A Modern B-School—in Tehran

Most Saturday mornings a small group of Iranian professionals and entrepreneurs gathers either in a small office on London's New Bond Street or in a Tehran villa to talk about a school that doesn't exist yet. This fall, though, after two years of planning, they hope to open Iran's first modern business school, an event they hope will boost their country's development.

The Iranian Business School Project has hired a dean (who for personal reasons asked not to be identified) and, despite Iran's turmoil, intends to offer executive education courses starting in October. A full-fledged master's program would follow in two to four years. Iran has a dozen other B-schools, but this one will be designed to meet the standards of the world's best management programs. "If Iran is going to have any role in the global economy, it needs people who can manage companies," says Rouzbeh Pirouz, a London and Tehran-based entrepreneur and the project's chairman.

Pirouz, 37, is one of the few Iranians to run successful firms in his country despite the red tape and isolation that burden businesses there. Born in Tehran, Pirouz left with his family at the time of the 1979 revolution. He grew up in Vancouver, British Columbia, earned a college degree at Stanford, and went on to Oxford as a Rhodes Scholar—where, in 1999, he co-founded Mondus, a Web procurement company for small business, which he later sold to Telecom Italia (TI) for $350 million.

Looking for his next act, Pirouz found himself drawn back home despite the warnings of friends that Iran was a bad place for business. In 2005 he started Turquoise Partners, which manages a stock fund as well as a private equity unit. Turquoise, with more than $100 million under management, offers outsiders a rare chance to invest in the Iranian stock market. In the 12 months through Dec. 31, Turquoise's Portfolio One fund returned 18% in dollar terms. In setting up the funds, Pirouz showed deftness in handling the regime while keeping his employees and colleagues fired up for the venture. "Rouzbeh," says Katy Palizban, a member of the project's board and a former Goldman Sachs (GS) banker, "has an incredible ability to inspire loyalty."

Much of the Iranian economy remains in the hands of the state. But Pirouz believes that over time the country's pragmatic side will assert itself. He points to the stock listings of state businesses, including Telecommunications Co. of Iran and the giant Mobarekeh Steel Complex. As for President Mahmoud Ahmadinejad, the school has obtained a letter of support from a presidential aide. Pirouz also lured some top names in Iranian business to the school's board, including Parviz Aghilli, founder of one of Iran's few private banks.

Iran's existing business schools can't meet all the country's needs. They have room for only 500 students, which means too many top applicants get turned away. Many of those who do get MBAs end up leaving the country, contributing to Iran's brain drain. The curriculum of the existing B-schools doesn't offer the latest thinking in such subjects as strategy, finance, career development, and succession planning.

The new school will greatly expand Iran's pool of business graduates by offering places for 250 students in each class. It plans to hire faculty from the West and in some subjects will employ the Harvard case-study system. One model, according to Michael Hay, a London Business School professor and special adviser to the project, is the decade-old Indian School of Business in Hyderabad, which taps the wealth of overseas Indians and recruits faculty from the many Indian B-school professors working abroad.

The project has been a tough slog. A year ago the founders thought the school might end up in a small town on the Caspian Sea after learning that no new licenses were available for schools in Tehran. Eventually the Tehran license came through. Crisis averted. There are sure to be others, though, before class is in session.

Before it's here, it's on the Bloomberg Terminal.