Echo Moskvy radio (Site news), September 03, 2009

WHAT FOR IS WESTERN BUSINESS EDUCATION NECESSARY IN RUSSIA?

Anchor: Natella Boltyanskaya

Guest: Alexey Popov, Program Director of EMBA General Management

N. BOLTYANSKAYA: It is almost 11:14, you listen to Echo of Moscow, Natella Boltyanskaya is at the microphone, good morning. In our studio we have Alexei Popov, director of Executive MBA program of Stockholm School of Economics Russia, welcome.

A. POPOV: Good day.

N. BOLTYANSKAYA: We will talk to you about the Western system of business education in Russia. Before we start speaking about the Western system in general, can I ask you what is from your standpoint the difference of Stockholm School from other Western schools?

A. POPOV: Thank you. Well, Stockholm School of Economics is known among the leading business schools of Europe. This is the best business school of Northern Europe. According to many ratings that exist for international business schools, Stockholm School is in the top 20 of schools in Europe. The education that is provided for top managers and companies is recognized not only in Northern Europe, we are sufficiently well known in Russia already and have existed for more than ten years.

N. BOLTYANSKAYA: Tell us, please, why, for instance, a top manager needs Western business education taking into account Russian realities?

A. POPOV: Well, this is a good question and many people probably think that it is not necessary at all because Russia has a special path and can do with its own education, moreover so that our business environment is absolutely different. You know, such opinion is fairly widespread. It is believed that Western education brings absolutely different standards and explains quite a different reality. In Russia companies act in a different way, economy is composed in a different way and we have different laws and let us study how all this is arranged. By and large, Russian business should be evaluated from the standpoint of its efficiency on the global level. We have many big companies in Russia being well known and having god capitalization. But if we compare their productivity according to international scale, productivity of Russian business is in the limits of 10% or maximum 30% of productivity of the best international companies. That is why no matter how we or someone else advocates a special Russian path, if we compare efficiency of Russian economy and Western one by and large, and this is not a secret because there are many research works, our companies are inferior in efficiency. That is why the question about Western education is absurd. I agree with the statement that business environment is really different there. However, if our businesses pursue a task of becoming efficient, of sale of high-quality goods at lower prices and winning in productivity, which is simply vital for our country now, it is necessary to learn Western practices.

N. BOLTYANSKAYA: Let me ask you a question then. Can the reasons due to which Russian companies are inferior to foreign ones in quality be corrected, for instance, with assistance of Stockholm School of Economics Russia?

A. POPOV: To the reasons it is probably possible to attribute the business environment proper, of course, and the state institutions that we have. This means that business does not exist in vacuum. Along with this, I would say that there are two kinds of reasons and each of them are important. On the one hand, this is really business environment: this is legislative regulation, absence of competition in our country and suppression of competition in many sectors. On the other hand, this is efficiency of the businesses. Such economic term that you hear from me like "productivity" is interpreted in the economy of the 21st century not as primitively as in the 19th and 20th centuries. Then, at the dawn of the management science two famous management gurus Frederick Tailor and Henri Fayol measured productivity of workers in mines at the beginning of the 20th century.

N. BOLTYANSKAYA: How did they measure it?

A. POPOV: They found out that the shape of a shovel, say, should correspond to the shape of coal and a worker should stance in a certain stance, should do certain movements, there should be a certain heartbeat frequency and so on. This was productivity. Now when we speak about productivity, so to speak office workers or companies in general and business in principle, this does not mean that someone presses computer keys faster or runs faster around the office.

N. BOLTYANSKAYA: The result is important.

A. POPOV: No, productivity simply reached a level of understanding of management technology now: which business processes a company has, how it manages them, how it takes care about quality, how it optimizes the structure of the staff, how it works with the loyal client base. These aspects in business disciplines have a very critical influence eon productivity. Nobody abolished the role of the state in this field too, of course.

N. BOLTYANSKAYA: Well, we will go back to how it is possible to combat the role of state when you study business. Tell us, please, do you think the fact that Stockholm School of Economics celebrates its centennial jubilee this year has any effect on quality of education?

A. POPOV: Yes, thank you that you have said this. Really, Stockholm School of Economics marks centennial jubilee of the day of its establishment. It has been founded in Sweden as an educational institution in the field of economics and remains a leader in economic education. It is sufficient to say that Nobel Prize winners in economics read their public lecture in Stockholm School of Economics every year. Along with this, it is fairly free and democratic and everyone who walks around Stockholm can come in and listen, no matter how strong it may seem.

Along with this, now Stockholm School of Economics is seriously developing towards business education. This mans that the name should not mislead people. This is not only a school of economics but this is also a business school. In the last few years we have been receiving more and more orders on the part of companies, not only separate top managers but also companies that send entire groups of their students to us in principle to educate them and to have such a big spurt. We speak about efficiency again too.

N. BOLTYANSKAYA: Well, explain, the following thing, please. As I understand, your potential segment is top management, right?

A. POPOV: Yes, absolutely right.

N. BOLTYANSKAYA: Many people who make a decision that they need business education now, for instance, in Stockholm School of Economics Russia, believe that the main thing in the current situation is the so-called crash resistance, right? Because there is crisis.

A. POPOV: Well, if you mean the moment of crisis, this is just a moment from the standpoint of education. This means that from the standpoint of long-term prospects of education it is a very long-term investment. You have asked a good question because any person has education, even if I speak now not about business education but about education in principle as a process. First, this is a permanent process, that is, if we speak about intelligent educated people they learn for the whole life, not necessarily in a formal structural way but for the whole life in general. If we speak about top managers who come to get business education, first of all, many of them come already not for the first time because education, as I say, is a permanent process and many of them have had some education and some courses somewhere. Everyone understands perfectly well that when a person leaves the school education does not end. In broad sense, education is cultural and intellectual development of a person and crisis is a fairly short period of time that will end. We do not know what will be its end like but it will end anyway. Education exists now not for the sake of crisis and for the sake of driving out of the crisis. Many concepts embed a wish to develop business efficiently in a person and in a top manager. No matter if there is a crisis or market growth, if we speak about marketing economy knowledge is necessary to compete anyway.

N. BOLTYANSKAYA: Yes, to understand mechanisms.

A. POPOV: But I make a reservation, if we speak about marketing economy. It is important to understand that this is Western business education and the notion of "religion" is, so to speak, its religion.

N. BOLTYANSKAYA: Really. When you, so to speak, exist in conditions where you can create a very competitive company but a kind top-ranking guy comes and gives unearthly benefits to your competitors, what kind of resistance can we talk about?

A. POPOV: Yes, so it happens. I think that you do not reveal any secret. It is known that institutions of competition are fairly weak in Russia, the role of the state in this is well-known and we have preferences for companies.

N. BOLTYANSKAYA: Incidentally, not only in Russia.

A. POPOV: Not only in Russia, yes, some people like saying this.

N. BOLTYANSKAYA: Such precedents happen in the US too.

A. POPOV: Yes, but these are different realities still.

N. BOLTYANSKAYA: Not to such extent, you are right.

A. POPOV: Business education is built on this holy belief, we can say, protestant belief in common equality, I competition and similar starting conditions for those market agents that bring a big value to society while competing. It sounds high-flown but this is so. Even if we bear in mind what you have said that competition is not so developed in Russia and sometimes not a managerial but an administrative resource plays it role. We are not North Korea and I hope will not be like it. Many our companies come to foreign markets and encounter competition on the part of foreign manufacturers. I think that we will not see such moment when our borders are closed and we have only domestic goods. No, borders are open and Russia will may be enter WTO sometime.

N. BOLTYANSKAYA: Or will not enter.

A. POPOV: And will be even more open. Competition is always frightening and it forces you to move.

N. BOLTYANSKAYA: Incidentally, many representatives of small and middle-sized businesses say that entrance of Russia into WTO will not bring anything good to them and will bring only bad things.

A. POPOV: Of course, it will not bring anything good because who wants to compete? In principle, there is laziness and, of course, a wish to protect yourself in the human nature.

N. BOLTYANSKAYA: "What for is it necessary to compete against the strong if it is possible to compete against?"

A. POPOV: No, this is really an interesting conversation. We should understand that market agents, businesses themselves will never create competition for themselves deliberately and there is a big role of the state in this. In the science of management and strategic management that is studied in Stockholm School of Economics and, I think, in all business schools, many kinds of knowledge and theories about competitiveness of a company are inseparably connected with competitiveness of countries and economics in general where there is the role of state, it has been studied sufficiently, and there are many theories and models that explain how the state should support the market and create competition. Management classic, if I remember correctly, Michael Porter, one of the main authors of the theory of competitiveness of countries, has written that the state should create conditions for businesses to experience pressure and to transit to the innovation path of development. This means that business should have pressure and should get improved and make itself more perfect.

N. BOLTYANSKAYA: Figuratively speaking, there is a pike in a lake for a crucian carp not to stay idle

A. POPOV: Yes. That is why, of course, no businesses will create competition for themselves and all of them wish to have preferences. In any case, the role of the state is very big. When competition is not created in the economy we have what we have. We have companies with preferences, companies without preferences, it is not interesting for anyone to talk about labor productivity because it is important for everyone to receive access to administrative resource, to receive some budget resource. Who cares about labor productivity? If you are exclusive and if you have exclusive resources you will always sell bad product at high price because others do not have such opportunity.

N. BOLTYANSKAYA: Our listener Martin, a manager from Moscow Region, has a question for you, "Do you think that Western education can and should hinder corruption methods of running business in Russia?"

A. POPOV: It would be good if it was so, it would be good were it possible to solve such fundamental problems through education. Everyone knows about the level of corruption and people at Echo and all our students speak a lot about this. All people who study in Stockholm School of Economics do not live on Mars, they are businessmen who work in this environment. Incidentally, corruption is associated with state bodies and we have practically no students from state bodies. Well, it is possible to count them by the fingers of one hand. I am very surprised by this because the group of state officials who are responsible for development of industries and for development of territories should understand due to the nature of their service that this level of corruption actually hinders fulfillment of these state tasks. They do not come to study and they probably have absolutely different tasks. I invite them now by radio: please, if someone is interested in successful development of his territory, in making of it competitive in successful development of industry, in development of economy in an area that the state has entrusted to you, please, come to study.

N. BOLTYANSKAYA: To Stockholm School of Economics Russia. Tell us, please, how is the education received in your school is evaluated? What are the general criteria for assessment of education of such kind?

A. POPOV: There are criteria. Along with this, it is a criticizing question because it is always a little subjective. Ideally, it is possible to evaluate quality of education only after an already educated person works and uses the knowledge and some changes take place.

N. BOLTYANSKAYA: But is it valued?

A. POPOV: I will tell you briefly that according to the leading rating of all business schools of Financial Times Stockholm School of Economics including its Russian programs has the 14th place in Europe. According to corporate programs for corporate customers it has the fourth place in Europe. It is valued.

N. BOLTYANSKAYA: Well, you have answered the question. Incidentally, I did not mean any critique. When a person plans to get business education, for instance, in Stockholm School of Economics Russia, naturally, he should ask, "How much is it valued? How big is the rating of this education?" Tell us, please, as I understand, your education may be not the first, right?

A. POPOV: Exclusively not the first one. It cannot be first at all because top managers who come to us not only have higher education, they should also have managerial experience of not less than five years and these should be well-to-do people. This means that people come to us not as much for career growth. This is mostly the interest, I return to the beginning of our conversation, in improvement of efficiency of their business.

N. BOLTYANSKAYA: Which first education do you think contributes to further increase of the level of people in your school?

A. POPOV: We do not look at what kind of education it is, it only should be. Because practice shows that life path of a person, especially in our country, may be so diverse. You know, presidents and chairs of the boards of directors with education of biologist, lawyer, builder and engineer, whoever, come to us. This means that everything may happen in our country and this is very interesting.

N. BOLTYANSKAYA: In general, doors are open. I remind that our guest is Alexei Popov, director of Executive MBA programs of Stockholm School of Economics in Russia. We will continue after news and advertising at Echo of Moscow.

NEWS

N. BOLTYANSKAYA: It is 11:35 you are listening to Echo of Moscow. We continue conversation with Alexei Popov, director of Executive MBA program in Stockholm School of Economics Russia. I would like to ask you to speak a little more in detail about your students, about your graduates.

A. POPOV: Well, like I have said, top managers, people who have already established themselves in business, come to Stockholm School of Economics. This means that these are managers with a sufficiently big experience of management of companies and, naturally, these are people who have certain income. In general, they come not for the sake of career and even not for the sake of money. Many people think that MBA education is necessarily a path of ascent on the career ladder and earning of money. Executive MBA and MBA are often confused at this point. MBA as full-time, so to speak, for young people, is probably a possibility of career growth. Executive MBA is rather a possibility of development of managers as managers. They come to get knowledge, to learn something new in the world, about existing management techniques and technologies. I dare to assure you that people are fairly interesting, live, energetic, cheerful and optimistic. This means that communication with them gives simply an immense pleasure and brings luck to work in a business school. Of course, you can imagine a top manager and a businessman with a kind of pessimistic look at life but this is practically impossible by definition.

N. BOLTYANSKAYA: Yes, there is no other way out.

A. POPOV: We had the latest classes last week, we prepared a certain review of such situation in companies. Practically all groups wrote on the blackboard, "Negative situation with positive outlook." This means that they think that situation in their industry and in their company is negative but they look into the future with optimism and a different attitude is impossible for such people due to their psychological type.

N. BOLTYANSKAYA: Tell us, please, is this taught?

A. POPOV: Not at all. I think that this is, of course, talent and vocation and, let us be honest, it is impossible to teach a person simply to become a successful entrepreneur and manager. If this is not given, if something has not happened, it is necessary to understand that this is a small part of the society and all kinds of research show this. Enterprising culture and enterprising initiative is inherent to 3% to 5% of the whole society. Managerial skills are inherent to about 15-20% of people.

N. BOLTYANSKAYA: One of our listeners asks you a tricky question, "Where have you got your education, Mr. Popov?"

A. POPOV: Thank you. Well, as you may guess, director of Executive MBA program of Stockholm School of Economics has received his education in Stockholm School of Economics too. Along with this, I have certificate of the Moscow Aviation Institute and some Western educational institutions. Education was diverse. But I worked in business and was curator of strategic marketing in companies. Afterwards I was brought to business education. I do not feel pity about this because this is a very interesting area. Communication with such people, quantity of new knowledge that always comes in communication with such people, it is very interesting.

N. BOLTYANSKAYA: May I ask you to say a few words about certain skills that may be received in Stockholm School of Economics Russia?

A. POPOV: You ask a very specific question and probably expect that I will take a certain list and will start naming these skills. Honestly speaking, I would like to clarify that the skills and capabilities they belong rather to, so to speak, regularly repeated procedures and operations. For instance, these are skills of a worker at a conveyer for assembling of something. Probably these are skills of a doctor or something regular and correct. Although business is a regular environment, it is also fairly unstable and all knowledge becomes obsolete. Business is an environment that changes very seriously and that is why, most likely, the main skill that Stockholm School of Economics can teach, is the skill to accumulate the rapidly changing reality, to find a way and some movement that looks correct now. This means that our main skill is to be efficient in any changing circumstances. I will not give you any long list because everything that belongs to the management science that is divided into a gigantic quantity of business disciplines means a very long conversation and all this will be fairly false. Not a single skill can be measured objectively. If a top manager manages his company efficiently, if there is a result, this is the best skill.

N. BOLTYANSKAYA: Well, me and you will not even confirm the thesis that Western business environment differs from the Russian one in many aspects. As I understand, it is possible to take these differences into account and to use them. Am I right?

A. POPOV: I agree. It is necessary to take Russian differences into account and to use them. We know very much about the Russian cultural environment and its differences from the Western one. Sometimes they are very interesting and dramatic, sometimes they are very positive and sometimes not quite. Sometimes it may be funny. During the latest classes I had an interesting case when a lecturer organized classes for students and offered a task of playing an auction. One of the students had to lose, one had to win and all others had to remain participants. The teams conspired and the lecturer found out with surprise that it was he who lost. The teams conspired to have no losers, they all actually outplayed the lecturer and received small profit and he lost. He was very surprised by this. He said that he did not see anything like this anywhere except Russia: we have a healthy feeling of collectivism and I have been pleased by this. Our teams did not let someone, well, it is possible to say a team member, a friend, to lose in the eyes of the others. This feeling of support has worked and everyone remained with profit and everyone has helped each other. This means that there are cultural peculiarities in Russia that are studied and tracked by Western sciences. The so-called collectivism is really very strong in Russian culture. There are also many other things. Definitely, it is necessary to bear this in mind.

N. BOLTYANSKAYA: Well, if you emphasize that the matter is not simply about Stockholm School of Economics but about Stockholm School of Economics Russia, are there any specific aspects that are taken into account in this educational system?

A. POPOV: There are many specific aspects. Although it may seem strange, Time Management is a very painful issue for all our top managers, even the topmost ones. Sometimes we are so very well organized from the standpoint of time management as, for instance, representatives of the Western culture. Our people do everything on the last day, submit the term papers on the last day and get ready for exams on the last day. I understand that the same happens in companies of our managers.

N. BOLTYANSKAYA: Yes, the text, "When is it necessary?" – "Yesterday" is a norm for Russia.

A. POPOV: Yes, I think and you know this perfectly well, this happens in all companies. This is amazing but what can we do? We are such and we have such arrangement. Along with this, sometimes our creativity is so affluent that it surprises our lecturers who travel all over the world and teach in Europe and in other countries. But when they come to a Russian audience they are surprised, "Fantastic creativity."

N. BOLTYANSKAYA: So, I can thank our guest. I remind that Alexei Popov is director of Executive MBA program of Stockholm School of Economics in Russia. I can wish good luck to you and your potential students, success in their businesses. Thank you very much. You listen to Echo of Moscow.