Where do the Partners Have a Button?

Here is the translation of Vedomosti article about “Knopka Zhizni” (“Life Button”), a project of SKOLKOVO MBA graduates. The original text in Russian can be found here

This January, Dmitry Yurchenko, the SKOLKOVO graduate, created a company for selling the fall sensors for the elderly people. Will the idea popular in the West work in Russia?

“During the final stage of the MBA programme at the Moscow School of Management SKOLKOVO we were to present the business projects we would like to implement.” – Yurchenko who precedently was heading the Derivative Operations’ department at Renaissance Capital says. – “I studied the markets of energy efficiency, IT and mobile medicine – estimating them in terms of competitiveness and capital intensity. I decided to focus on the medicine.”

Four months before graduation, when Dmitry was studying Entrepreneurship at the Massachusetts Institute of Technology (MIT), he involved Irina Linnik, his classmate, into the project – first as a marketing specialist and then as a partner. This January they have registered “A-clever” LLC. (According to the Register of Legal Entities Dmitry has 57% of charter capital and Irina has 43%.)

No-Doctor Business
The initial plan was to sell devices that would enable people do cardiograms, measure blood pressure and blood sugar level, remotely, without going to the doctor – and then to send the data through internet connection to their therapist or an insurance company. According to Yurchenko, such devices have been quite popular in the Western countries for the past 30 years. “Yet our doctors are too conservative and hard to convince that such things can be practical,” – he says. Consequently there had to be found a business model not involving the doctors. “We decided to focus on the services market for the elderly and disabled persons’ relatives.” Thus the “Knopka Zhizni” (the company’s brand) appeared – the service of calling for help in emergency situations. “We studied statistics and learned that in case of a downfall more than 50% of the elderly and disabled can not get up themselves and more than 80% - can not dial a telephone number”.

“Pressing the SOS-button, that also can be inbuilt into the cell phone, enables voice connectivity with the operator of the company’s call-center, and if the emergency is confirmed we contact relatives, neighbors or an ambulance,” – Irina says. – “According to the contract terms, like a satellite signaling company, we guarantee that we will accept the call and process it. Unfortunately we can not influence the work of ambulances, but we do increase the probability of receiving help.” The company doesn’t have their own ambulance team, now they can only use the municipal services, but they plan to start working with private ambulances in future. “That may become either a joint project with insurance companies that provide an emergency calling service or we will buy that service from them and offer it with the button to our clients.” – Irina explains.

Business information for emerging markets

Creating a strategy for capturing the business opportunities in emerging markets is at the top of the agenda for many companies. This article written by our library project manager Helen Edwards looks at what researchers and experts are writing about.

A recent influential book Winning in emerging markets: a road map for strategy and execution by Tarun Khanna and Krishna G. Palepu (Harvard Business School Press 2010) argues that the key characteristic of emerging market economies is institutional voids, the absence of the business systems, financial infrastructure, regulation and legislation, which facilitate business. The book introduces a five phase process for exploiting these voids as opportunities. This "portable" definition can be applied to any emerging market country. Harvard Business Publishing has also put together a collection of recent articles Thriving in emerging markets to be published in June 2011.

The Financial Times regularly publishes special reports on the BRIC countries, former CIS and the Middle East. Recent and about to be published reports include 20 May The New Trade Routes: India. This report shows how India, already known as the IT back office of the world, is challenging China on manufacturing, especially of telecomms and small cars. 23 May is Brazil China Trade 2011 speculating on the long term relationships within the BRICS, 27 May FT Wealth 2011 Emerging Markets Special and 16 June Russia and the World. The FT also has a dedicated blog beyondbrics: the FT's emerging market hub at which is this month celebrating its first birthday. This brings together news and views from over 40 correspondents in emerging markets around the world with graphical summaries of market data .

Mckinsey have just published Is your emerging market strategy local enough? recommending a strategy based on city clusters with case studies from China, India and Brazil.

Wharton School's famous blog Knowledge@Wharton has Indian, Spanish and Chinese editions, the last two also in local languages. Recent articles include microblogging in China, India's revised FDI guidelines and the potential for overheating in the economies of Latin America.

“SKOLKOVO as Everest” – an interview with Andrei Volkov, the business school’s Dean

Here is the translation of the “Business Excellence” Journal interview with Andrei Volkov, Dean of Moscow School of Management SKOLKOVO (the original text in Russian can be found here)
In his interview Andrei Volkov speaks about the business school’s distinctiveness, the history and main prospects of its development, its students and faculty.

There have been no world-renowned business schools in Russia. The Moscow School of Management SKOLKOVO was created as an attempt to become one. Though such understanding of the school’s misson and aims would be too simplified. In order to set the record straight we have met one of the founders of the school and its Dean – Dr. Andrei Volkov.

- Andrei, how did the idea of the school come up?
- The idea came up five years ago as a result of the three men's talk – Vladimir Mau, the Dean of the Academy of National Economy under the Government of the Russian Federation, Ruben Vardanian, the Chairman of the Board of Directors of the investment company “Troika Dialog”, now the SKOLKOVO President, and me. According to Ruben Vardanian, Russian business was in need of a new generation of entrepreneurs in order to make the next step in its development; the existing landscape was not satisfactory for some reason or another. Vladimir Mau, who manages several business schools (there is almost a dozen of them under the Academy of National Economy), thought of creating an ideal school, a school of a new type – historically, economically, philosophically and sociologically biased. It has appeared to him that broadening of cultural horizons of those who make decisions in business is crucial. As for me, for the past twenty years I have been working with innovations in education and first of all in efficient education for the modern person, their abillity to make decisions under comlicated and uncertain conditions.

So when we exchanged our opinions we were quick to come to the mutual understanding. Ruben Vardanian took over the management of the process and started to search for those who could become partners in creating the school.

- There are more than 150 business schools in Russia and more than 5000 in the world. What are unique features and advantages of SKOLKOVO?
- First of all, this school was founded by private business. People have invested their own money into the project which doesn’t promise quick profits. This needs a certain vision, certain mindset, and an ability to think 20 years ahead.

Secondly, we are oriented to the emerging markets. This is neither a good thing, nor a bad one. Russia belongs to the emerging economies even formally; our market is unusual and needs of new competences, according to the Western standards.

Thirdly, our work is based on a project approach. We build our education process not on cases and lectures, but on real projects, both Russian and international. I would say, this is a key unique feature of the SKOLKOVO business school. Here is an example. Several Russian and multinational corporations already invite our students to develop a strategy of launching a new product or service for them. Recently our students have worked on the project of bringing into operation new Sheremetyevo airport terminals, and this project was very successful. Sometimes we see unsuccessful projects as well and clients may not accept the result, but anyway this kind of work is a great educational and real-business experience at the same time.

Lee Kuan Yew: “Everyone should learn English, and their native language is to become the second one”

Here comes the translation of the Forbes article by Anton Saraykin (SKOLKOVO MBA Graduate) about the Singaporean first Prime-Minister. The original text in Russian is available here

“My tactics was always in underestimating my future advances and achieve more than I had promised.” Lee Kuan Yew

On May, 16, the 87-year old creator of the Singaporean Miracle and one of the most outstanding politicians of the century announced his resignation from the post of the Singaporean Minister-Mentor. After 30 years of ruling his country as a Prime-Minister and 7 years of being the mentor for the Singaporean government, now Lee resigns in order to “give way to the young.” In these years he managed to convert the poor fishermen village of Singapore into the prosperous state with practically no corruption and one of the most wealthy and educated population in the world.

In the recent years Lee Kuan Yew was a frequent guest in Russia. It was several years ago when Ruben Vardanian, the SKOLKOVO business school President, had proposed to the Minister-Mentor the membership in the Advisory Board of a yet unbuilt school, and since then Lee Kuan Yew willingly comes to Moscow to give lectures, handle the student cards and share his advice with the SKOLKOVO students.

“Do you speak Chinese?” – He asked me during one of such meetings. Singapore made a huge leap in its development in the 50-s because of Lee’s aggressive strive to make the English language the principal one for his country. Now, when most of the population communicates frrely in English with each other, he is pointing out the neccessity of learning Chinese and so he introduces it in the schools. That is partly why I have chosen to work at the ChineseOnline.ru start-up project – the opinion of the Minister-Mentor is worth listening to.

Not only business school students have something to learn from Lee Kuan Yew – many of the politicians and statesmen do as well. He had deep sympathy for Russia and believes in its future success; though he anticipates “some patience will be needed”.

Inspite of his elderly age, Lee Kuan Yew keeps amazingly clear and imformed on the news from all over the world and Russia particularly. And by all means his outstanding sense of humour still makes any audience like him at once. I do hope his health lets him come to Moscow again and again.

Hereafter I will quote some extract from one of his meetings with the SKOLKOVO students.

- Who was the person to assert the most important influence over you?

- I wanted to become a successful lawyer. In order to become a successful lawyer in the country ruled by the British and where all the judges and procurators were British I had to become as British as they were – I learned English perfectly, studied in the best universitied and law schools. Upon my return home I went to work for a British law firm, some time later I began to work with labour unions, then I won the elections (which my boss lost). So he adviced me to leave the partner post – and thus I found myself unemployed.

The President of the Russian Federation at the SKOLKOVO business school

Press Conference by the President of the Russian Federation Dmitry Medvedev was held yestarday at the Moscow School of Management SKOLKOVO.

The venue choice for the press conference was not arbitrary: the project of the SKOLKOVO business school where Dmitry Medvedev hols the post of the Chairman of the International Advisory Board keeps attracting the world’s attention for several years now. SKOLKOVO Campus was officially opened in September, 2010, during the solemn celebration of the School’s fourth anniversary. Located on a vast territory of 26 hectares in the Moscow region the Campus relects the school’s innovative and forward-looking character and possesses all the up-to-date opportunities for holding large-scale events.

Capital Controls and the Macroeconomic Determinants of Entrepreneurship in Emerging Markets - is a new research of SKOLKOVO

“Countries need the latitude to impose capital controls that meet their particular needs, and it is a relief to see that they are finally getting it after a long period of debilitating neoliberal ideology.”
Ilene Grabel and Ha-Joon Chang

A rising wave of financial protectionism threatens to derail the progress made in improving business entry in emerging markets. As the quote above shows, there is an accelerating trend in favor of capital controls that began with the collapse of the Icelandic economy in 2008. The use of controls in Iceland, explicitly supported by the International Monetary Fund as a way to stem capital flight, has given intellectual cover for policymakers, and emerging markets throughout the world have contemplated or implemented controls:

• In March 2009, Ukraine ordered banks to buy and sell its currency at a rate no weaker than a floor policymakers set each day (with the first day’s floor much higher than the prevailing market rate). This was done ostensibly to prevent the rapid depreciation of the currency from turning into a rout.
• Brazil, which saw its currency appreciate by 36% against the US Dollar in 2009, imposed a 2% tax in October 2009 on money entering the country exclusively for investing in equities and fixed income instruments, doubling the tax to 4% in October 2010.
• Also in late 2009, Taiwan banned foreigners from putting money into time deposits.
• Thailand, following in the footsteps of Chile in the 1990s, enacted a 30% unremunerated reserve requirement in December 2006 on all new inflows. Much as in Taiwan, a further 15% tax on foreigners holding Thai government and state-owned bonds enacted in October 2010 was called a “withholding tax.”

The purpose of the paper "All That’s Old is New Again: Capital Controls and the Macroeconomic Determinants of Entrepreneurship in Emerging Markets" is to fill this gap and examine capital controls in both a historical and recent context, ascertaining their possible effect on firms and entrepreneurship in emerging markets in coming years.

The New Geography of Capital Flows - is a new research of SKOLKOVO

In their new study researches from SKOLKOVO Institute for Emerging Market Studies (SIEMS) draw a general picture of recent trends in global capital flows. While detailed data is scarce, the analysis suggests that middle and low income countries have become more prominent in the global geography of capital flows in recent years. China, Russia, Malaysia, South Africa and Brazil are among the middle income countries and India and Nigeria are among the low income countries driving this recent phenomenon.

The findings suggest that the South has in the last decade emerged as a destination but also as a source of Merger&Acquisitions (M&A) flows. South-South deals have soared suggesting greater integration of the region. Although the share of southern deals directed to the North are getting smaller relatively to the share of southern deals directed to the South, the weighted average income per capita of southern countries in South-North deals are considerably lower than those in South-South deals suggesting that relatively poorer countries among the South are pushing the increase in the South-North integration. Overall the BRICs (Brazil, Russia, India, and China) and a reduced set of emerging countries, including Malaysia and South Africa, are behind this new phenomenon of the South as a source of foreign direct investments. The same set of countries plus Ukraine, Indonesia, and Mexico are the favourite destination among the M&A deals targeting the South.

Overall, the priority sector for firms in the South seems to be similar whether they reach a firm in the South or the North. Investments in materials, financial, and industrial sectors account for 45% to 50% of the number of deals. However, there are important differences when looking to the sectors that are not among the top in terms of the number of deals. Consumer staples and energy and power have a higher share among South-South than among South-North deals while the opposite happens in more advanced sectors such as high technology, healthcare, and media and communications. This suggests that South firms reach North companies to both access new markets and technology, and target South companies for raw materials and traditional markets.

An article by Pierre Casse: Team work. Is it always efficient?

Here is the translation of the article by Pierre Casse, the SKOLKOVO professor, published last week in his personal blog on the Vedomosti Newspaper. The original text in Russian is available here.

A team of top-managers of the French giant Alcatel-Alsthom, which was the leader of the telecom, transport and enegretics market at its time, had a long meeting in June 1992. It took them many hours of discussions and arguments to make a final decision that the mobile phones market has no future. At the very same time Mr. Jorma Ollila, the Nokia’s new CEO, had made an individual decision to dispose of the company’s traditional business and invest all the money into the mobile phone industry. We all know what happened next…

During the latest fifty years we have been constantly told how important team work is. It is shown as if this is the main factor to bring success and, they say, even the companies themselves wouldn’t exist without it. CV templates at the web pages of such multinational giats as Procter&Gamble, for instance, are built to sift out those applicants that are not suitable for team work.

Meanwhile even a casual analysis of the world’s practice can show that, first of all, team work itself (even the work in the best teams) doesn’t guarantee high results, and secondly, all the innovative and progressive ideas are the results of an individual work of some outstanding persons, not a team. With all of that we come to an inevitable conclusion that it’s high time we all consider some other types of a team work than that one we got used to.

Advice on business literature from Helen Edwards

At the height of May Holidays and such wonderful weather we offer you the fresh business literature overview from our Library Project Manager Helen Edwards.

1. Everywhere: comprehensive digital strategy for the social media era
Larry Weber
John Wiley, 2011
xi, 260 pages; ISBN: 9780470651704

Social enterprises are a new form of competitive advantage. This book addresses such questions as: What would your company look like if had more collaborative relationships with its customers and stakeholders? and How robust is your innovation pipeline? What percentage of your new product and service ideas are sourced externally? With chapters covering the development of social engagement skills, corporate culture issues, the use of Web 2.0 technologies in functional areas, the consumer journey, R&D, strategy development and talent recruitment and retention, this book outlines the essential steps to building a comprehensive digital business strategy.

2. Where good ideas come from: the natural history of innovation
Steven Johnson
Allen Lane, 2010
326 pages; ISBN: 9781846140518

This is a book about the space of innovation; environments that are suited to the creation, diffusion and adoption of good ideas. Steven Johnson identifies the seven patterns which encourage innovative thinking and explores their contexts from a cross disciplinary perspective. With stories as wide ranging as the inspiration behind incubators for low birth weight babies to the invention of air conditioning the book illustrates the patterns and throughout shows the value of connection between ideas.

3. Gamestorming: a playbook for innovators, rulebreakers, and changemakers
Dave Gray, Sunni Brown and James Macanufo
O'Reilly, 2010
xv11, 266 pages; ISBN: 9780596804176

Written by experts from visual thinking consultancies, this book first explains the value of games in business to encourage creative thinking, team building, problem solving and strategy development. The book includes rules and sketches for such games as Pain-Gain Map to understand motivations and decisions; Speedboat to identify what customers do not like about products; and The 5 Whys to find the root cause of a problem.

Football battles at SKOLKOVO

In the late April the SKOLKOVO Campus sports complex hosted the first football tournament among our students – the Executive MBA programme participants.

The idea of such a tournament was brough by the two students of the EMBA second intake – Mikhail Bratanov and Dmitry Orlov – who organized the whole event by themselves and invited also the first intake graduates, so as to have all the four EMBA groups take part in the competition.

The tournament included 4 games each of 15 minutes, with 5-minute brakes in between. Each game was a very tough and dramatic competition with a certain share of passion and staginess. The rousing cheer leaders’ shows support students’ teams in the brakes. So you wouldn’t be bored a minute

Our mini-championship started right at a play-off stage where we saw two games: EMBA-2 against EMBA-4, and EMBA-1 against EMBA-3. The teams who lost – EMBA-1 and EMBA-2 – then had a battle for the third place, and the victory went to the latest. It needs to be noted that the graduates’ team (EMBA-1) had to face tough conditions, as they had to play two games one right after another (the play-off game and the third place game) and had no chance to rest and restore between the two. By the way, the EMBA-2 team is considered to be very strong football players, as they had almost always won the friendly matches being often organized by the students after their classes during the programme modules.