Christian Graggaber always knew he wanted to start his own business in Russia, so he left his job at a South African forestry multinational for an MBA at Moscow business school Skolkovo with a clear goal.
Two years later, he has shifted from working with trees to the fashion industry, using the business school’s programme and contacts to launch his own venture.
“I read an article about Skolkovo in the Financial Times and it was offering a revolutionary model for an MBA through learning by doing. I studied business administration in Italy 10 years ago so I didn’t want to retrace my steps and study business theory again,” says Graggaber.
The Skolkovo Moscow School of Management offers an MBA programme that focuses on emerging markets and stresses practical business experience over management theory, with an emphasis on start-up projects in sectors ranging from high-tech to infrastructure and consumer goods.
In Russia and beyond, many MBAs retain an emphasis on theory, with much time spent on case studies of best management practice, but the reality of working in emerging markets such as Brazil, Russia, India and China can be a world away from the textbooks. Intransigent bureaucrats, corruption and persistent logistical headaches are a characteristic of most of the Bric markets, and managers working in them need a grasp of the realities on the ground.
Business schools grew in popularity after the fall of communism created a demand for a new understanding of management. There are now about 150 schools offering MBAs, most taught in Russian, although few are accredited by internationally recognised bodies. Skolkovo’s programme is among the best known, while St Petersburg’s Graduate School of Management offers well-regarded masters in management and executive EMBA programmes.
Skolkovo’s MBA programme pairs management theory with consulting projects on the ground, including a two-month strategic consulting project in Russia (often in the provinces), two months working with a Russian start-up, a two-month operational management project in India and another two-month project in China.
“We think that the MBA programme is very revolutionary and offers much more hands-on practical experience in emerging markets than most MBAs,” says Valeria Pavlyukovskaya, director of the school’s executive MBA programme, which includes a module in which participants start up their own business.
This year there are 200 EMBA students and 45 full-time MBAs. Both programmes emphasise entrepreneurial skills and practical experience, which is what drew Graggaber who is originally from Austria, to the school.
He is the chief executive and founder of the Russian operation of Juvalia & You, an online jewellery marketing company that relies on sales representatives, which the company calls “stylists”, to host parties and sell costume jewellery to their friends, in much the same way Avon or Mary Kay sell make-up.
The company started simultaneously in four countries – Russia, Germany, India and Brazil – after seeing a gap in the market for costume jewellery that had already been filled in the US. In Russia, Juvalia & You particularly targets the regions outside Moscow and St Petersburg where customers have far fewer retail options.
Graggaber says his Skolkovo MBA was the key to finding a business partner in Russia as well as understanding the unique challenges of the market.
“Skolkovo opens up a huge network for you, including their founding members who include oligarchs as well as chief executives of ecommerce start-ups and other businesses, and they offer you the office space and logistical support you need to get your venture off the ground,” he says.
Through the school, Graggaber met the chief executive of Russian online fashion commerce juggernaut KupiVIP, who co-founded the jewellery venture with him, helping to raise the initial financing to get going needed to get going as well as providing much needed know-how.
“Russia is a lot more bureaucratic than India or Brazil and you lose a lot more time in red tape than in other markets when founding a venture and dealing with logistics,” he says. “The distances involved are huge so that presents another complication.”
Shipments of goods can get stuck at customs so the company has to maintain a much larger stock in its central warehouse than branches in India or Brazil.
“We have to make sure that delays at customs don’t mean our stylists can’t make their sales,” he says.
Skolkovo’s combination of faculty including some drawn from schools such as Insead and MIT, as well as Russian oligarchs and top businessmen was a powerful draw for Ruslan Mukhametzyanov, chief executive of the Moscow United Electric Grid Company.
Mukhametzyanov co-founded the electricity provider with seven classmates as part of the start-up module of their EMBA. Half the group had worked in the energy sector and two were bankers.
“Our idea is to develop small independent power stations which solve the problem of connecting to electrical and heating infrastructure for consumers,” Mukhametzyanov says.
In Russia, consumers can wait months for new power connections in areas not served by the existing grid, a problem that slows down new business start-ups. Advice from Skolkovo president Andrey Rappoport, who was chief executive of Russia’s Federal Grid Company until 2009 and chairman of Alfa Bank during the 1990s, was instrumental in shaping their business plan.
“We changed our idea quite a lot after regular feedback from Andrey Rappoport,” Mukhametzyanov recalls.
However, not all Russian MBAs emphasise so heavily practical know-how as the route to overcoming the complexities of doing business in Russia. The Russian Foreign Trade Academy (VAVT), which was founded in the 1930s to train Soviet trade officials and now runs MBA courses, puts a greater stress on management theory.
“Our students have not studied business before so we pay more attention than many other schools to the preparation of students’ masters theses,” says Olga Andreeva, dean of the professional programmes faculty.
The school is linked to the Russian Ministry for Economic Development and designs programmes for its employees, which means that 30 per cent of MBA students at VAVT are government officials, while several of the faculty hold government jobs – Viktor Melnikov, the deputy chairman of Russia’s central bank, lectures at the school.
“At present our society has a critical attitude to civil servants but I hope [the make-up of our classes] helps students who work in the private sector with useful contacts,” says Andreeva, adding that bureaucrats and private sector employees studying for MBAs can learn a lot from each other in classes.