientated, practical. We’re doing a lot to link the
business education to the reality."

Three of the founding donors have already been persuaded to give
annual master classes at the school, which will be run like a business,
not a university.

Mr Vardanian plans for the school to have executive short programmes in
2007 with a pilot 25 or 50 students enrolled on the 18-month full-time
MBA programme in 2008. The campus, which has been designed by David
Adjaye, the London-based architect who also designed the Nobel Peace
Centre in Oslo, Norway, will open in September 2009.

"The concept is to have everything in place by 2012," says Mr
Vardanian. The plan is to break even in 2015.

Professors will be paid as if they were working on Wall Street or
in the City a salary with bonuses. The tenure system, beloved of US
academic institutions, is out.

Coming from a family where his father and grandfather were professors
of architecture and history respectively, Mr Vardanian understands
the appeal of an academic life, but he believes researching and
teaching history is very different from researching and teaching
management. "For business education [the tenure system] is the wrong
concept. The main problem is trying to build a new school on a new
concept."

One of the biggest differences between the Moscow School of Management
and more traditional business schools will be the school’s emphasis on
developing leaders who are risk-takers. While other schools may judge
the success of their programme by the corporate clout that their alumni
hold, the Moscow school believes a sign of success will be if 20-25 per
cent of graduates own their own businesses five years after graduation.

"We want to encourage more people in Russia to take risks," says Mr
Vardanian. Some $40m of the initial funding will go into a venture
fund to finance new ventures.

Another difference is that the school will teach initially in English
but eventually in four languages English, Russian, Spanish and Chinese.

Finding the right faculty will be the tough part, says Danica Purg,
founder and dean of the IEDC-Bled School of Management in Slovenia
and a member of the advisory board for the Moscow school. "The biggest
challenge for them [the Moscow school] is to match their big ambitions
with reality. They need to develop their own professors.

They will need a lot of academic support," she says.

Schools in other developing countries, notably China and India,
have secured their reputation by attracting home Chinese or Indian
professors who were trained in the US or Europe every top business
school employs Indian and Chinese nationals. The same does not apply
to Russian nationals.

For example, the Indian School of Business in Hyderabad, with which Mr
Vardanian says the Moscow school already has close links, was set up
with help from two US schools, the Wharton School of the University
of Pennsylvania and the Kellogg School of Management at Northwestern
University. Dipak Jain, now dean of Kellogg, was previously dean
at ISB.

Without similar emotional ties or very large sums of money the new
Moscow venture is unlikely to find support from the US.

For this reason, Mr Vardanian is seeking partnerships in other emerging
markets, notably South America.

That said, the remuneration for faculty will be competitive with
top international business schools, but Professor Purg believes it
will not be the money that persuades faculty to teach there. "In my
experience professors don’t go where there is money but where there
is a challenge."

Mr Vardanian will hope she is right. He is planning to appoint 10
Russian professors and 20 non-Russian professors along with 70-100
visiting faculty, largely from business schools in other emerging
economies.

Most significant in the hiring process is the dean’s job or, to
be more precise, the appointment of two deans, one Russian, one
non-Russian. The Russian will be Andrei Volkov, deputy minister for
science and education and head of the education expert group for
Russia’s presidency of the Group of Eight industrial nations.

Headhunters Heidrick & Struggles have been appointed to find the
second co-dean and an announcement is expected next spring. Mr
Vardanian will remain as president of the school.

Widely regarded as the one of the most respectable of Russia’s
self-made men, Mr Vardanian has continually expounded the need for
stronger corporate governance in Russia. The school will practise what
it preaches, he says. "The school needs to show success, transparency
and corporate governance. It needs to be well-managed."

This will be corporate governance Russian-style, however. Mr Vardanian
has no intention of handing over the reins altogether, but he and the
two co-deans will form the triumvirate that manages the school. "The
triangle needs to work together well," he says.

Compromise will be the order of the day.

Whether the school will be able to attract a high-calibre international
dean under these strictures is debatable, particularly as the co-deans
will also report to the board. "The manager is there to execute the
plan and he has to report to the board. We have to show that we are
like any other company."

"The problem," he concedes, "will be getting someone who wants to
play by these new rules."