Herman Gref: Don’t lie, don’t steal, don’t waste time

- Do you lend money to other people?

Sberbank does. Loans are an important element of our daily routine.

I don’t. I stopped lending to others a long time ago.

- Even to friends?

Especially to friends. I don’t lend money because I don’t want to spoil relations with them. In the past, I did lend my money to other people, and several times, I shared literally everything I could afford only to never get my money back. In the meantime, those people kept contacting me as if nothing had happened. Of course, that was unpleasant. Not that I regretted the money I’d lost very much. I rather felt upset at the thought that some people could behave in such a way that just does not add up with my notion of what is right and wrong. You either don’t make promises or do your utmost to keep your word. With time, I began to take a more tolerant approach to such things, but at the same time, I stopped lending money to people a long time ago. Let me put it this way, I regularly help people who’ve gotten in trouble, but I never expect them to give the money back.

- In other words, you give gifts.

No, I just don’t expect a return. That’s the point. I give and forget. It’s easier and more proper to have it this way.

If I have some doubts, I prefer to say no right away.

- Without explanations?

As you may have guessed, it’s rather hard for me to say I’m broke. Nobody will believe me anyway. So, let me be frank, I would like to know first off why I’m being asked for money. In our family, it is a custom: share what you have with others by God’s grace. We constantly donate to charity.

- How much?

I can tell you approximately how much, but it’s not for publishing…

We spend our own money to support educational projects. First, several of our partners and I support an educational center in Moscow’s Khoroshovo neighborhood, called Khoroschool. Also, there have been many one-time projects which we discuss within the family.

Incidentally, Sberbank takes care of more than 160 orphanages. I go there not only with my family, but with my colleagues, too. We pick a weekend and go there as a team, usually on Saturdays. Each time, we purchase something necessary and useful with our own money. Last time, we brought equipment for an outdoor sportsground. It was delivered as a do-it-yourself kit. We assembled it together with the kids.

In the previous years, we purchased books for libraries when somebody had told us there were not enough books for children. On another occasion, the automobile manufacturer GAZ agreed to sell us minibuses at a discount. We purchased 20 Gazelle vans and distributed them among orphanages. It was not a Sberbank-sponsored project but a private initiative.

- So each donor contributes as much as he or she deems necessary?

Honestly speaking, we’ve established a bottom threshold for Sberbank board members. If you can give more, you are welcome, but you cannot donate less than a certain amount.

We do not fund professional sports. It is a matter of principle. After prolonged debate, we selected three priorities. First, children, including education. Second – culture, and third, the elderly and the disabled, including veterans of military conflicts to whom government benefits do not apply. In our Memory of Generations fund, which Yekaterina Kruglova is in charge of, there are some wonderful guys. They search for disabled individuals who are unable to step out of their homes, because they cannot afford artificial limbs or were denied basic treatment. Some of such cases are truly heartbreaking…

Sberbank has created a charity fund called: “The Contribution to the Future”, whose mission is to support Russian education in light of the challenges of the 21^st century and to promote an inclusive environment. The fund helps introduce new technologies, knowhow and solutions for giving trainees knowledge, skills and abilities crucial to our volatile world.

We have more than 100 partner charity funds that we cooperate with on a permanent basis. They’ve been through our due diligence procedures. We could see that their administrative costs are low, reputation is impeccable and activity transparent, and that all the funds they get are spent properly.

In 2018, Sberbank arranged for an education tour by our remarkable musician and teacher Mikhail Kazinik. He visited orphanages in different regions of Russia. The kids were literally screaming with joy and later they started writing letters saying that just two hours in the company of Mikhail Kazinik had changed their life... We are very grateful for this initiative.

In the Khoroschool, we held a second Christmas Bazaar last December with the children’s parents and grandparents, both young and old taking part. Preparations lasted for a whole month. It was a great party and the general mood there was fantastic.

- How much money did you raise?

Nearly three and a half million rubles. A hefty sum, you will agree.

The school uses its own internal currency, called Khoroshka.

- What’s the exchange rate?

Fifty Russian rubles, if I’m not wrong.

- Falls short of the dollar.

But the rate of inflation against the ruble is zero.

The Khoroschool has its own parliament where the children decide on their own who deserves the transfer and how much. That’s what democracy is about! Sometimes the voting produces quite unusual decisions. The kids may choose recipients none of the adults would’ve ever decided to support. They invariably donate to animal protection funds. For instance, shelters for homeless dogs and cats. In 2018, part of the sum went to pay for hospital clowns. They are wonderful actors – volunteers, who twice a week visit children in hospices and hospitals and help patients to cope with grave illnesses. Haven’t you ever seen them in action? It’s a great show!

- We’ll get back to education projects a little bit later. Right now, I would like to finish up the opening subject of our interview. We already know that you don’t lend money to other people. Have you ever borrowed money?

I cannot tell you right away. Possibly yes, in my younger years…

- For instance, to buy your first car?

I earned the money for my first car myself, when I was a law student at the Omsk University. Each summer, I went with a team of students to work as a builder in the north of the Tyumen Region, where I earned a pretty penny.

- What did you do?

Anything that came our way. First we built cowsheds, and then semi-detached houses. To tell you the truth, none of us was competent enough. There was a team of Chechen guest workers next door. Quite often we went to see what the guys were doing and then tried to follow suit. We were not always very successful. I recall that on one occasion we went to the place where we’d worked the previous summer. A local family – a young female school teacher and a doctor for whom we’d built a house - complained to us that winter winds had torn off the roof from the outhouse nearby.

We went to see what was wrong only to find out we’d failed to fix the sheet of roofing. What a shame! Naturally, we apologized and put everything in order.

This amusing incident was an exception, of course. By and large, we worked well and were paid decently. Plastering the ceilings and walls was a great problem. On the face of it, the job looks easy, but in reality, it was exhausting. Some of our fellows didn’t stop complaining. During the first season, it was terrible waste of time and effort. Then we got word that there was a team of female students from the University’s departments of psychology and philology in a neighboring district. We asked them to lend a helping hand. They did great stucco and plastering work, finishing the job in just two days. Had we worked on it, we would have surely needed no less than two weeks!

The building team usually hired only those who studied well. We took our exams ahead of time and left for the whole summer. Therefore, I didn’t have to borrow from anybody to buy a car.

- Do you remember your first car?

The first front-wheel drive model from AutoVAZ, a Lada Samara coupe. In my younger years, I was very fond of motor racing. Also, I worked as a night watchman at a garage part-time. During my night shifts, I learned how to disassemble and assemble cars. So, within a short period, I got to know My Lada’s engine like the back of my hand.

- When did you get your driver’s license?

Very early, when I turned 16. These days I seldom get behind the wheel. I haven’t got the urge. I must’ve calmed down, I think. Such things do happen in life quite often. Tastes, hobbies and interests change.

For instance, there was a time when I loved firearms. I was an enthusiastic hunter. Now that feeling is completely gone. I can no longer imagine myself shooting a wild animal. I still may go hunting game birds once in a while, but I can no longer take aim at a big animal.

- Nevertheless, you did manage to collect Big Five game animals, including a lion, an elephant and a rhinoceros, didn’t you?

No. I didn’t even bother striving for that goal. You know, when I was still fond of hunting, everything was slightly different. Or greatly different, I should say. These days it is no longer a duel between a human being and a strong, cunning beast, but in fact live-target practice.

My first hunting experience was back in my childhood. I recall the day when my dad took me on a hunting trip to the woods after I finished my third year at school. He promised: “I’ll buy you a gun, if you finish the seventh grade with only excellent marks.” Can you imagine that? That was a real goal for a ten-year boy to strive for. I studied very hard just so I could get a real gun!

My father was an avid hunter and his hobby became mine. Let me say this once again: hunting then was for real. You took a simple gun, put skis on and went out into the forest on your own. Nowadays, everything is at your disposal - hunting towers, sniper rifles with a 20X zoom lens and forest rangers who drive the poor beast into the line of fire… I find no pleasure in this anymore.

- When did you give up your hobby?

Fifteen years ago or so. Since then I’ve always gone hunting armed only with my photo camera. Although I’ve repeatedly found myself in the company of hunters since. I even flew to Africa. After each trip, I bring home thousands of snapshots, then select the best ones and have an album printed in several copies for each member of the hunting party. I prefer these hunting trophies a whole lot more.

- Motivation is important for each human being, isn’t it?

I have to be interested. I can’t do anything mechanically. I definitely need some sort of challenge, some goal to strive for.

- Does this explain why you may say or do something strange or extravagant now and then? Like show up at a Sberbank office wearing a GERontologic test suit (GERT) simulating visual, hearing and movement impairment or criticize mathematical schools as an irrelevant legacy of the past…

I merely put the spotlight on a certain problem this way. I never try to stun the public at large on purpose, but I believe that sometimes it is important for everyone to remember the somber sides of life.

- Not all of your ideas and creative concepts have earned public support. Does this you upset you?

To tell you the truth, I’m not upset about the lack of feedback at all. It is important for me to share my ideas and to say what I think. If this sparks some kind of discussion, it will be great. Nobody is obliged to agree with me. I’m not trying to be liked by the general population or win public acclaim. That’s a politician’s job.

I often foresee a reaction to some statement or proposal of mine. Any point of view inevitably affects a certain number of people. Especially when global processes are at stake. A conflict of interest is inevitable, but this is normal. The conservative part of society is against any change, which is life’s credo. Those who do not understand what it is all about join those who disagree out of sheer solidarity. 

I can see nothing tragic in the very instance of a dispute as such, and I’m skeptical about any forecasts concerning the future. It is far more important to have a civilized and professional discussion. Time will put everything in its place.

- A while ago, you said that Sberbank was introducing a radical truth concept. This news drew a mixed response.

This takes us back to what I’ve just said. Will you tell me please if there is anything that does not draw a mixed response? Even a weather forecast begins to be instantly questioned. If you say that honey is tasty and useful, someone will begin to argue at once that honey is harmful, because it causes allergies and can lead to diabetes. Moreover, in certain situations both parties will be quite right.
We are not trying to brainwash anybody or convert others to our own faith. The radical truth concept is not a hypocritical call for total honesty. It is becoming part of our culture, but we are not urging anybody to follow it. It’s voluntary.

Let me say again that it is not a way of preventing somebody from lying or cheating. It is not a matter of moralizing. It’s corporate philosophy. Each Sberbank employee is expected to live up to certain criteria and abide by certain rules. No employee has the right to touch up, gloss over, or let alone conceal information related to one’s current status or compliance with office duties. We do not require total compliance outside the boundaries of the business process. It’s an unreal task and it is beyond the range of our powers. It’s a code of conduct within the company. The authenticity of information coming from our employees is crucial to the quality of the services we provide and everything that is connected with the bank’s operation.

- You’ve said you punish employees for any attempt to hide a mistake?

It cannot be called punishment. Four years ago, we adopted an internal corporate policy of risk management, which states in very clear terms that concealing important information and facts is an unconditional reason for dismissal. In fact, the viability of the organization is at stake.
Given the scope of our business, mistakes are frequent and sometimes may turn out to be very severe.

- What ranks of personnel had to be fired in accordance with this code?

Fortunately, such cases were few, but among those we had to say goodbye to, were the chiefs of some units and divisions. There can be no exceptions or leniencies – the rules are the same for all Sberbank staff. Should an employee step over a certain red line, the rule must be applied automatically. If no pre-meditated fraud was involved, we try to make an amicable deal, to dismiss people by mutual consent without spoiling the leaver’s CV. Life has to go on. But when we come across a deliberate violation of our principles, we take extremely harsh action.

Just recently, Sberbank launched a new platform for rating the employees based on assessment and performance management technologies. This is a remarkable platform and it has demonstrated good results. You are unlikely to see anything like it elsewhere. We see information about each individual employee and on the basis of this data we assign quarterly marks on a 5+ scale, which incorporates current activity and compliance with the principles of corporate culture.

- Are you rated, too?

No, this program does not apply to me.

- Nothing is spotless, not even the sun?

The reason is different. Sberbank’s president is not included in the performance management system by virtue of his office. I’m rated by the Supervisory Board every year. And once in four years the shareholders decide, if I deserve their trust to run the company.

- What is the 5+ system like? Is it hard to get top ratings?

It’s not easy at all. There are different levels – A, B, C, D, and E. Say, the one with the C rating knows that performance matches the required parameters and the business plan has been fulfilled. The B grade is awarded to those who surpassed expectations. For getting an A mark you have to perform an act of heroism.
Staying in the A group for two quarters in a row is practically impossible.

- Are there any special bonuses for each category?

There are special coefficients for calculating bonuses. For instance, they range from 0.9 to 1.1 for the C level, 1.1 to 1.5 for the B level, and 1.5 and higher for an A.

- Anyone who gets a D grade is at risk, right?

Yes, this performance rate is below expectations. If an employee gets a D grade for six months in a row, this is grounds for dismissal.

- How many people are employed within the Sberbank system?

About 310,000, if our ecosystem is to be included. In the meantime, the number of employees performing simple operations is shrinking by 10,000-15,000 a year, while the contingent doing skilled work is growing. This is a multi-vectored process. In real terms, the staff is being downsized, while the quality of employees is improving and the process of automating all operations carries on non-stop.

- And how far can it go?

I recall that when we launched Sberbank’s Credit Factory – an automated lending system – we processed 6,000 to 9,000 applications a day. About 2,500 underwriters were required to do the job. Seven or eight years ago, this figure looked like a great success.

Currently, there are about 1,500 retail risks assessment specialists left. It is important to stress that up to 80% of applications are considered automatically: a robot makes a decision on the application on its own, without any human involvement. On peak days, the system handles up to 130,000 loan requests. We had a situation like this last November.

Artificial intelligence today is the main technology, it is the new power source of the digital era the world entered into in 2015. Artificial intelligence has not only eased access to information, and improved its quality and accelerated processing, but also allowed for automating the process of decision-making.

We’ve launched a vast program for retraining underwriters. They are highly skilled people, many of whom have become data scientists. An overwhelming majority of them preferred to stay in the company, which is very pleasant, of course. Over a relatively short period, the number of Sberbank’s data scientists doubled.

- Not too long ago, they were called IT people, right?

Not quite. It is not enough to have good software and be a good programmer yourself. You are expected to have a good command of data processing methods and understand your organization’s business requirements.

- Where does the instruction process take place?

Firstly, there is Sberbank’s Corporate University. Every year, we send up to 500 managers for instruction under a joint program with INSEAD, whose MBA degree is considered one of the best in Europe. In addition, another 600 are dispatched to the London Business School.
And so on and so forth. We have many joint programs. Naming them all will take too much time.

- And do you take training courses yourself?

Naturally! Currently, I’m attending a course on cloud services. I hope to be through with it in February. Then I will take another one. David Rafalovsky, the chief of Sberbank’s bloc called Technologies is working on a new course our top managers will have to take in 2019.
Also, there is the DDI platform. We would like to send all of our managers through it.

- Will you please explain to those who have been living under a rock what this is about?

The DDI is a simulator of real situations. During the day, the trainees are tested for their ability to work under pressure and display multi-tasking qualities, which is, doing several jobs simultaneously.
The machine monitors the process and in the end it produces a verdict as to what extent a person has coped with the tasks set out, and if the decisions made were correct and taken fast enough within tight deadlines. The participants also have to answer financial and managerial questions. 
In the end, we get a full analysis of a trainee’s psychological profile and managerial potential.

- Are you going to take the tests yourself?

Certainly. Usually, it all begins with me. I test everything myself before others follow.

- Does your rating meet expectations?

It depends whose expectations you have in mind. As for my expectations, it doesn’t. I always want more…
Seriously speaking, it is important to remember that the requirements for managers of different levels vary. For instance, in order to get an international master’s degree one has to sweat it out. In any case, nobody is able to be the best always and in all respects. You may surpass everybody else in some things but in others you will surely lack abilities. For this reason, a team of very different people is put together to minimize mistakes made in decision-making.

- What are your strengths and what is your Achilles heel?

Boasting will be boring and demonstrating weaknesses in public, a little bit strange.

- It’s self-criticism we are talking about…

I’m working hard to build up my technological skills. I take into account the recommendations the machine made after testing and advice from my colleagues. I keep a special reminder on my work desk in front of my face all the time.

- Can we take a look at it?

Yes, please. I can even read it out for you.

“Time management. Begin and end business meetings on time.
Delegate powers when there are results.
Leadership styles.
Use mentorship on a wider scale. Quickly part with managers who fail to yield results.
Practice gratitude.”

Those were the tasks for last year. I’ve already identified different development guidelines for 2019.

- On your desk, I can see not only business papers, but a pile of books. What book are you reading at the moment?

Of those I read just recently, I liked John Whitmore’s Coaching for Performance very much. Andrei Kurpatov just recently presented me with his World War IV. I read it with great interest during the New Year holidays. Normally, I read three-four books a month. I just don’t have time for more, although I’ve mastered speed reading. I even took a special course. Honestly, my literary tastes are not very exquisite. I like the process of reading as such. This may explain why I sometimes waste time on cheap books. By the way, this is a common problem for all people struggling with a complex of having an incomplete education.

- That’s a not very flattering remark about yourself, I should say.

I am just following your advice to be self-critical… It is true that there are a lot of gaps in my education and I’m doing my best to fill them. The deeper I delve into any problem, though, the more it seems to me that I begin to understand it even less…
Without trying to show off, I can confess that throughout my life I’ve struggled with the hang-up of being a person who has an incomplete education.

- Incidentally, why did you give up the intention to defend a dissertation under Professor Anatoly Sobchak’s guidance at Leningrad State University?

I was too busy. There were many other duties I had to attend to, even though I’d completed the paper. Sobchak was not my thesis adviser, though…
In 1991, I responded to Sobchak’s call and embarked on a civil service career. By the time I had finished my post-graduate course I had already occupied the office of deputy chief of a district administration in St. Petersburg. I thought that in such a capacity, it would not be very appropriate for me to present my thesis.

- Have you ever resumed work on that paper?

What for? Everything should be done in due time. In 2011, I did obtain a PhD in economics, but the subject of my work was very different.

- What benefits did you derive from studying law?

It’s a very strict science. It matches my mindset very well. However, it turned out that it was not very good for me as a profession, so I preferred to start teaching, but only for short while.

- You’ve been in banking for 11 years now.

Experience has shown that I’m certainly not a civil servant, let alone a politician. As for business, I feel quite at home in this field. I like it more than everything else. There is no moral overload that I experienced due to low productivity which I’d felt while doing a civil service job. The civil service is rather a process, and not a result. Any civil service decisions require tremendous efforts to exert. Although as I look back, I can say that, we had managed to achieve a lot. Nevertheless, it was the most hard-earned experience for me.

- The annual joint trips you take with other Sberbank top managers to Silicon Valley, are they efforts to plug the educational gaps you’ve mentioned?

We go there not so much to fill the educational gaps, but rather to try to understand modern trends. Obviously, we’ve fallen behind the West and something has to be done about that.

- Do you believe that the gap is widening?

I’d like to say something more optimistic in reply, but I can’t. Regrettably, it is growing, although the gaps are sometimes hard to gauge objectively.

- The sanctions do play a certain role, I suppose?

Alongside other factors, yes. The way I see it, the main problem is in the current model of management and administration. I returned from one trip to America with the understanding that in the world today, there is no competition of services, goods or products, instead, competition exists in management models. This is the clue to everything. So here, we come to a fork in the road: it’s either innovative development, or…Our worst problem is that we’ve historically lacked an effective management model.

- How can this be possible?

We’re alive, aren’t we? “Russia is governed by Almighty God himself, otherwise it is impossible to understand what has enabled this state to survive to this day,” Russian Field Marshal-General of German descent, Burkhard Christoph von Moennich, is rumored to have said once. I believe, this remark hits the nail on the head…

Professor Alexander Prokhorov, of the Yaroslavl University, has a good book called Russian Management Style. It explains everything very well and clearly. The author’s main idea is this: the Russian model is extremely ineffective but productive. Prokhorov cites quite a few historical examples to back up this hypothesis. On many occasions, immense resources, including millions of human lives, were sacrificed for the sake of some goal. The result was achieved at the cost of colossal losses.

By a long shot, not every end justifies the means. In fact, management is a skill to correctly pinpoint a goal and then select an optimal way of achieving it. When it comes to moderate measures, it is possible to follow the principle of “we wanted only the best, but you know the rest.” The mistake will be not very painful, but in global affairs, there can be no guide to success other than building an effective management system.

Frequently, throughout our history some fragments or parts of foreign models were borrowed and transplanted to our own soil only to be followed by sudden declarations that this is no good for us, because it does not match our national idea or mindset – instead of recognizing our mistakes and correcting them. After that, we may proclaim some other goals and embark on inventing something strange and absurd. I’ve already said that we in Russia keep trying to invent some third way only because we’ve not tried to walk along the paths set out before us. If only we’d explored at least one of them properly, we would’ve never tried to invent the wheel anew. The laws of management, just as the laws of physics, are universal.

- When you visit the West and see distinctions between the management models, do you find this encouraging or discouraging?

If such things were able to knock me out of the saddle and throw me off balance, I would’ve been unable do my job. It’s as simple as that. However, it’s the other way round. I understand that Russia has enormous potential to develop and enhance productivity. Any shortcoming is good news, because it demonstrates the potential for growth.
You know, our lag in some technologies is not the main problem. It is far more regrettable that we are still unable to generate the human capital of the quality and at the pace our time requires. This imbalance is far more significant and far harder to overcome. Everything else can be solved. These are not problems but rather opportunities.

Human capital cannot be reformatted overnight. This is where we’ve developed a wide gap. An abyss lies between the Russian and Western education systems. Our school education is still slightly behind the most advanced nations, though the lag is not very great. However, if nothing is done about it, we will find ourselves left way behind in no time. Let me reiterate that the situation can still be corrected. As far as college and university training goes, the state of affairs is much worse, I suspect.

- And how about the objective laid out by the president to get on the list of the world’s Top 100 universities?

The 5-100 project, extended over seven years, is set to be completed in May 2020. The original expectation was that five Russian institutions of higher learning would enter the top list.  For now, the situation looks like this: in 2018 only the Lomonosov Moscow State University managed to get into the QS World University Rankings, taking the 95th spot. The United States, Britain, Switzerland, Canada, Japan, Korea, China, Singapore and Australia are represented far wider. The deadline for the objective has almost run out, yet the goal has not been achieved. Meanwhile, Novosibirsk State University is 250th, and all the others are way below. Bauman University comes in at 291st, Tomsk University at 323rd, and MGIMO University and Moscow Engineering Physics Institute share 373rd place.

I believe that it is a disgrace to have such a level of higher education in a country with the richest traditions of training scientific and research personnel. It is a strategic lag, which requires fundamental reorganization.

- Do you know how to implement it?

There is nothing tricky about this business, but again we run into the system of management and administration, including those of universities. I have a seat on the council for enhancing the competitiveness of Russia’s leading universities, so I have first-hand knowledge of what they are like. In May 2013, 54 institutions of higher learning applied for the 5-100 program. Thirty-six of them were allowed to participate. Half of the attestation council are foreigners. It was recommended to make a presentation in a foreign language. Only three universities heeded the advice. Only three!

This is not exactly what one should expect from the heads of leading universities, scientists of the 21st century, and at a time when practically all scientific literature is in English.

Just recently, we published a book called Third Generation Universities. Instruction in English is one of the characteristic features of such an educational establishment. Most scientific articles and works worldwide are written and published in English. The Germans, Chinese, Spanish and French do so. The inability to use English is tantamount to conceding that you lack modern knowledge, that you have no access to it.

I posed the same question to our higher educational community: “You’ve decided to get into the list of the world’s Top 100 universities. You’ve been in charge of your university for many years. What prevented you from setting such a goal much earlier and trying to achieve it? Over a period of 15 years, your university has risen from 460th place to 459th. What miracle can make it leap a hundred places up in just one year?” In response, I always heard the same wonderful answer: “There was no task of getting into the Top 100.” How do you like that?
And when I asked for an explanation as to what would enable such a leap, I always got answers that I’d prefer to remain quiet about. I’m not trying to insult anyone, but this is not the way of handling fundamental tasks. Nothing can be achieved in this fashion.

- When you established Sberbank’s Corporate University, was it one of your intentions to set an example for others?

We did not pursue such a goal, but in the end, we created a fine educational establishment, which occupies top spots on the list of universities in its class. It is not in the Top 100, but in the Top 3 in the world. At least since 2014, when it was founded, it has never left the Top 5.

- What about the Khoroschool?

It is a private charity project. Sberbank has nothing to do with it. Eight partners and yours truly provided all the investment. We are trying to build an ideal school of the future with platform education based on an individualized track and offering a certain combination of skills. Not only knowledge, but also skills. Alongside hard skills, there should be also digital skills, which are not taught in ordinary schools. In the meantime, a command of digital technologies is a crucial need.
Also, there should be soft skills, meta-disciplinary abilities. Possibly, this is not the best name of all. Young kids and possibly some adults may become curious as to what it really means. In fact, the focus is on communication abilities, the skill to work as a team, creativity, punctuality, self-control, tolerance to criticism and so on and so forth.
In Russia, there are no standards of teaching or rating such skills. There are no teachers competent enough. An education platform has to be created from scratch and all parameters invented anew. The task has not been resolved yet and we are in the process.

- Do your own daughters go to Khoroschool?

Of course.

- How are they doing there?

Well enough. They’re doing all right.

- Do you reprimand them for getting bad marks?

We do not have any. Neither bad nor good ones. I believe that performance marks are a relic of the past, a disincentive that discourages children and makes them feel scared. Then some big guys like you come to work in the bank and we have to spend several years deprogramming them to make them get rid of the habit of stealing solutions from their colleagues and trying to produce a better impression … And so on and so forth. People should understand that in reality it is they, not us, who need the marks. They are interested in impartial judgement more than anybody else. If you get sick, you wouldn’t even think of giving the doctor your healthy neighbor’s blood tests.
To change the traditional grading system there must be a new digitalized platform and a new school culture. Doing that on a national scale is a daunting task.

- Wait, wait, but haven’t you just told us that those Sberbank employees who get into the D ranking as a result of the 5+ tests for two quarters of a year in a row, get the sack? Now it turns out that you retrain your personnel and put their minds on the right track…

These are entirely different things. What you’ve just mentioned is personal performance, the method of grading someone’s performance efficiency, the individual’s achievement of a certain result. We hire a certain employee for coping with a certain task laid out for him. It is not the knowledge that we rate, but the ability to carry out any project. When you come to work, you are expected to perform your duties with clockwork precision. It cannot be otherwise. You cannot be allowed to stage experiments on living people, thus learning by experience. Those who fail, get a lower grade.

The same is true of corporate culture. Self-control is one of its parameters. Those who afford to take liberties that are regarded as impermissible risk their jobs. But this concerns only execution and behavior.
Periodic assessments help you ferret out weak spots and recognize the impediments that hold you back from moving up the career ladder. It is a reflection of your professional condition. We map out charts and show where an employee is stronger and weaker. In some respects, it may not be critical, while for others, it creates great problems for the employer. We say: “Dear Colleague. You have some problems with performance. You should improve this, this and this. We’ve created a custom-tailored individual development plan and select two specific guidelines for this year.” More than two wouldn’t make any sense, since the individual will be unable to cope with it physically. Then a coach is appointed to help with implementing the development plan. There is a virtual school and classes at Sberbank’s Corporate University. The widest choice is available. Or you can go to the Massachusetts Institute of Technology, which is in the Top 100 by the way.

And in 12 months’ time we will see if you’ve made any progress.

In the meantime, the traditional school, whose traditions have been regrettably inherited by the Russian school, was based on different principles. Students felt scared about getting a bad grade. Nobody cared how you earned a good one, whether you used cheat sheets or tips from classmates. The end effect was that many people grew up with a distorted mentality. They didn’t care that much about getting the knack of doing things but rather conforming to certain expectations. To look like, and not be what they want in reality.
I recall the mood in the room where we held the first tests here, at Sberbank. All managers gathered groups of experts around them and the testing began to look like the brainstorming What? Where, When? show on TV. In the end, the happy boss being tested produced the correct answer and was awarded the highest mark possible. But that’s absolutely irrelevant! Old-time habits take years to reform.
Such fears are inherited from school. Try to recall the moment the teacher was selecting the one who would go to the blackboard to do a math problem. “The next one I’d like to see at the blackboard is …” And the whole class would turn dead-silent waiting for the name of the unlucky one. Once the victim was chosen, everybody else breathed a sigh of relief.
Terrible! Complexes like that took shape in one’s childhood are the worst ones and they are most difficult to get rid of.

- What can you offer in exchange?

The education platform we are creating makes it possible to assess the student’s progress at any given moment in time. It is no longer necessary to call him up to the blackboard or make him take a test at the end of the instruction period.

I believe exams should be done away with, together with the fears that the process of instruction involves. This method of grading is outdated and irrelevant. The person knows the stakes and is ready to go to great lengths for the sake of attaining the ultimate goal. For passing the United State Exam, it does not matter what the student had been doing for the past year or two. The examinee’s condition at H-hour is all that matters. You buck up, you pass the test and then may take it easy and do nothing. As a matter of fact, that’s the way the system had been functioning all the time. It was enough to rise higher than usual several times, to pass the graduation exams and then entrance exams at the university, to go through the ordeal of examination sessions twice a year, get a graduation certificate at the end of five years and then drift along the current.

- But this road leads nowhere.

We are building our learning process on fundamentally new principles. All students in the same class are absolutely different. I believe that those who have two or more children will agree at once that each one critically needs individual education trajectories.

The student’s progress is in focus all the way. There is no chance of starting the next subject until the previous one has been chewed, swallowed and digested. If a trainee has failed to understand or overlooked something, more explanations will follow. No black holes or blank spots in the curriculum are allowed.

The question is how to let the students acquire meta-disciplinary skills at a time when today’s curriculum is overloaded and kids do not have a minute to spare. It is essential to ensure the whole learning process entails the acquisition of soft skills. A situation where school and daily life exist separately and never overlap must be prevented by all means. Instruction must rely on the basis of specific projects. First, children are to be enticed into a common project. Then they will be eager to obtain the knowledge that will let them implement the undertaking. Children can and want to play along. Our task is to give them such an opportunity.

Knowledge can be acquired not just by reading books, but also by watching videos and listening to audio recordings. Incidentally, it is school students, and not adults, who generate the most successful content. They may not know yet the term “customer journey,” they may be unaware of marketing technologies, but nevertheless their intuition drives them to the most effective strategy of communication. Their presentation of new content is different, it is more illustrative and dynamic and truer to life. Against this background, the teacher’s vocabulary and manner of expression looks dull and boring.

A kid is unable to listen to the teacher’s monologue for no more than three minutes. They get tired and lose concentration. Each class must be turned into a show.
Why children are prepared to play games on their PCs or other gadgets? They can do so for hours on end, forgetting about sleep and food. The content is made differently. It pulls them in. This means that the content of education must be made just as appealing. Soft skills can be wrapped into others.

For instance, the cuisine class at the Khoroschool is very hard to get into. The entire instruction is in English. The students are taught not only how to make pies or oat meals, but also given the names of different dishes and sauces. Not only girls, but also boys are eager to study cuisine. At such classes they agree to make teams, they learn to cooperate, to display empathy and to control emotions. In this way, they acquire the meta-disciplinary skills I’m talking about.

- But your brilliant children will be unable to dodge the Unified State Exam anyway.

This means we will be teaching them skills and getting ready for the exams. However, the system of education will keep moving in the direction I’ve described.
And I hope that the system of rating students’ knowledge will be upgraded, too.

- I’ve heard you launched a new project called School 21.

It is meant for young people aged 18 to 30. Also, we are opening an experimental group for people 50+.

Russia today is in dire need of skilled engineers. There are several universities that train good specialists. The Higher School of Economics, the Moscow Engineering Physics Institute, ITMO University, a couple of departments at Moscow State University and St. Petersburg University… You can count them all on both your hands.

We founded a special non-profit organization and obtained a franchise in France, where School 42 trains computer programmers. It is a private non-commercial project sponsored by multimillionaire Xavier Niel.

Our School 21 opened in Moscow last year and it operates on similar principles.

- Why is it only half of the French school’s number?

Firstly, we live in the 21st century. Secondly, our school has 21 levels.

Instruction is free. The methodology is similar to what we are creating for the secondary school. The duration of courses varies from 18 months to four years. The graduates receive a non-governmental diploma. We hope that we will be able to train the best engineers in the world.

For the time being, we’ve enrolled 500 students. The competition was colossal – 85,000 applicants.

- Did you participate in the selection process?

No, none of us did. A certain algorithm was created. Everything was done online. Only the last stage for the 2,500 hopefuls on the shortlist was held in Moscow, where attendance was required. All applicants had to toil 15-16 hours a day for four weeks. They were to cope with certain tests. The focus was not only on the quality of solutions but also on the progress made. We selected not the most experienced and skilled, but the most motivated ones, those who were eager to study and demonstrated the greatest progress.
Three of my acquaintances tried to get into School 21, but only one passed the test.
One young man after Harvard had felt no doubts he would pass the test. He cracked all the problems he’d been offered very easily. At the beginning, he exhibited a very high level, but at the end he remained where he’d been. No progress at all. In the end, he was rejected.
The school is open round the clock with no days off.

 - Will its graduates be offered jobs at Sberbank?

None of them has any formal obligations to us, but of course, we will be competing for these guys. I believe Sberbank today is the most thrilling job prospect. The only thing we are very much concerned about is how to avoid producing export-oriented graduates, to make sure the people with our diplomas agree to stay in the country. After all, we are training specialists for Russia.

- Do you know a way of making them feel patriotic enough?

For now we don’t. That’s our headache. But we’ll eventually come up with a solution, I hope.
Moscow’s School 21 will have a total of 3,500 students. We plan to add 1,000 every year. And in the first half of 2019 we will open an office in St. Petersburg.

- You’ve repeatedly said that for your team you want to select people whose qualities run directly counter to your own. Could you elaborate on that, please?

There is my profile. It is well-known. It’s useless to try to find clones. A good picture needs a diverse pallet.
As for me, I’m a typical extrovert and I react quickly. I think fast and I make instant decisions. By my side, I need people who do not hurry anywhere, who take their time to consider every step or move. That’s the way to harmony.

- So you would’ve agreed to hire Alexei Kudrin?

Without a shred of doubt.

- In what capacity?

It does not matter.

It takes Alexei approximately twice the time I need to grasp the gist of any situation, but once he gets it, it’s for life. He can see a tremendous number of details I tend to overlook. This quality of his is neither bad nor good. It’s different. He and I are ideal for the team, however different we may be.

It is essential to have a team of associates who are in the habit of thinking one’s own way. However odd this may look and sound. Selecting only your own kind will be the surest way to ruin. It’s a dead end.
At Sberbank’s board meetings, we may argue a lot. Each defends his or her own viewpoint. The “I’m the boss, you’re the fool” formula does not work. So, if you want everybody to agree with you, go ahead and prove it!

On the other hand, arguments are characteristic of organizations with immature information culture and corporate culture.

- But an organization like Sberbank cannot operate on principles other than those of a dictatorship.

Not in the process of discussions and decision-making. There is a certain rule. My first deputies and myself are the last to speak. We do so only after we’ve heard what the others have to say. Quite often I avoid voting on controversial matters so as not to put pressure on my colleagues. Nearly all decisions are made by open ballot. Exceptions are very rare.

You said once that fear is the key driving force in the world. What is it that you are afraid of, sir?

I don’t think that I’m unique in this respect. As a human being, I’m afraid of seeing my dear ones lose their health or life or of the possibility that this can happen to me. Secondly, I would name the fear of losing freedom. Any freedom. It is a key value. When there is lack of freedom, the question inevitably arises: “What’s the reason for living?”
I would’ve never agreed to work for an organization where I would’ve been denied room for creativity. Not for all the money in the world.
I’ve named my two main, prevailing fears.

Let’s rewind, I remember where you worked and the things you did in life… Wasn’t your freedom limited in the very same Ministry of Economic Development?

I must give credit to President Vladimir Putin as a leader for letting us do a lot. He allowed us to experiment and to argue and that totally surprised everyone.
Of course, in the civil service there are very strict limitations and this circumstance is often most depressing. The process of implementing any idea compels one to make a great number of compromises and the end result is often the opposite of what had been expected at the beginning. This is a serious problem.
Such are the rules of the game and there is no way of escaping them.

- Sberbank has a Procrustean bed of its own, doesn’t it?

There is much more freedom here. It depends on what you compare it with, of course. In the private sector, you are the master of the game and you can take far more liberties. However, there are certain drawbacks, too.
A large organization lives by its own rules, which are to be followed.

- You say that Russia has no effective system of management. In the meantime, you are at the helm of the country’s largest public bank.  How can these two statements correlate with one another?

We try to get our ideas across and we’ve invested a lot into creating a better model, even organizing exchanges of the best practices, if our solutions can be used to the benefit of the civil service. The state is a complex mechanism and it requires constant fine-tuning.

- You even delegated some of your former subordinates to take gubernatorial posts.

We didn’t delegate anyone. The guys participated in the Leaders of Russia contest and they performed well enough. They caught the presidential staff’s eye and some were invited into the personnel reserve… Some became deputy governors. Igor Artamonov now runs an entire territory. He is the acting Governor of the Lipetsk Region.

- Was it easy for you to let them go?

If a person wants to grow and move on in this direction, why put spokes in his wheel? All of them were paid decent bonuses, because I know very well what kind of salaries civil servants can count on. You’ll never make fortunes there.

If kickbacks and other deals are not counted.

I believe that our people will never steal anything. They’d rather get up and leave.

- Aren’t you putting them on a pedestal?

Never say never, but the way I see it, Sberbank has been very successful in teaching its employees to observe certain mores. Our people appreciate a reputation and good name.

- In 2017, you published the bank’s development strategy. What did you manage to accomplish last year?

The strategy consists of several stages. We moved step by step from one landmark to another. By November 2018, our progress measured approximately 24%. You can easily see how far we advanced along each of the guidelines. The financial parameters are slightly ahead of the business plan, while the technological ones have to catch up a bit.
There is one more important result that we did not include it in our strategy, but it is very significant and pleasant for us anyway. The international agency Brand Finance recognized Sberbank as the strongest banking brand in the world and the second most powerful out of all the companies surveyed. We were second only to Ferrari. Not that we were competing with them, but ceding first place to such a brand is certainly not something one should feel ashamed of. And in terms of the brand’s value we are in the Top 20 banks around the world. One’s attitude to such rankings may vary. The calculation methodology is comprehensive. For instance, the brand’s strength is rated according to 19 parameters related to investment in marketing, client preferences, personnel satisfaction and corporate reputation… I’m very serious about this recognition. I see it as a verification that we had selected the correct policy of building an ecosystem and of turning the bank into a technological company.
As far as the technological aspect is concerned, it’s among our objectives for the current year. We plan to put ourselves on the technological track, although at this point it is hard to guess. A lot will depend on macroeconomics.

- And what do you foresee for this year that just got underway?

Nothing optimistic.

- Only for Russia or for the whole world?

We all live in one single and very fragile building.

This is a very sensitive subject… You know, macroeconomics can be likened to a large animal. An elephant or rhinoceros. It may long stay patient, pestered by flies, mosquitos and birds. Such a giant is too lazy to react to every trivial thing, but there comes a certain point when it may lose temper, get up and shake it shoulders causing everyone to run helter-skelter, and vanish in an instant.

The same goes for macro-economics. It is very hard to tear down the current trend, but if it starts to budge, whole system may go out of control. Nobody knows when this may happen, it could occur at any moment.

Humanity has accumulated a very large negative potential, and it is beginning to systematically destroy the condition it has been moving towards for the past half a century. I don’t believe that this hocus-pocus won’t have consequences. Regrettably, we will be inevitably confronted with something like this. We should brace for the collapse of the existing world order. It will be very painful.

- Horror stories from Herman Gref?

I’m just sharing my impressions. However, it depends on us in what condition we will approach the forthcoming upheavals. It is obvious that neither the existing world order, nor the national managerial and administration models will last much longer. The key contradiction today is between the existing pyramidal decision-making systems and the exponential growth in the speed of change. The amount of change as it is, the capacity of pyramidal decision-making systems is rather limited. It is unable to maintain the adequacy of the system as such. In the meantime, politicians with their actions have been making these disproportions even worse. Moreover, we are obviously moving towards the Thucydides Trap -  a confrontation between the dominating world power, the United States, and a booming China.

An explosion will be imminent, unless the international and national institutions are reformatted.

It’s a very sad story. Apparently, humanity will have to live through hard times again and to suffer a lot to realize the preciousness of the world that we once had. The pace of development of modern technologies and the linear development of human mentality are in dramatic conflict. Everything has to be restored to balance.
All the rest is a consequence of this main conflict.

- What is to be awaited?

What’s the point in waiting? We should go on living. You will never guess what the last drop will be like. The crisis strikes later than we expect it and before we are prepared for it, the saying goes.

- Are you telling us that no protection exists?

I’m not. Just support the maximum possible competitiveness and flexibility. Such large entities like countries find this far harder to do, though.

- Sberbank isn’t a small entity either!

A tremendous share of the Russian economy is pegged to us. If the bank’s clients get in trouble, we begin to feel the earth shake under our feet.

- Do you find the risk of coming under Western sanctions a great problem?

What do you think? It is not an economic affair, but a political one. You can’t insure yourself against it.

Yet the bank prefers to be absent from Crimea to be on the safe side.

In fact, we try to avoid many things so as not to provoke anybody… We seek to be in conformity with the standards that will prevent the emergence of any pretext for imposing sanctions on the bank. But as I’ve just said, there is politics involved, so nobody can offer any guarantees. Certain concerns linger, of course.

- About your own future, too?

Honestly, I’m not very much concerned about myself. True, to a certain extent it is a loss of freedom, which I’ve already mentioned. But in this context, it is not very critical. As for the banking business, blacklists can create great problems.

- Can Russia be disconnected from SWIFT?

That’s an old-time horror story. Today, we are far better protected from such a hostile measure. SWIFT does not matter. Any bank is a link in a global chain of transactions. Losing a place in it will be critical. Exclusion from the international system of settlements makes the bank unable to perform its main functions. Inside the country, we have created an alternative. In the past, we might have had problems with Visa and MasterCard. Today only cross-border transactions might be affected. That’s five percent of our clientele. All others use our internal system.

- Is the declared policy of de-dollarization economic or political? What do you think?

Strategically, it was a very correct measure. First off, the dollar today is the world’s monopolist, and any monopoly is evil. Second. In economic theory, there is a rule, the debt as such is less important than its currency. If the debt is in the national currency, then that’s not so terrible. When currency risks accumulate, then it makes sense to worry. For the time being only a smaller share of Russia’s state debt is in rubles, but now it has begun growing. This is the right decision at the macro level.

It is also true that there is no alternative to the dollar in the world right now and there won’t be one for a long time, no matter how hard the other countries may try to create one. I don’t think the situation will change considerably for several decades to come. But this does not mean that nothing should be done.

As far as Sberbank is concerned, we were issuing far less dollar-denominated loans lately. And US currency-denominated transactions we handle have dwindled, too.

As far as people’s savings are concerned, the dollar remains one of the main means of protection. Retail clients are in no hurry to get rid of the greenback. Strictly speaking, they hedge the exchange rate, which is only reasonable. It is important not to fuel panic with gossip about a forthcoming ban on dollar circulation in the country. Nothing should be banned or restricted. As soon as we try to tighten the grip, the people will retrieve their cash at once to stash it under their matrasses. Just in case. To be on the safe side. The bitter memories are still there.

- And what currency do you prefer for your own savings?

The ruble, dollar, euro and Swiss franc.

- In what proportion?

A greater share of my savings is in dollars and rubles, and a smaller one in euros. And still less in francs. The foreign currency share stands at about 60%. The rest is in rubles.

- Incidentally, do you know the Wi-Fi password in the antechamber of your office? It ends with the dollar sign. Not very patriotic.

I didn’t invent the password, believe me. Besides, patriotism should be searched for elsewhere. It is far better to do your job right to be able to have something to take pride in afterwards. Experience shows that those who position themselves as the greatest patriots aren’t worth anything in reality.

- What’s your opinion on the Bank of Russia’s current management?

My opinion is an exceptionally professional one. The Bank of Russia keeps a close watch on the situation and promptly responds to changes. The stability of the banking system has grown several-fold over years.

A shift in the trend is the worst thing Sberbank can expect. Our bank is a giant machine. It is very hard for us to rearrange the balance sheet. It takes no less than six months. Our mortgage loans’ margin rate is 0.1. The rates were lowered to the maximum and we can’t go any lower. The CBR has raised the mandatory reserve requirement and the rate trend changed the direction. Our inertia is enormous. Altering the course takes time…

- But don’t you like to encounter problems you can contend with?

I would eagerly agree to live for some time without any turmoil.

- On February 8, you turn 55. It’s not exactly a jubilee date, but the matching digits looks nice …

I have certain goals and plans, but not all of them are to be mentioned in public… Speaking about my private life, I can tell you that the time I can spend with my family and children is most precious. My schedule remains too tight. My youngest son will soon turn four. He needs ever more attention. And my daughters would like to see their dad far more often. All kids have different interests.

Maria is 12, and Eva is ten.

Maria is more like me. She has a mathematician’s brain. And her favorite hobby is horseback riding.

- Hasn’t she persuaded you to hop on a horse and ride, too?

There was a time when we went horseback riding together. Today I have no chance to catch up with her. She participates in many competitions, including international ones, and takes top ranking.
Eva is different. She is a creative person.

We like to have breakfast together. But very often I’m away from home on business trips. And my girls have to leave early, half past seven at the latest. When I’m at home, I usually get up ten minutes to six. I spend one hour reading and answering e-mails. At seven, I’m in the gym where I jog on the treadmill for half an hour. Then I step out for a moment to wish my girls a good day and then get back to the training machines to pump iron. The usual morning routine follows. I have breakfast and go to work, where I stay till late in the evening.

The greatest challenge for me now is to become more effective at work to reserve more spare time for the family. That’s my way of priority sequencing. I have to confess that the family comes second. I cannot imagine how I can change this state of affairs as long as hold my current position at Sberbank. It will be hard to revise my business schedule and mode of life, but I will try. I’ve already made up my mind what I’ll do in 2019 to this end.

- The first target-setting lecture at Sberbank’s Corporate University begins with a question about the meaning of life. When you pose a question to others you are to be ready to offer an answer yourself…

I don’t invent anything new. There are many theories on that score. On the one hand, some great philosophers postulated that the meaning of life is in serenity. There is a different opinion: happiness and harmony are unattainable as long as you strive for them. The root cause of most misfortunes is that we draw a virtual image of what does not exist in reality. We project real life onto an ideal picture and get disappointed. Perfection is unattainable. You’ve got to put up with this and work to reform yourself. The very instance of an individual’s existence at a specific moment in time is happiness. Enjoy every moment in life. Remember this wonderful parable: “A camel was roaming the desert in pursuit of happiness. To no avail. Because the camel’s happiness is all inside.”

History is simple and diverse at the same time. Each of us is to discover it anew. The pursuit for something external is very harmful. It is a great ill. Human beings are forced to accept some standards to match and some examples to follow: a nice car, a great apartment, a home in the countryside… People saddle themselves with certain ideals, but every passing day brings another material aim to chase after. It is very hard to stop. An endless race beyond the horizon, while the ending is quite predictable.
Old age is already here, but wisdom remains elsewhere.

I do my best to see things around me as reasons to be happy and not feel upset. It’s easier to achieve harmony that way.

- Are you successful?

Not always.

- Were you happy today?

This very day? Yes and no at the same time. I guess. It is not a state of mind but a process. I don’t think that I have at least one reason to feel unhappy. Nobody can live life without ever sustaining grave losses, experiencing disappointments or struggling with moral problems. The main question is what attitude is to be taken to all this. Our leading psychologist, Professor Alexander Asmolov, says our everyday life is a pre-stress training session for post-stress adaptation. To understand this, to be able not to fall into a state of depression and to control oneself in such situations is the key.
You know, the ancient civilization of the Incas relied on three principles: thou shall not lie, thou shall not steal, and thou shall not idle thy time. What if this is precisely the formula of happiness? Who knows…