Competitiveness of a country is determined not only by condition of its market institutions or infrastructure but also by quality of its managers and hence the level of business education. Dean of Stockholm School of Economics Russia Dr. Anders Liljenberg has explained in his interview to BB why Russia lags behind the leading countries according to all these parameters yet, what are the psychological peculiarities of Russian managers and for what it is necessary to get ready.
In the latest rating of global competitiveness of the World Economic Forum (WEF) Russia was put on the 63rd place. Do you agree that not only the low quality of infrastructure and market institutions but also weak management of Russian companies is to blame for such modest result?
I think that everyone should understand that radical market changes in Russia happened in an extremely short period of time, unlike in the West where the capitalist model was formed for a couple of centuries. At the beginning of this path Russian economy passed through shock therapy. Prices were released before institutions and infrastructure necessary for the market game to be honest appeared in the country. It was probably more correct to act otherwise: to create laws, courts, governance system etc first and to release prices gradually only after that. This is not critique but simply an explanation of what has happened. Despite this, I think that Russia has all chances to become a mature marketing economy in due time.
With regard to Russian companies, I would say that their governance culture has not grown mature like the entire Russian capitalism yet. Its differences from Western practices become especially noticeable when Russian companies receive foreign partners. Serious conflicts appear in such alliances very often. Among the examples are disputes of Gazprom with a consortium of Western companies headed by Shell on Sakhalin. Other examples are disputes of shareholders of VimpelCom – Norwegian Telenor and Russian Alfa Group – about their telecommunication assets in Ukraine.
Of course, imperfection of business environment and bad institutions hinder development of Russian companies too. For example, business suffers because of weakness of the judicial system seriously. This is not only a matter of weakness of the laws. If you are a small company and go to a court, legal proceedings take too much time and often require serious material expenses. There is this problem in Sweden too but in Russia it is much bigger because you have a huge country. Time and active participation of the state is necessary to streamline all this.
This is not a secret that many Russian companies including the big ones are often managed by the people who have not had a serious managerial experience and relevant education. Yes, I think that this is a problem in Russia, although it does exist in other countries too. To prevent this it is necessary to have the principle of meritocracy to be in effect in the public sector and in business when ascent of career ladder depends only on capabilities, skills and experience. Of course, it is possible to mention many examples when a person turns out to be in an executive's chair that has never had to be there objectively. Along with this, these people not only do not know anything normally but also do not let the really talented and initiative subordinates with the relevant education develop. We often hear stores from our students explaining how they cannot implement interesting ideas in practice very often because there is someone above them who does not need such initiatives.
Are these costs of excessively rapid development of the country too?
To a certain extent, yes. Very many people in Russia grew rich and acquired big importance in the last two decades. However, not all of them received this according to merits and often they got this only due to a chance, acquaintance etc. In a capitalist system where there is the principle of meritocracy in effect if you do not comply with this or that post you will be unable to occupy it.
Authorities of the country and managers of companies do not see this problem, do they?
I think that they see it now. Approximately a year ago, many owners of companies understood the extremely bad condition of their management. In conditions of growing markets they could live in clover and prospered but as soon as decline began and everything fell apart everything became clear. Situation in the state sector is not better. Quite recently, President Medvedev complained that the crisis demonstrated how low the level of governance in state companies was.
Not long before our meeting the President gathered prominent Russian businessmen in the Kremlin to have consultations with them as to what should be done to economy of the country. Do you have something to offer him?
Honestly speaking, I do not think that the President needs my advice. There are enough clever people with brilliant ideas in the economic section of the government. The only problem is that very few people know what they are going to do. What the Russian government really needs is bigger transparency.
In which sense?
Transparency in all meanings of this word. When the crisis began a year ago the government said: these are problems of America and they will not touch Russia. I think that this has not been very wise. For example, people in Sweden spoke about the crisis since its first day. As I remember, in Russia the government recognized the crisis for the first time approximately seven months after it really began.
Thus, if you wish to listen to my advice, here it is: openness and transparency. Russian officials need to speak more frankly not only about achievements but also about failures. They need to confess that they happen sometimes. It is possible to hear the government and not only the government speaking about its mistakes very rare in Russia. We requested participants of our first group of Russian students once to speak about their biggest failure in the career once.
Did they tell you everything honestly?
No. We heard silence in response.
Why?
Really, why? This is a very important question.
Do you think that this is a Russian trait?
Yes, I think that this is a Russian peculiarity to a significant extent. You do not open what is inside you. If you wish, this is one of the explanations of why is entire Russian economy non-transparent. I do not wish to say that everything is in order in the West in this aspect. There is exactly the same problem there too but I think that absence of transparency in Russia in the broadest sense of this word is a much bigger problem. During a crisis that creates a huge quantity of uncertainties in any area by itself, when nobody knows what will happen further, it aggravates the situation because absence of transparency is an uncertainty too. In these conditions nobody understands what is going on. There appears a huge quantity of rumors and fantasies and this prevents adequate evaluation of the situation, finding of correct solutions and efficient combating of consequences of the crisis in current circumstances.
How is it possible to correct this?
I think that mass media play a very important role in this sense. It is necessary to convey the thought of how importance is transparency to the broadest audience possible. It is necessary to recognize existence of problems. Everyone should know about them and should discuss them openly. Naturally, this does not mean that it is necessary to trumpet only this everywhere. I mean creation of an absolutely different atmosphere in the country when existence of problems is not hushed down and the broadest public participates in their discussion. I repeat that lack of transparency is a serious obstacle for development of the economy. It is possible to say with assurance that it is necessary to improve this situation in Russia radically.
Will development of business education in the Western style help making the Russian economy more competitive?
Yes, definitely. It is good that Russian authorities understand this and have supported the university education in general and business education in particular actively lately. First of all, I wish to mention the national project 'Education" started back during the presidency of Putin. This was a correct decision and it was done very well, unlike in many countries that tried to do something similar.
What do you think about the general level of education in Russia? Due to inertia it is common to think that it is fairly high but is this so in reality?
The answer to your question depends on the disciplines about which speak. For example, perfect education is provided in Russia in natural sciences like aviation, cosmonautics and many others still. With regard to the economic education, you are much stronger in the field of finance than in the field of business administration. This is understandable because this line of education appeared in Russia only in the middle of the 1990s.
Are you happy with the level of the students who study in your school? Do they differ, for instance, from your Swedish students?
I am very happy about them. Along with this, teaching in Moscow or in St. Petersburg is more difficult and requires a much bigger devotion than, for example, in Stockholm. However, here your efforts pay back over and over again and teaching of Russian students is much more interesting.
What is the reason?
Russian students have very big expectations related to their business education. They are much higher than, for example, in Sweden. They expect that an MBA certificate will help them to change their career radically. Incidentally, so it happened to majority of our graduates. Correspondingly, their requirements to the level of teaching are also much higher than in majority of other countries. Compliance with these ambitions is a very difficult but also a very interesting task for lecturers. Judging by my own experience, I can say that this requires a huge devotion but also brings a huge satisfaction because you feel that you help people to change their life. When alumni come to us and start telling excitedly about the way in which their life has changed after learning in the school you have a fantastic feeling. I have had nothing similar in Sweden because the tasks of MBA students are much more modest there in this sense and they are not so involved into the process and are not as demanding as in Russia.
There are also very many skillful professionals with big practical experience and skills among Russian students. Our school specializes in Executive MBA programs. The main requirement to the entrants is availability of higher education and not less than five years of experience of independent work in business because majority of our students has already been in the role of managers before.
This means that you make executives from existing executives? Why do these people who do not need an MBA certificate as an entrance ticket to business anymore come to you?
Today, majority of people do not perceive an MBA certificate in such way already. I think that business education in Russia has been perceived as a kind of whim and entertainment earlier: a person wished to have a certificate on the wall because it looked nice. It is possible that someone has such attitude to this now still.
It is very simple to understand this already at the stage of interview. We ask all entrants, "If you are here, do you wish to change something in yourself?" Those who finally fail to enter the course sit down in the stance of a boss and answer, "Nothing. Everything is OK." We tell such people, "It was very pleasant to get acquainted with you. Goodbye. You are not suitable for us." Those who become our students behave in a different way. They react in an absolutely different way, "Really, if I am here I have something wrong. Let us thing what can be done together."
Psychological correction is probably not the only goal for which they come to you?
Yes, our students know why they have come here very well. Of course, they wish to refill and systematize their knowledge. I think that it is also important for them to do certain overcoming in life, to meet people of their circle because relations and contacts obtained during education are very important and graduates often even start working together afterwards.
Along with this, students often receive more than they have expected from their education in the business school. There are those who have changed the course of their professional career, have changed the field of professional activities and even lifestyle among our alumni. We had cases when people who were content with everything in career and life came to use and they simply wished to spend the time well. However, in the process of education they understood that the company for which they were working was not for them because it did not comply with their aspirations, ambitions, competence etc. Thus, having studied in our school for two years people sometimes changed everything. I think that this is a good sign that confirms that something has happened inside of them. This is the main grain and the meaning of business education: this is not just refilling and streamlining of your knowledge but also changing of your outlook. You can consider your educational program successful only if you see that something has changed in the head of a person.
Advise something to those who consider entrance of a business school now. How it is possible to receive the maximum result from this education and for what does this person need to prepare himself?
The first thing that you need to do is not to make a mistake in choice of a school and MBA program that should correspond to your goals and life circumstances. Those who choose Stockholm School of Economics should be prepared to work much. They should understand the meaning of the expression "garbage in, garbage out" (the principle of programming in accordance with which wrong input data may lead to a wrong result, - BB). They need to understand that it is possible only to earn your certificate and not simply to receive or to buy it.
People who come here should also demonstrate their readiness, they should be ready to speak about their career, their company, their wishes and aspirations frankly in the classroom. Thus, if a student comes and starts saying suddenly, "I am a client and you should listen to me" what do you think I answer to him?
You are welcome?
No. I say, "Yes, we are oriented at our client but our clients cannot govern us." From the moment of your coming to the school you become a part of our brand and we are obliged to work together. If you show a certificate of Stockholm School of Economics to the employer but do not comply with a certain level this harms reputation of the school.
Sometimes we exclude the students who are not diligent enough, start playing tricks because we have to keep up our brand and standards. In this case you also become discontent and frustrated because you do not receive what you have expected.
Finally, you should understand that our business education does not end after two years that you spend in the business school but will continue for the rest of the life due to the contacts, ideas and friendly relations that you receive here.