The Lauder Global Business Insight Report 2011 - Knowledge ...

Innograd to succeed, observers say. Proponents will be
hard-pressed to turn Innograd into a “Silicon Valley”
without smart governance and legal reforms. Skolkovo’s
main hurdle will be convincing businesses to invest
in building their intellectual capital and operations in
Russia while not merely outsourcing cheap labor to
Russia’s blue-collar class.
Innograd vs. silicon Valley
President Medvedev has said that Innograd will try to
replicate Silicon Valley’s success while paving its own
way to completion. Therefore, it is important to analyze
some of the factors that led to Silicon Valley’s success
and to determine whether Russia will be able to cultivate
the right environment for Innograd to be successful.
Silicon Valley became the main technology center of the
U.S. due primarily to funding from the U.S. Department
of Defense in combination with an influx of highly
trained graduates from the engineering departments
of reputable universities in the area, such as Stanford
and U.C. Berkeley. Interaction between Silicon Valley
and these graduates fostered a culture conducive to
technological progress. President Medvedev’s goal is to
create a similar environment in Skolkovo, promoting the
development of technology in Innograd and fostering
diversification of Russian business with the proposed
MBA program. Innograd has underpinnings very
similar to those of early Silicon Valley, with a high level
of government support and several Moscow universities
in close proximity to the technology center.
For Innograd to succeed, Russia will need motivated
entrepreneurs trained in emerging markets, with
specific knowledge and skills pertaining to the
Russian landscape. The Skolkovo-Moscow School of
Management is intended to provide precisely such
training. For graduates lacking interest in the volatile
oil and gas sectors, Innograd is looking to attract the
leaders who wish to remain in Russia to pioneer new
entrepreneurial technology-based businesses. Therefore,
the relationship between Innograd and the Skolkovo-
Moscow School of Management will mirror, in theory,
the existing relationship between Silicon Valley and its
local universities.
However, there is a key difference between traditional
business schools like Stanford and the Skolkovo-Moscow
10 Knowledge@wharton • Lauder Global Business Insight Report 2011
School of Management. The intent of the Skolkovo MBA
program was never to “reinvent the wheel” or imitate
the West by cloning the model of well-established
graduate business programs such as Wharton, Harvard
and Stanford. Rather, the program is intended to
design a Russian-branded institution from the ground
up. The result is a program in which students spend a
total of only four months on campus in Skolkovo. The
remainder of the 16-month program is spent working off
campus on consulting projects in both the private and
public sectors in India, China and the U.S.
Interestingly enough, the concept for the Skolkovo-
Moscow School of Management predates the concept
for Skolkovo’s Innograd by about eight years. The idea
for the MBA program originated when Shiv Khemka’s
family in India and Rajat Gupta, former managing
director at McKinsey, recognized the need for talented
local managers to run its Russian companies. Nand
Khemka, Shiv’s father and chairman of SUN Group,
approached Herman Gref, Russia’s minister for
economic development and trade, in 2001 to discuss
the possibility of starting a Russian business school.
Eventually, eight like-minded leaders of prominent
Russian companies and nine well-known oligarchs —
including Alexander Abramov, Roman Abramovich
and Ruben Vardanian — partnered with the Khemka
family and agreed to fund the venture privately. The
founders remain actively involved in the leadership of
the Skolkovo MBA program.
As optimistic and exciting as the project sounds, the
founders realize that developing a previously non-existent
business school in Russia is a risky endeavor. They have
already spent over half a billion U.S. dollars on the project.
The campus alone cost over US$250 million to build.
Designed to resemble a painting by the famous modernist
Russian painter Kazimir Malevich, it is purportedly
visible from outer space. However, if the MBA program
is unable to establish a decent reputation and garner
sufficient external support, it is likely to end up as another
expensive scrap heap like the countless other fully funded
but abandoned Soviet projects. Another unanswered
question is whether Skolkovo’s graduates will be able to
compete with the graduates of the already-established and
well-respected MBA programs around the world. If not,
the school will have trouble attracting potential students