MBAs aren’t dying, but they keep being buried: RANEPA Vice-Rector Sergey Myasoedov’s interview with Forbes Russia Education
Forbes Russia Education spoke with one of the founders of business education in Russia – RANEPA Vice-Rector, Director of IBS RANEPA, President of the Russian Association of Business Education (RABE), Doctor of Sociology, Professor Sergey Myasoedov. The expert spoke about the opening of first business schools in the Soviet Union, explained what is unique about Russian business education, how many world-class schools Russia has, and whether MBA programs are going to die giving way to shorter courses.
You were among the pioneers of Russian business education; please tell us how it all began. What challenges did you face?
In 1988, four associate professors at MGIMO – it was a turbulent time – spoke up at a communist party meeting. I was one of them; the Soviet Union was still alive and kicking, and we were all party members. We criticized the vice-rector because MGIMO had no business school, after the Council of Ministers of the USSR had made a decision to establish the first two business schools in the Soviet Union, one at the Foreign Trade Academy, the other at the Academy of National Economy. The vice-rector said: “What about you then? Go and create one.” So we registered a non-governmental not-for-profit business school, the first in its kind, as part of MGIMO.
This was how it began. This is how we grew. It was a turbulent time when we had to discover things by ourselves, because we didn’t know what marketing was, even Philip Kotler’s works had not been translated yet. Fortunately, we knew foreign languages.
There had been no business schools in the Soviet Union. Did you build the first business school based on Western experience, replicating some schools already existing in the United States, or was it a unique Russian product?
We did study some theories proposed by prominent Russian economists such as Gastev's approach to management (Alexey Gastev – Ed.), but for the most part, we read Burr (John Burr Williams – Ed.), Fayol (Henri Fayol – Ed.), foreign textbooks translated into Russian, although we at MGIMO could read the originals. It all came from the West. We had an understanding that if something comes from the West or the East, we assimilate it, adapt it, and that never-ending catching-up effort contributed to growth.
Each of us took a course at Harvard Business School – in this sense, I am a Harvard graduate – and a few years later, at Wharton School, University of Pennsylvania. Those were two-month executive-level summer programs, which just blew my mind.
Asian business schools are rapidly raising to top positions in global rankings. It seems that Asian business education is advancing fast. Is Russian business education, as it is now, closer to the Asian or to the European version? What is unique about it?
Russian business education is Eurasian in nature (the simplest approximation without lengthy research). If we take the governance model that relies on cultural value dimensions, Russia – like Kazakhstan, and largely like Turkey, with a slight deviation – is assessed somewhere between 40% and 60% on every dimension. We are in the middle. On the other hand, there are two metrics that are quite high in Russia, over 90%. One is the so-called uncertainty avoidance – fear of the unknown, ambiguity and unpredictability; the other is power distance, which is very high. But power distance does not refer to a political phenomenon; it isn’t about democracy or dictatorship. It is a subconscious phenomenon that refers to psychology. Would you feel more comfortable with a high or a low power distance at your company? With a tough leader at the top, regardless of whether they are a man or a woman, or you’d prefer them to be more democratic, all sweetness and light?
According to anonymous polls, most Russians are more comfortable with a high power distance. They like strong and decisive bosses. This is neither good nor bad. It just needs to be considered.
However, there is another interesting trend. The deeper people delve into doing business, especially in an open market, the more they embrace entrepreneurial psychology, the lower their avoidance of uncertainty; their comfort with a high power distance begins to decline as well. It’s interesting. This trend can be expected to continue.
How many business schools are there in Russia today?
More than a hundred. Just over 100 schools are members of the Russian Association of Business Education. I cannot say that all business schools have been RABE members for the past 30 years, but I can confidently assert that 99% of serious business schools and business centers are.
How many of these 100 plus business schools – which we know for sure aren’t bad – how many of them actually meet international standards?
About 15. The three leaders are IBS RANEPA, St. Petersburg School of Management and Skolkovo. How is their leadership confirmed? These three schools are international-level business schools.
A business school is acknowledged internationally if it has at least two of the three Triple Crown accreditations, and is included on at least one of the world's top business school rankings.
There are special rankings for business schools only. General university rankings cannot assess the quality of business schools because they have different organizational principles, different clientele, and a different accreditation system.
We can easily find two or three dozen business education accreditation systems on the internet, in Asia and in Europe, and elsewhere.
But there are the top three accreditations – they're called the Triple Crown. It is the most challenging and most prestigious to get accredited by AACSB International (Association to Advance Collegiate Schools of Business). The name is a little misleading because it also accredits private schools that are not associated with any universities. It is the oldest professional association headquartered in Tampa, US. It is over 100 years old. It only accredits the entire business school, not specific programs – MBA, undergraduate or graduate courses taken separately. The accreditation process takes from five to six years; it is called strategic accreditation, a totally new thing for Russia. When first AACSB evaluators arrive, you write a description of your business school for them including 15 parameters. They check everything using the so-called triangle method of cross-checks.
They meet with the school’s professors, administrators and students simultaneously in different rooms. They open the school’s report and ask – this says here you participate in five or six one or two-day interactive training sessions every year; have you had this many sessions this year? Give us the titles and the dates, please.
If the students have had no such sessions, even if they had been taught to say otherwise, they begin to flounder. At the same time, they ask the same question to the professors who say – we have no idea about any interactive sessions, we just give lectures. But the management’s report says such sessions are regular. It's an immediate failure. They cross-check and compare opinions before their interviewees can exchange.
They start visiting every six months. You say, our ambition is to reach this level on each of the 15 metrics in five years; you map your current level and the level you expect to reach. They track your progress. You are allowed to underperform on one or two parameters, but overall, vigorous growth needs to be ensured. When you have people coming over every semester, in five years, your school becomes fully transparent – nothing can be faked. And then suddenly you look back and realize that you have come a long way and your general approaches have changed; you have a different take on the subjects, the teaching methods, your teachers’ professional development, interaction with the students, career centers, etc.
The second accreditation is EFMD (European Foundation for Management Development), which is also institutional and very difficult to earn.
The third one is AMBA (Association of MBAs). Until recently, it only accredited MBA programs and MBA associations. Now they are embracing institutional accreditation, accreditation of entire schools.
If you have all three accreditations, you’re all golden, internationally. By tacit agreement between the accrediting associations, they never allow the number of business schools with three accreditations to rise significantly beyond a hundred.
EQUIS (European Quality Improvement System), EFMD and AACSB, even individually, are considered a pass to the top world business schools’ community. Each of them involves a rigorous quality review. A second one confirms it is a world-class school.
Can business schools be classified based on their focus?
It is possible, although I’m not sure it’s very productive or will help us in some way. If we take foreign analogues, Harvard Business School is believed to be the strongest in strategy, and Wharton, in finance. In the US, Kellogg is famous for marketing, and MIT, for innovation.
But this is all hypothetical. I studied at Harvard and Wharton. For me, the way organizational behavior, group dynamics, leadership, and the theory of motivation was taught at Wharton was much more effective than at Harvard Business School; Wharton's psychologists were the best. Maybe it was more about the professors; those were different teams.
How can we classify business schools in Russia? We have schools with a full tertiary cycle and we have schools that cater to established professionals.
Both IBS-Moscow and St. Petersburg Business School are full-cycle university-based business schools. We offer bachelor's and master's degree programs, we have a European one-year master's program, although, according to Russian laws, it is considered a continuing education program; in Europe, it is recognized as an applied master's program, a one-year course in a new profession. MBA, Executive MBA, DBA, Executive retraining programs. IBS-Moscow offers all of the options, and so does St. Petersburg, and probably 60-70% of Russian business schools.
Non-state business schools are less likely to offer all of the above. This is another classification criteria, if you like. What are the advantages of state or non-state business schools? State diplomas are usually more recognizable.
When adults go to a business school, whatever they tell you, they are looking for three things: new KSAs – knowledge, skills and abilities they need – and a framework to structure their experience.
The third part refers to networking and connections. In this sense, the more flexible, innovative and market-oriented the business school is, the greater its b2c share, all other things being equal.
Let me explain why I said b2c, not b2b. As a rule, a b2b program is commissioned by a company's management or HR for several participants, and these people’s interests do not always fully coincide with the management’s understanding of their interests.
It is a well-known fact that the middle class is only a narrow part of Russian society. But it is the exact category that business schools focus on. Can Russian business schools even survive with a b2c model, when so few people can afford such an expensive education?
You're right. To begin with, the middle class is a ‘stretchy’ concept. There are down-mid people, and mid-mid, and there are upper-mid, and down-rich people. They all can be customers of various business schools – inexpensive, medium-priced or top ones. The market is expanding.
Secondly, as regards the risk of falling short of consumers – I’m sorry, this country, according to statistics, has 250,000 US dollar millionaires. I'm not even talking about the oligarchs. If we add owners of property in big cities, in Moscow and the Moscow Region, we have 300,000. Do you think a business school can't find 20 people among the 300,000 young millionaires who often run small companies? If you have served them well, their middle management follows. Once the business owner or its top official gets an Executive MBA, three or four people from that company follow. True, the middle class is narrow; small, medium-sized and large companies account for 20% to 25% of the country's GDP, and this is not enough. We need at least twice as much. However, even that was unachievable 30-35 years ago. These people are backed by their companies. Therefore, 100 good business schools and business centers will always have enough customers in Russia, assuming those business schools learn to provide not only what they can, but also what businesses need to be able to not just survive, but also to grow and explore new markets.
Leading Russian business schools do not attract most new customers through PR and GR efforts. They capitalize on word-of-mouth marketing. I know from RABE, from talking with the top 15 business schools, that up to 80% of new enrollment comes through alumni. People bring in more people. It is a global trend, and it has spread to Russia now.
So, experienced and established professionals join business schools. What kind of qualities should business education foster?
It depends on the level of the program. For example, with adults, we need to restore their joie de vivre. Many of them have been racing for money for decades; now that they’re at the top, all their property problems resolved and their business up and running, they find they have lost friends and are struggling with family problems, and lack of understanding with their children. They need to learn to achieve balance between life and work.
Some of them seek answers to their questions among their own kind; others try to find a different social environment where they would unlock their interests – travelling, wine tourism, gastronomy tourism, visiting Altai or climbing the Elbrus. Now these people want to enjoy life, and it is the right thing to do.
Therefore, at a lower level, with young people working on their first university degree, we try to explain from the very beginning that life must be balanced, that success does not come from books alone, and that one needs to learn to be a good friend. The more friends you have, the better, because you will travel your life’s journey with them. Go join student clubs, do your best.
We also tell them: “Guys, start thinking about this country as your own. Start thinking about this planet as your own. They’re small and very vulnerable. Don’t wait for someone else to solve your problems for you.”
I'll tell you a short story so you’d understand my point better. It’s from a man we affectionately call “our grandpa” – Dr. Ichak Kalderon Adizes, a Yugoslav Jew who plays the accordion and sings superbly, runs an institute in California, and whose books have been translated into 40 languages.
Two people are walking along the ocean after a storm, and see many starfish dying in the sand, hundreds of thousands of them being killed by the sun. One of them keeps walking and talking about life and death, looking up at the bottomless sky, while the other one bends down every three or four steps and throws one starfish back into the sea. The first man says, what are you doing? There are tens of thousands, hundreds of thousands of them here. You can’t solve this problem. Only our Lord can help it, and the government should take care of this. Let's raise the question. But the other one replies, while you are thinking about raising the question, I have already saved 17 lives.
We tell our students, don't wait for anyone to do things for you. Don't put off what you can do yourself, do it today. If we all do a little good, the cycle of good in nature will go much faster.
Do you believe building a socially responsible business rather than just a profitable one will help solve the problem of billionaire loneliness?
Let's not confuse two different issues. Corporate social responsibility should finally deal with one problem I really dislike – we are perfectly willing to think about people en masse, but very often forget about specific people.
A socially responsible business is not the ultimate solution to the problem. But, according to Adizes, it can help specific people who desperately need help right now. The government can support such initiatives or help organize them, but this should be done by people.
As for the oligarchs and major businesses, they also have a very big problem, and it has to do with the transfer of their business and property. This problem is deep. I once heard a fascinating report at Wharton Business School about fathers tending to blow the fortune made by grandfathers, and sons, to revive it and take it to a new level.
Wharton's averaged research into the transfer of management abilities over a hundred years shows that it is a sinusoid. We are now witnessing the first generation of outstanding Russian businessmen. They have built their empires and started many unique enterprises. They are brilliant in their own way; they have done what no one else could do. It is important that what they have created does not crumble and vanish. What can they do to secure it, pass it on for the benefit of our country, for society? How can they channel part of it towards charity, become the new Tretyakovs?
This isn’t idle talk, for them or for our society. This is where research and collaboration are needed. This is also a challenge for business schools, and some of the business schools are thinking about such programs, and so are we.
There is a widespread opinion that MBAs are gradually dying, giving way to shorter-term programs. What is your forecast?
MBAs aren’t dying. They are being buried all the time, in foreign markets and in Russia as well. Note that out of 10 MBA critics, nine have never attended an MBA course. Psychologists call this self-actualization through aggression. As far as I know, globally, MBA programs show steady enrollment levels. They aren’t growing fast, but they aren’t declining either.
If we add one-year MBA programs, similar in content, but focused on younger groups, we will see exponential growth.
Speaking about Russian business education, specifically, where will it go from here? Will we have more world-class schools? What will happen to other schools, which are not so good now?
We will grow along with the general global trend of business education, because Russia’s leading business schools are already among the top international business schools. They have become a benchmark for many Russian schools of the second and third tiers. This is my first point.
Second, there are several important trends, and here is one of them. Russia and the world are now trying to figure out the new geopolitical environment and new ecosystem. The attitudes are changing. There was a time when Keynesian and conservative theories succeeded each other in economics; now the general approaches are changing – how the world should work, how business should be regulated, what the humankind’s general priorities are. This will be reflected in business education.
A business should do more than just make a profit. It must also work to make the world a little better; otherwise, our children and grandchildren will be left with nothing. This trend is very clear now.
One very important word for business schools is “balance.” New technologies are penetrating the economy fast – IT, Big Data, Artificial Intelligence, neuropsychology and others. All these things are at the intersection of various disciplines. As a result, business schools begin teaching more hard skills, disciplines based on technical knowledge. Soft skills have made room, but they have not gone anywhere.
Our job is to help students balance their thinking, to bring in new technologies and seamlessly integrate them into the current business school programs.
We need versatile teachers who are capable of integrated teaching, of conducting synthetic classes involving knowledge from several subjects, several management functions – marketing, finance and strategy. This way their students will solve cases and analyze situations where things are interconnected and intertwined, just like in real life.
Speaking of Russian business education, we have a super goal. We need to join forces with new business schools created at our outstanding technical universities, which are among the best in the world, and try to inspire our engineers and theorists, mathematicians and physicists, with their brilliant and creative minds, to shift towards commercial thinking.
We need professionals called product owners – people who are responsible for the product all the way from the concept to marketing the finished product, that is, for the entire chain, all 360 degrees. They are sometimes incorrectly referred to as product makers – people who can create a new product and also know how it needs to be packaged, who is likely to pay for it, and how much they’ll pay, and what needs to be done to actually sell it.
If now the new generation learns to work with this, they will make a huge breakthrough.