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. Last Updated: 07/27/2016

A Rocket Ride Up the Corporate Ladder

For MTNovitsky's strategic goal is to help diversify Sistema's holdings.
Yevgeny Novitsky wanted to be a cosmonaut. In pursuit of this dream, he entered one of the most highly regarded technical institutes in the Soviet Union in 1979.

Almost two decades later he did reach galactic heights -- of business, that is. During the country's heady days of political and economic transition, his interests migrated away from science and he climbed the corporate ladder, becoming president of AFK Sistema in 1995.

In addition to being one of Russia's top conglomerates, Sistema is also poised to retake a controlling stake in Mobile TeleSystems, the largest mobile operator in Eastern Europe.

Indirectly, it was science that led him into business.

After graduating from Moscow's Bauman Technical University with a degree in aerospace engineering in 1985, 28-year-old Novitsky started a small software company with few of his classmates. This was back during perestroika and the government was doing all it could to promote such kooperativnoye dvizheniye, or small-business development initiatives.

"This was how my transformation from a scientist into a businessman began," Novitsky says. "It was a different life -- with more money than before, more interesting and eventful. Although I liked working in science, doing business was more appealing to me. I met more people, and I could have a role in more things."

Demonstrating his two-pronged interest, Novitsky went on to complete a three-year graduate program in aerospace engineering at Bauman University in 1989 and promptly enrolled in a year-long business program at the Moscow State Foreign Relations Institute.

"It's a scientific rule, you have to learn all the information about a certain field to understand the process," he says. "I went to business school to understand business as a process."

After wrapping up studies in 1990, Novitsky became manager of a computer assembly company owned by electronics-maker Kvant in the Moscow suburb of Zelenograd.

The 1990s were an exciting time for businessmen, Novitsky says. "You didn't have the settled [business] practices [that you have in the West], where everything is understandable. Everyone thought up his own way to do business."

Novitsky was put at the helm of a fledgling Sistema in 1995 by its chairman Vladimir Yevtushenkov, just three days after the two met.

In forging strategies for the business, his scientific background proved valuable, he says. "People with a technical degree have their mind structured properly, and they think logically." The same laws apply to science and business, and "that helps."

"You always need to monitor whether you're moving in the right direction, along the vector you had planned. That's when you need feedback."

Heading a business, he says, "is like steering a plane on the right course."

Novitsky looks to the profit margin of Sistema's many companies to know whether the holding is on the right track.

"My biggest responsibility is to make sure all our 70,000 employees get their salaries on time," he says. "The second responsibility I have is to shareholders, to make sure the business is developing successfully. And my third responsibility is to myself, to make sure things are going well so that I'm not a loser in my own eyes."

Novitsky says his leadership style involves setting targets, rather than tasks for his staff. "It's simpler to manage people by setting goals for them and letting them decide how they're going to reach those goals."

Novitsky's strategic goal is to further diversify Sistema's holdings from its concentration on telecom companies.

Its key asset is its 40.4 percent stake in cellular operator MTS, a company it owned in partnership with Deutsche Telekom. In March, the ailing German firm offered Sistema the chance to buy back 10 percent of the company, which would restore its controlling stake in the cash-generative firm, one of only a handful of Russian firms to earn a U.S. listing.

Besides MTS, Sistema holds shares in fixed-phoneline giant Moscow City Telephone Network as well as several leading alternative telecoms operators.

"The main thing is to balance our portfolio so that we don't have one key business, but two or three," he says.

"In reaching a balance, we don't want to weaken our telecom businesses, but we want to develop our high-technology and insurance businesses so that they are equally strong," he says.

Sistema owns another holding called KNTs, which unites several companies that produce microchips, electronic equipment and home appliances. Sistema also owns Rosno insurance company together with Germany's Allianz AG.

Though he calls work his hobby, in his free time he works on improving his English and he reads up on the Kaplan-Norton "balanced scorecard "management method. He is also in the midst of writing a doctoral dissertation on strategic management, which he plans to defend at the Russian Academy of Sciences.

"It's important to be able to learn at any point of your career," he says.