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Feature Story

Severstal Russian Steel CEO Offers Leadership Lessons to Global Executive MBA Class in Russia

Alexander Grubman shares insights on one of the world's leading steel and mining companies.

Several News Story
August 31, 2012

To know what's happening in global business, you need to be where business happens. This is part of the reason why students in the Global Executive MBA class at Duke University's Fuqua School of Business have program residencies in key international markets: London, St. Petersburg, Dubai, Shanghai and New Delhi (as well as a residency in Durham, North Carolina). As part of the residency in St. Petersburg, the students interacted with Severstal Russian Steel CEO Alexander Grubman and gained insights on one of the world's leading steel and mining companies.

Mr. Grubman was the keynote speaker during the residency - here is a snapshot of his views on leadership, the future of the steel industry and his advice to students.

What is the greatest challenge you face as a business leader today?
In my opinion, one of the greatest challenges today is changing people's mentalities as well as their corporate and operating cultures. It's people who do everything. The outcome of our work is determined by how people are set up for the goal and how well they understand the importance of the goal. At Severstal, we in the leadership team do not produce steel or mine iron ore. We work with people. Our professionalism is judged by the way we do this.

What is your estimation of the current state of the world steel industry?
Overall there are increased levels of uncertainty and volatility in the industry. The industrial cycle became shorter and at the same time, the era of expensive raw materials continues, but steel prices are not growing proportionately. Today the global prices almost reached the cost of production which does not allow manufacturers to make profit sufficient for business development. In the upcoming years, steelmakers will not see the same degree of margin which we became accustomed to during the Chinese boom (2000-2008). This is in part because the capacity utilization in the industry is at a lower level today than at previous times.

As CEO of Severstal Russian Steel, how do you see globalization impacting your everyday operations?
Severstal is a global company. The company holds assets and operates on four continents: in Eurasia, North and South America, and in Africa. Globalization is a very important factor for us. It offers interesting opportunities but also challenges that influence competitive conditions.

What is Severstal doing to address the challenges and opportunities of globalization?
The company has implemented numerous projects to promote dialogue between management teams and production units in different countries. Ongoing best practice exchange helps us to sustain competitive advantage and efficiency. We've transformed our corporate culture, re-branded the company and created a unified business-system. The goals of this system are to optimize activities on the company scale, unify our goals, create a strong corporate culture, and improve key performance indicators. The business-system's projects customization is being executed at all manufacturing divisions of the company and takes into account local cultural specifics. A shared system of web sites is created for all divisions (unified corporate style and communication platform, consolidated product information.)

It is a priority for us that our company's executives are actively involved in all forms of communication with the media community and investors. In particular, in 2011 the company held an "Investor Day" in London. It was largest Investor Day held by a Russian company in London. The event brought together representatives of the company management who announced our strategic plans further to being ranked among the five leading companies of the industry by EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). The Investor Day is now held annually.

What advice would you give to a business school student who aspires to work in the steel industry?
In a few words, I would put it this way: take care of costs and try to foresee what a client needs.

Learn more about Severstal and discover more about Fuqua's Global Executive MBA program.