INTERVIEW WITH A RUSSIAN ENTREPRENEUR: RUBEN VARDANIAN
Stanislav Shekshnia

Organizational Dynamics
July 2008 – September 2008

In 2007, the investment bank Troika Dialog reached a value of over
$1 billion. Its major shareholder, Ruben Vardanian, had promised that
if that figure was reached he would give a $1 million party, give his
employees $10 million in bonuses, jump out of an airplane, and shave
off his hair (and Vardanian has a lot of hair, including a beard). And
what a party it was. If not the talk of the town, it was certainly
the talk of the company. As is the case with many Russian parties,
there were no half-measures at Troika. According to Vardanian, the
party cost a dramatic multiple of $1 million. The bonuses were also
significantly more than he had originally promised. He even jumped
out of an airplane (although tied to an instructor). Vardanian must
have been influenced, however, by the biblical story of Samson and
Delilah. He didn’t cut his hair.

As far as parties are concerned, Russians seem to have more fun. The
merriment at the party hosted by Troika Dialog during the 2008 World
Economic Forum in Davos proved to be highly contagious. An incredible
number of Olympic ice skating champions were imported to strut their
stuff for the night. The stars twirled and spun their way through
well-known Russian popular music, while the spectators, well wrapped
up in blankets, gloves and earmuffs, clapped along, fortified by vodka
and gluhwein. Then guests were invited to try their luck with these
stars on the rink. There were probably more billionaires per square
meter present at this spectacle than anywhere else in the world,
including the town of Davos.

Vardanian was born into a middle-class family in Armenia; his parents
and grandparents belonged to what could be described as the Soviet
intelligentsia. His mother was a researcher and his father a professor
of architecture. If the stories are to be believed, Vardanian seemed
to have been a model youth in the Soviet system and initially even
envisaged becoming a Communist party member and following a career
as a professor himself. His extremely social disposition must always
have stood him in good stead in all his personal dealings. His student
years at Moscow State University were interrupted by a 2-year spell of
military service. During this time Vardanian was greatly influenced
by Samuelson’s Economics, a classic textbook, as well as various
economic journals, and began to reconsider his career options. On
returning to university in Moscow, he continued to study economics
and finance. Following an internship at Merrill Lynch in New York,
he returned to settle in Moscow.

Vardanian joined Troika Dialog in 1991 at the age of 22. Troika
had been created earlier that year, and Vardanian was one of the
company’s four original – and unpaid – associates. These founders
powered Troika Dialog into an organization with an enviable clientele
and a worldwide reputation for fairness in dealing with their clients
and employees. Troika Dialog is currently Russia’s leading indigenous
investment bank, employing 1200 people across Russia and in five other
countries. Vardanian has become the undisputed head of the company
and a father-figure to his employees. He is the chairman of the board
of directors and chief executive officer (CEO) of the Troika Dialog
Group. He could be called the "poster boy" of Russian capitalism.

Throughout his career, Vardanian has expounded the need for stronger
corporate governance in Russia, signaling – after the "Wild East"
period during the Boris Yeltsin years – a move toward a more
"civilized" approach to doing business and positively influencing
the performance of the Russian economy. In contrast to many Russian
business leaders, given his concern about creating a "best place
to work," Vardanian has tried to design a company characterized
by transparency, open communication, and teamwork. From the start,
modern management techniques, including 360-degree feedback evaluation
systems, have been a high priority. Emphasizing the importance of
best practices, Vardanian does realize, however, that there is still
a long road ahead to create a serious change of mindset in Russia.

Troika is now considered one of the top credit institutions in Moscow,
making Ruben Vardanian one of the leading figures on Russia’s capital
markets. The company has played a key role in developing almost all
segments of the country’s stock market. Vardanian is an active member
of many respected business organizations, notably the Russian Union
of Industrialists and Entrepreneurs, where he sits on the Management
Committee. He is also the chairman of the organization’s Corporate
Governance Committee and the arbitrator of its United Committee on
Corporate Ethics. In addition, he is a member of many boards.

Vardanian has been named Businessperson of the Year by the American
Chamber of Commerce in Russia for his "significant contribution
to business in Russia and commitment to the highest standards of
business ethics." He was also named Investment Banker of the Year in
RosBusinessConsulting’s annual Person of the Year award for 2003,
while Fortune magazine, in an article on the next generation of
global leaders, named him one of its 25 Rising Stars for 2001. He
also has been ranked one of Russia’s top three business leaders by
the National Association of Managers, while for 2004 he won Ernst
& Young’s Entrepreneur Of The Year Award in Russia and was named
Investment Banker of the Year.

In addition, Vardanian has been the driving force in creating the
Moscow School of Management, Skolkovo, of which he is the president. To
do so, he not only wooed President Putin but persuaded 12 like-minded
Russian business oligarchs and two non-Russian investors each to
donate $5 million to finance the new academic institution. After
years of lobbying, in early 2006 Vardanian won essential political
blessing for the $300 million project to start up the business school,
and President Vladimir Putin laid the school’s foundation stone at
a ceremony later that year. Perhaps even more important, Dmitry
Medvedev, Putin’s hand-picked successor, has become the chairman
of the school’s board. Vardanian’s motivation to create the school
is based on his strong belief that Russia’s main resource – its
people – is undervalued: "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 the
inhabitants of those countries who want to return home, but also for
foreign companies. His vision is to create an institution that is
very business-oriented and practical, linking business education to
reality. According to Vardanian, "one of the key obstacles for all
of us born in the U.S.S.R. was always management. Many of today’s
top managers are foreigners or Russians who have studied abroad." By
founding Skolkovo, Vardanian is hoping to change that situation. 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 entrepreneurs.

In encountering Vardanian, you face a great bear of a man, who in spite
of the power he wields comes across as a soft spoken individual with a
twinkle in his eyes and a great sense of humor. You quickly recognize
that he is not a typical businessman. He is well read, very cultured,
and extremely sociable. Furthermore, it doesn’t take long to realize
that you are dealing with an individual with a great sense of corporate
social responsibility, a person who wants to use his wealth not merely
for selfish pursuits, but for the greater good. During discussions
with Vardanian, you cannot fail to be struck by his need to contribute
to the improvement of Russia, and, significantly, his original home
country: Armenia. Vardanian appears to be a strong believer in the
"learning, earning, returning" philosophy, activities he prefers
to do concurrently. And in spite of his understated, modest manner,
when Vardanian speaks, the financial community in Russia (and beyond)
listens.

INT: Last year Russian capitalism marked its 20th anniversary-in
1987, the authorities first officially permitted the practice of
private business in a cooperative format. What changes have occurred
since then?

VARDANIAN: In this 20-year period, the system of governance and
decision-making mechanisms on a federal level have changed a lot. The
whole economy has shifted onto a different track. At the same time,
you can’t say that Russia has become a capitalistic society. I would
say that capitalistic institutions have taken shape, but capitalistic
cultural traditions have not yet emerged. Think of the Bible-Moses made
the people of Israel spend 40 years in the desert to free them from
slavery. We have covered 20 years already, but we have another 20 years
ahead of us. In 20 years’ time, Russia will be a completely different
country, not necessarily a better one, but it will be different.

To be more specific, I think that the final acceptance of capitalism
and private property will take place when property is transferred
from the first generation of rich Russians to the second. This has
not happened yet. The children of wealthy Russians are still young,
still growing up. Many 40-50-year-old businessmen have children who
have recently started getting into business, but so far they are
taking up management positions. It’s when they start managing their
parents’ assets that we will be able to say that private property
has taken root.

For the time being, we are still a nation with no profound respect
for private property and money. In the Russia in which we grew up it
was important to produce, but not to create added value or even to
be profitable. Costs and returns on investment just didn’t feature
as problems for anyone. This mentality is very slow to change.

The last 20 years have seen several stages with different attitudes
to business and capital. In the first stage, which started with
the collapse of the planned economy and communist system, some
individuals learned to make huge amounts of money, but they were not
able, and in many cases did not even want to build businesses-stable
and growing profitable enterprises. The second stage started when, in
the late 1990s, a considerable number of people emerged who started
to build their businesses, not just make money. The third stage,
which is very important in Russia, began in the 2000s, when Russian
businessmen discovered the stock market, and started to understand
that capitalization was better than taking out cash from the cash
flow. A dollar taken from the cash flow is just a dollar, while in
case of capitalization the ratio goes up to 1:4 or 1:5, and people
started to appreciate that. Furthermore, prestige, and respect became
important. People wanted acknowledgment, and this prompted them to
change their attitudes to what they do and how they do it. Transparency
and publicity are steadily changing Russian business for the better.

INT: Can we say that we are into a new stage in which business leaders
not only wonder how to become rich and famous, but also think about
creating companies that carry their names, that are different from
other companies and that are designed to last, if not forever, at
least for a long time?

VARDANIAN: No, there is no such trend. Certain Russian companies want
to buy large Western corporations and become leaders in the world
market. But in general we are still pretty local.

INT: Is this because of the traditional short-term thinking of the
Russian people, or because there are still great opportunities within
the country?

VARDANIAN: The principal reason is that there is still huge room
for growth in Russia, and that business profitability is still very
high. I’ve got a feeling that possible growth inside the country is
so great that we do not have enough energy, time or actual need to go
outside Russia. The second reason is that it is a little scary to do
so. People do not feel sufficiently confident. In a way we are all
like China Mobile, which is one of the largest corporations in the
world, yet it is present in only one country. The transition from
a local company to a global one needs very serious restructuring of
the management system, strategy, and so on. If there are no direct
economic stimuli, few people will start doing it.

INT: What contribution to developing society has been made by business
leaders in this 20-year period? Did they adapt to the environment or
did they actually build it themselves?

VARDANIAN: Both. It is always the 3-5% of leaders who change the
world. There are never large numbers of proactive people in society
who are able to make decisions and take responsibility. Our top
business people did change the country. They learned the basic skills
in different ways, devising schemes like MMM (a pyramid investment
scheme operating in Russia that went bankrupt) or creating genuine
banks, inventing brands such as Dovgan and Tinkoff, changing the image
of advertising, developing newspapers; in short, they did things that
had not been done before.

This section of society has played a very big role in the changes in
Russia. The leaders showed that it was possible to achieve success
in a fair and legal way, and that you could become rich not only by
being a top bureaucrat. All they needed was the access to a quasi-free
market. In the Soviet Union it was possible to become rich only by
becoming part of the nomenclature. You can still do this, but many
new opportunities have emerged as well.

INT: What kind of evolution has occurred among the people who are
conventionally called business leaders?

VARDANIAN: I would say that there are three categories of business
leader in Russia. These are schemschiks – or those who devise schemes –
entrepreneurs and managers.

Schemschiks are people who simply make money. One Russian billionaire
coined the phrase, "I don’t buy shares; I buy situations." These
people spot assets that are not efficiently managed or looked after,
and can be bought or obtained for free. In the 1990s, they played a
very significant role in the economy and made huge fortunes. There is
nothing wrong in that. They are a part of society that exists in every
economy, including America. Let’s not forget the people involved in
leveraged buyouts of large corporations. Those People used air, so
to speak, to buy huge corporations. This type of businessmen doesn’t
vanish into thin air, but their role diminishes over time.

As for the entrepreneurs, macroeconomic instability and growth in the
domestic market led to the appearance of a large number of people who
started their businesses from scratch. This happened in various sectors
and they were very successful. It is the entrepreneurs who created
industries such as retail, investment banking, mobile telephony,
and many others.

The situation with managers is quite curious. We have had several
waves: a wave of self-taught managers, a wave of foreigners, and now
a wave of Russian professional managers, who often have a business
education and have learned on the job in various management positions,
is rising to the fore.

INT: Why don’t we see Russians in the top management positions in
global companies? Is the reason that there are so many entrepreneurial
opportunities in Russia that the most talented business people have
rushed into entrepreneurship?

VARDANIAN: No, I don’t think so. Managers and entrepreneurs are two
different kinds of people. I am deeply convinced that there are many
brilliant managers who would never transform into entrepreneurs. What’s
more, they are not likely to throw themselves into such an uncertain
arena. If they did, they would burn their fingers badly.

I think you can single out four reasons for the relative lack of
success of Russian executives in the international market. First,
the requirements for a good manager in Russia differ from those
in the Western world, where particular skills and competences are
needed. Second, the period we’re talking about is too short. After
all, 17-20 years is not long enough for someone to realize his or
her full potential. Third, the market (apart from raw materials) is
too small and highly segmented. Finally, those who did go abroad and
tried to build their careers in the West found themselves incapable
of making such a great leap. Instead they started settling down and
having a nice lifestyle. Their level of ambition was lower than what
was needed to force their way through the tough hierarchical systems
that exist in large corporations.

Furthermore, large global corporations have only started paying real
attention to Russia in the last 2-3 years, and that’s why they did
not take Russians seriously. I am sure we will have more examples of
top managers from Russia in a few years’ time.

INT: Are there any cultural heroes in Russian business? If there are,
can you describe them? Is there a specific type of person who combines
all the desirable features for doing well in Russian business?

VARDANIAN: A sort of Once Upon a Time in America hero is gradually
being transformed into an educated businessman who knows foreign
languages, has managerial experience, and knows what EBITDA
(Earnings before interest, taxes, depreciation and amortization)
means. Recently I took part in an amusing meeting in Volgograd. The
members of the board of directors were having a discussion. Four of
them were representatives of an older generation, and the two other
were young men. They all pronounced EBITDA in very strange way. I am
sure that half of them did not know the correct meaning of the term,
but everyone used it. This is an example of the new image that the
business elite wants to project.

At the same time the role model for society as a whole is still the
official, a bureaucrat. This character remains dominant.

INT: Can we say that there is a Russian leadership style? If so what
is it?

VARDANIAN: I don’t think so. We can only speak about leadership here
under the conditions of a developing economy with an undeveloped
infrastructure and great uncertainty. Basically the Internet shows
that even in an economy with a developed infrastructure, in high-risk
conditions where the price of a mistake is very high, the leadership
style needed to be successful is very close to the one we see in
Russia today. People who possess this kind of style are the ones
ready to make decisions with insufficient information, when it is
impossible to make a SWOT (Strengths, weaknesses, opportunities and
threats) analysis for example, or write a formal business plan and
build a company according to it. These are also the kinds of people
who are able to cope with exponential growth. Managing exponential
growth is done in China, in Russia, in India, in certain industries
in America. In Western Europe, it may be more difficult.

INT: What are some of the other characteristics of this style? How
do such leaders accomplish traditional leadership tasks, such as
creating a vision, developing strategy, and setting key priorities?

VARDANIAN: Very often, they do not have a program or priorities at
all. They are very opportunistic, because a person in such uncertain
conditions has to be very flexible. Naturally, most successful
businesses in such an environment are conglomerates.

Most of them do not dream of building the best company or one that
will last forever. They focus on making the most of the opportunities
they see around them. A good example of this is how the Absolute Bank
was created. The owners were originally in real estate and only paid
attention to the bank at odd times. However, it was a huge success
story, and they sold it for a billion dollars. The bank was actually
built up in bits and pieces in a very ad hoc way. So, I’d say that
leaders like this have a very opportunistic view of business.

INT: And how do they cope with another critical leadership
task-selecting and motivating people?

VARDANIAN: I must admit that a largely couldn’t-care-less attitude
towards people exists in Russia. In the past, people were not
considered a major issue, although there is more talk about it these
days. In the 1990s, the main criterion for people was whether a person
was a friend or a foe, whether they were loyal or not. It’s only during
the last 10 years that owners have started to think about issues of
performance management, teamwork and motivation. Still, while owners
were at the same time the chief executive, their role in motivating
people was limited to inspiring and energizing them. At present,
as the owner and the manager roles are being separated, some real
attempts at motivating people are made, such as introducing share
and option schemes.

The point can be illustrated by a very simple fact: HR (human
resource) directors are not part of the board in any big company
in Russia. This simply means that people are not seen as the most
important asset. Profitability in Russia is very high. Some elements
of business, like operations, HR and IT (information technology),
are considered so secondary in the overall scheme of things that
the leaders in our country do not bother to construct these systems
in detail. They don’t realize how a well functioning HR system can
positively contribute to the bottom line. Rather, it is more important
to gain a greater market share, to build a bigger system, to be the
first. Although in the last 2-3 years the top business leaders have
started to understand the value of coaching and teambuilding, the
present way of looking after people is far from ideal.

Furthermore, as long as the employees are not seen as the most
important resource, their motivation is mainly to be a part of a big
company. You may ask why size is so important? It has to do with the
mindset, the pursuit of security. Working in a large company offers
stability and safety, and that’s why large, semi state-owned companies
are so attractive to these people. Taking into account the high level
of uncertainty in society as a whole, it doesn’t come as a surprise
that many managers are trying to find a safe place to work.

The main problem with smaller private companies is that many owners
can’t formulate and pinpoint the strategy and tasks, but act very
opportunistically. As is to be expected, managers have to go with the
flow, doing whatever the owner tells them to do. They have to remain
calm if the owner suddenly changes his mind and decides, for instance,
to build not a house on a site, but a shopping center, and then decides
to build a stadium, and finally just to sell off the site. Whatever
the decision, the manager simply has to execute it. Thus the manager
has to live in deep uncertainty. That’s why it is so difficult to
make a long-term motivational scheme for a manager in such conditions.

INT: How do you spend your time?

VARDANIAN: I spend a lot of my time on HR issues. Some people at Troika
criticize me for not spending enough time with clients. Frankly, I
am quite stretched. I also do a lot of interviewing. For example,
I interview everyone we hire in the HR department, even the
secretaries. I also take part in the 360-degree reviews for a large
number of our employees.

Every Monday morning, I make a speech to all employees. It has become a
tradition. I update them on important developments. I also welcome new
employees and congratulate people who have birthdays that week. It’s
part of our culture at Troika to encourage people’s dreams. It’s
almost an obsession with me. We always ask new employees what their
dreams are. And we try to help them to attain these dreams.

INT: How did the strengthening of the role of the state and the
personal role of Vladimir Putin influence the leaders of Russian
business?

VARDANIAN: Both positively and negatively. Positively, because there
are now clear rules of the game. It is clear who makes the decisions,
the political and economic situation is stable, and there is no
feeling that it will all fall apart tomorrow.

Negatively, because, as in any stable system, restrictions appear-what
you cannot do, where you cannot go, and so on. Also, the pendulum has
swung in the opposite direction. In early 1990s, you could bite off
any piece you liked from the state. What was stolen or bought in those
days (no matter whether it was legally or not) is now being brought
back into state ownership again. A huge number of enterprises and
assets are being consolidated into large units. Preserving a large
player in the form of inefficient and slow state corporations is a
negative tendency, on the whole. However, it is fair to argue that
in some industries private business should not play any role at all,
for instance, in the defense industry.

INT: Does this mean that the focus in doing business in Russia is
shifting drastically? Can we say that it is becoming more important
to build relationships with the state in all its various forms,
with the federal and local authorities, and special services?

VARDANIAN: No, it does not. There is such vast growth in the domestic
market that most industries connected to domestic consumption are not
influenced. It is petroleum, natural resources, defense industries that
are being influenced by the growth of state ownership. Nothing that is
linked to consumption – retail, trading networks, food, and clothing
production – is influenced by the state. By the way, it’s not generally
realized how profitable Russian businesses actually are. If we were to
compare global companies present in China, India, and Russia, we would
see that profitability in Russia is several times higher than it is
in China. Everybody complains about bureaucracy and other problems,
but in reality the comparative figures are much better here.

On the whole, there are both positive and negative tendencies-less
freedom, but higher stability.

INT: Talking about the future, what type of leaders will be required
in Russia in 10-15 years? What particular characteristics will they
need to have?

VARDANIAN: In 10-15 years, the requirements of Russian leaders will
be the same as those of leaders of global companies. They will need
clear vision, a high degree of emotional intelligence, high-quality
education, and the ability to manage large, complex, global companies
and multicultural groups of people located in offices throughout
the world. The critical change in competencies will occur in their
ability to manage globally, manage companies that are situated in many
countries with varying regulatory systems and their own particular
nuances, and to deal with complexity and ambiguity. They will need
not only the ability to grasp opportunities intuitively and to make
decisions quickly, but also the abilities to set goals correctly, and
to achieve them in a systemic and focused manner. Instead of the kind
of conglomerates we now find in Russia, in the future more companies
will emerge that will try hard to become champions in their own
industries and will not try to get into every possible industry. There
is an enormous discount in being part of a conglomerate.

Many state companies will become publicly owned. They will have to
publish their quarterly reports and to explain their actions to many
external shareholders, both Russian and foreign.

In the next 10-15 years, the first item on leaders’ agendas will be
efficiency, rather than expansion and capturing market share. Growth
will slow down, but efficiency will rise. Control systems, IT, and
HR will become more important, and managers will have to pay more
attention and devote more time to them.

INT: What kind of path will a person need to take to become such a
leader? What basic elements of training will be required?

VARDANIAN: Ideally they would have worked for some time in
China, India, and America-in different systems, both developed
and undeveloped. In India people speak English, but the system is
different. In China people don’t speak English, and there is no clear
legal system regulating business, but China has a huge market, and
finally America has it all. It is also helpful to experience both
building a career in a global company and to work in a start-up or
turn-around situation to feel the difference.

INT: But will such a person be able to reintegrate in Russia? Won’t
it be hard to re-enter Russian business after 10 years in a global
corporation?

VARDANIAN: No, I don’t think so. As the major issue then will be
efficiency, it won’t be very complicated. The tasks will change
and the integration of such a traditional manager will go much
more smoothly. Of course, Russia will still be different from other
countries: there will remain particular nuances related to efficiency,
corruption, uncertainty, and the lack of transparency, but there will
be fewer of these problems by that time.

INT: Let’s now talk about how to prepare such leaders. What are the
tendencies in Russian business education?

VARDANIAN: In my view there is a generally positive
tendency. Presently, there is a tremendous hunger to develop leaders,
let alone to provide elementary management training programs. The
demand for executive education is very high, and people are ready
to pay for it. That is, people now understand that it is needed. And
demand gives rise to supply.

HR expenditure in companies has increased many times over. Previously,
spending in HR was not more than one percent, and this was usually
for holding corporate events. Now more money will be spent on
training. Developing employees will be part of a company-wide career
development plan. For example, in Troika Dialog there are four
programs: one for the top executives, another for middle managers, a
third for young stars, and the fourth for interns. All these programs
are different. All these programs reflect a real hunger to learn and
to become more effective at work.

INT: Who should play the main role in developing business education
in Russia? Business schools, companies, or perhaps even the state?

VARDANIAN: The principal role in business education will be played by
business schools-both foreign and Russian. There is demand for both
types. If people pay money to Russian schools, it is because they
see advantages to teaching people in Russia, rather than sending
them to France, the U.K. or America. Many business schools will
emerge in the universities. I don’t think the government should play
a significant role in the process. It should neither stimulate, nor
restrict business education. Corporate education will continue its
own development as well, as both owners and managers have realized
that more money should be invested in it.

INT: What, if anything, can Russia give to the world of business
education?

VARDANIAN: It can give a lot. On the one hand, our case is unique-in
recent history, only the Republic of South Africa and Russia have
undergone a dramatic transformation from one system to another. But the
problems in these countries are different. We have a highly educated
society that does not understand anything about business. The mental
transformation needed to change a state socialistic regime into a
democratic one has not yet been fully studied or well understood.

On the other hand, educational trends are changing. For a long
time managers from all over the world strove to receive their
M.B.A. degrees in the U.S.A. At present, more and more managers are
interested in studying in those countries that demonstrate the most
rapid growth. Americans and Europeans will go to Singapore, Russia,
India, and China to study and get a job there. In this part of the
world, Russia will become a key element, as we are culturally closer
to Europe than either China or India. We will play the role of a hub
that will adapt people willing to enter a market where the rules are
not completely clear. In this context we have a very interesting, I
would even say unique chance to have a decent role in world business
education.

INT: A more specific question: what can business people learn in
Russia today – not in 5 or 10 years from now – if they are not going
to work there?

VARDANIAN: They can learn entrepreneurship. We are presently a
breeding ground for entrepreneurs. The world is transforming into an
open information space where creativity and the ability to find a new
niche, a new "blue ocean," is extremely important. Russia is a good
place to learn to do that, because there are still many niches where
it is possible, not to compete but to offer other goods or services.

There are particular interesting cases available for study. For
instance, you can work in a bankrupt company or a city-based former
state enterprise. When a company supports the whole city, the social
responsibility that rests on the company is huge. This situation
applies all over the world.

INT: Please tell me about your Skolkovo Business School. What is it
for? What is its concept?

VARDANIAN: The school’s concept is simple. First, as I’ve already
mentioned, I think that the world is changing and becoming multi-polar,
and educational centers are needed not only in America and Europe, but
also in the other parts of the world. The world elite need them. Our
school can become a very good bridgehead for understanding not only
Russia, but also China and the whole developing world. Moscow has
a great opportunity to become a venue for discussions, conferences,
and other activities, and a think-tank for the business society that
has taken shape in Russia. Both foreigners and Russians are part of
this new school, and I am glad that it is a joint project.

Second, Russia wants bright business leaders. They should be able and
be willing to accept risks, inspire, and lead subordinates, undertake
new responsibilities, and work with large-scale projects. Employers
will not ask for an M.B.A. diploma; they will ask for people who
are able to head any business project and make decisions in highly
turbulent circumstances. The Skolkovo business school should become
an incubator for growing such leaders.

Third, Skolkovo is a highly ambitious project. Starting this business
school is a great challenge because we are building an institution
that needs to meet not current requirements but those that will be
relevant in 15-20 years’ time. This initiative should demonstrate
Russia’s desire to be at the top, not only in terms of the landmass
but also as a leader in business education.

INT: What will make training in your school so special?

VARDANIAN: In the first place, the school will specialize in developing
markets and will try to use the maximum practical knowledge of
people working in business, the school’s founders and visiting
professors. Skolkovo is a green-field project starting from scratch,
not on the basis of an existing institution. The founding partners
are 14 major companies and high-profile individuals, both Russian
and foreign, who are leaders in their industries. They all have vast
experience in managing big business structures and are willing to
take part in the training process personally, developing the school
curriculum, giving lectures, conducting master classes, and organizing
practical training.

The principal training format in Skolkovo will be creating five to
seven student teams to develop real projects. The educational process
will be largely proactive and will include a variety of courses,
lectures, seminars, simulations, and role-play games, cases, master
classes, consulting projects, and internships.

Education in the school is aimed at training business leaders who
will be at the helm of their own businesses. That’s why student
selection will be quite demanding. We’ll do our best to select
people with an entrepreneurial streak, willing to work really hard
to run their business successfully. They’ve got to be real leaders
and strive to develop the talents and abilities bestowed on them by
nature. Attracting and selecting such people is a tall order, because
the usefulness of a business education is often not self-evident
to them.

We are going to prompt our students to start their own businesses. It
is impossible to be successful in business just on paper. Students
will have an opportunity to realize their entrepreneurial dreams. For
that purpose a special venture fund will be formed in Skolkovo. We’ll
consider this project successful if around 30% of our alumni start
their own businesses within 3 years. Nowadays the percentage of alumni
in the best European and American schools who start their own business
is not more than 7%, and among Russian M.B.A. alumni this figure is
even lower.

It will also be an international school. The curriculum will be focused
on studying business in countries with rapidly growing economies such
as Russia, India, Brazil, and China. The curricula will be designed for
Russian and foreign students who want to apply their leadership skills
and professional knowledge in dynamically developing emerging markets.

The teaching corps is planned to have 30 staff lecturers, half of
whom will be Russian, and half foreign, and there will also be many
visiting professors. Managers and entrepreneurs will come to give
special courses and conduct master classes.

Students may study in several international business schools
concurrently and take part in joint international consulting projects
or in simulations and role-play games of transnational business
management and they may also train in specialized areas.

INT: What are the main achievements of the school so far?

VARDANIAN: One of our main achievements is that the 12 to 14 partners
are really making an effort and spending time to create the school. It
is a joint project, and collaboration at this level is very important.

We have already launched some management development programs. We’ve
opened corporate programs for companies. Much of the teaching team
has already been formed. The campuses are under construction. The
first research papers have been released. We have started translating
interesting books from English into Russian, and from Russian into
English. We have reached agreements with our partners, business
schools in several countries.

INT: What types of programs will be launched?

VARDANIAN: There will be three types of program in the school. The
first is the M.B.A. This will be a full-time 16-month program for
young people aged from 23 to 35. The students will have to be ready
to spend at least three of the 18 months abroad in India, China,
Brazil, Europe, and the U.S.A. We plan to have this program launched
in September 2009. We’ll reach our full capacity for this program,
150-200 people, in 2011 or 2012.

The second type of program is the E.M.B.A. This will be modular,
part-time education for people 30 years and older and will last for
24 months. We plan to graduate 75 people a year from this program,
and it will be launched in January 2009.

The third type, one that we have already launched, is company-specific
programs. These are specialized programs for company owners, and top
managers. They last from 3 days to several months and can be customized
for a single company or adjusted for several companies at a time. We
are going to graduate around 3000 people a year through this program.

INT: What’s your vision of the school in 20 years?

VARDANIAN: I see the school as one of the leaders in world business
education. Skolkovo has every chance to take its place in the world
system of business education and to enrich it with a uniquely Russian
experience.

Our goal for Skolkovo is to be among the top 20 world business schools,
recruiting at least 25% foreign students, mostly from the rapidly
developing economies of China, India, and Brazil. I would be happy
if Skolkovo acquires the kind of image that MIT enjoys-where the
abbreviation is often taken to describe its students as "millionaires
in training."

Skolkovo Business School is truly a very ambitious project,
particularly measured by Russian standards. The total investment in it
amounts to $500 million. Ambitiousness per se is important not only
for entrepreneurs and managers, but for the nation as a whole. It is
crucial to raise the level of ambition, the level of comparison that
you set for yourself and for others.

But forget the lip service, action is what’s needed. Truly great
efforts have to be made. Then the goals will become reality. I like
the example of Samsung. In the 1990s, it was an almost exclusively
Asian company, in terms of its market and focus. Now it’s one of the
industry leaders, even leaving Sony behind. In my opinion Samsung’s
success demonstrates the level of ambitiousness of the goal the
company set itself. Of course they’ve had their share of problems,
corruption, and scandals, but throughout all this they have been able
to maintain their direction. This, too, is hugely important for the
future of Russia.

Slowly, we are moving in the same positive direction as the example
of Samsung demonstrates. Given our developing capabilities in
entrepreneurship, there are going to be great possibilities for
Russia-based companies to become the new champions of world growth.