Director of Equity Financing, FINAM Investment Company, Moscow
Troika Dialog CEO Ruben Vardanian and President Putin open the new
Skolkovo School of Management on September 21, 2006 in Moscow
One of the current constraints on growth in Russia's booming economy is a critical shortage of experienced people with executive-level training. In Moscow, many middle or senior management positions that would normally be filled by fortysomethings in the United States, Western Europe and Japan are going to ambitious young Russians who know how to succeed in the Russian marketplace, but who often lack professional education for managing businesses at an increasingly global level. According to government statistics, only three out of every 100,000 Russians have an MBA, compared to 70 in the United States.
To address this glaring need, the Russian government has developed a high-priority national educational project. As part of the national education project, two new business schools, one located in Moscow and the other in St. Petersburg, opened their doors last year. Both projects are backed by the government, which would like to see Russian counterparts to Europe's Insead, and America's MIT and Wharton.
The Skolkovo School of Management was officially launched in Moscow on September 21, 2006. The Graduate School of Management at Saint Petersburg State University (formerly Leningrad State University -- where President Vladimir Putin attended law school) began on November 29, 2006. Both inauguration ceremonies (laying the ground bricks) were identical and attended by the Russian President and other senior government officials. It is safe to assume that each of these national projects enjoys the support of the two leading candidates to succeed President Putin -- First Deputy Prime Minister Dmitry Medvedev and Defense Minister Sergey Ivanov.
Both schools seem to have the same goal, but the essential difference is that Skolkovo is being built from scratch and is targeted to focus on training managers for developing markets, while Saint Petersburg State University's Graduate School of Management is based upon the existing management department within the university. And of course the locations and sites are different -- in Moscow the campus will be built from scratch in a suburb of the city, while in St.Petersburg business leaders will be educated at the restored Mikhailovskaya Dacha.
There are two different sets of Russian oligarchs sponsoring the respective projects. The Skolkovo Project is the product of deliberate planning by Ruben Vardanian, chairman and CEO of Troika Dialog, one of Russia's oldest and largest investment banks. Mr. Vardanian did an exceptionally good job examining 18 world business schools and then drafting a plan for his own effort.
Mr. Vardanian also has persuaded 12 Russian business oligarchs and two non-Russian investors to donate $5 million apiece to finance the school -- including Roman Abramovich, the richest man in Russia. Aside from Abramovich, other benefactors include Rustam Tariko, the Russki Standart vodka and bank tycoon, Severstal steel magnate Alexei Mordashov, and Renova Group chairman Viktor Vekselberg. This donors list is impressive, but equally impressive is Skolkovo's International Advisory Board which is led by Medvedev, Russian Economic and Trade Minister German Gref, former Prime Minister of Singapore Lee Kuan Yew, Credit Suissie Germany Chairman Herbert Henzler, and Patricia M. Cloherty, Chairman and CEO of Delta Private Equity Partners, LLC, who is also a former manager for the U.S. Russia Investment Fund and Delta Russia Fund, LLP.
Key Facts about the Skolkovo Moscow School of Management:
- Construction costs for the school are expected to reach $128 million, with another $100 million being invested in Skolkovo's endowment fund. An additional $32 million will go to miscellaneous start up costs, such as hiring faculty, while the government has agreed to set aside 1.5 billion rubles (nearly $58 million) for the school from its national projects budget. The campus will open in September 2009. The initial round of construction is slated to end in 2012.
- There would be four options for business students: customized programs (oriented towards a specific corporation or industry); short-time open programs (for specific managers); full-time MBA and Ð•xecutive MBA. Full-time MBA is targeted towards managers aged 26-30 that have already worked in business.
- There would be 10 Russian professors and 20 non-Russian professors along with 70-100 visiting faculty members, drawn largely from business schools in other emerging economies.
-The curriculum will start with a small group of short-time program in 2007, with 25 to 50 students being enrolled in the 18-month full-time MBA program in 2008.
- Skolkovo will be an elite institution- it will admit no more than 300 Russian and international students a year. On average, the fee is supposed to be about $ 50,000 per year
- Some of Russia's most famous oligarchs have agreed to lecture and teach a small number of classes drawing on their life experiences every year. Roman Abramovich, who was recently ranked by Forbes as the 16th richest man in the world, is reportedly on the list of guest lecturers.
- Students from other leading emerging markets such as India, China and Brazil will be encouraged to enroll, while Russia-based students will take part in six-month exchange programs in these countries as part of the two-year MBA program.
Russia Today TV interviews Ruben Vardanian about the new business school
Jack Welch Visit Skolkovo
Despite being in its infancy, the Skolkovo has already hosted a number of major events, the most recent event being a meeting with Jack Welch, the former CEO of General Electric, and about 120 representatives of Russia's business elite in Moscow.
The St. Petersburg School of Management has also been active. However, SPSU is still in the process of raising required the $200 million it needs to establish a world-class international business school.
These new developments are really encouraging and we all hope that very soon Russia will have some of the highest ranked and most prestigious international business schools in the world.
UPDATE: Newsweek's Owen Matthews has a more negative take on the rise of new business schools in Russia.
You can read the original post at Vladimir Kuznetsov's blog, Equity Financing in Russia. The views expressed in this post and on his blog are the personal opinions of Vladimir Kuznetsov, and are reproduced here solely for educational purposes. To read more Russia Blog posts about Russian capital markets, click on the finance section or type www.russiablog.org/finance in your web browser.