Monday, September 25, 2006

in india, redefining the business school

A new institute takes a different approach and comes out ahead

From the Chronicle of Higher Education, issue dated September 29, 2006


Business schools looking for an interesting case study might want to start with one of their own — the Indian School of Business.

The story goes something like this: A new business school opens in a country flooded with management programs. It has a rotating list of foreign faculty members, many of whom arrange to stay for just six weeks. The school charges more than four times the tuition of the country's most elite business institutions. And it refuses to seek government recognition.

A disastrous plan? Hardly. Though the six-year-old business school had a rocky start and is still not making a profit in all its programs, it is producing some of the highest-paid graduates in the country. Other business schools are copying some of its strategies. And it is flooded with applicants eager to fork over tuition that is three times the average salaries they were earning before they enrolled in the school.

The 260-acre campus here in Gachibowli, about an hour from the information-technology hub of Hyderabad, breaks with the traditional higher-education model in almost every way. Its facilities are fully modern: Every classroom has videoconferencing capability, and every desk has wired and wireless Internet connectivity.

The institution has academic alliances with elite business schools in other countries, including the Wharton School, at the University of Pennsylvania; the Kellogg School of Management, at Northwestern University; and the London Business School, of the University of London. Eighty percent of its faculty members are from abroad, mainly from universities in the United States.

The school is making a big impact in India, prompting new thinking about private higher education in a country where almost every other top academic institution is financed and overseen by the government. It is challenging the notion that higher-education institutions need government accreditation to succeed. And its accelerated one-year program, in a country where the two-year M.B.A. is still the norm, has proved enormously successful.

"Its excellent faculty, impressive infrastructure, and the compressed one-year program have revolutionized the management-education world in India," says A.S. Murthy, senior vice president for human resources at Satyam Computers, a global information-technology-services company in Hyderabad that has hired graduates of the school.

Ironically, though, the very elements that have helped the Indian School of Business become such a success may limit its international standing. Because most of its faculty members are part-timers, it has been unable to develop a strong research program. And to attract more full-time professors and maintain its state-of-the-art facilities, it must raise a lot of money that high tuitions alone won't cover. (Administrators decline to say how large the school's endowment is or how much money it hopes to raise.)

Troubled System

The school's success comes at a time when the rest of India's higher-education system struggles to keep up with the needs of the country's booming economy. India's 300-odd public universities serve only 7 percent of the 18- to 24-year-old population, and the government does not have the money to increase capacity.

The state of professional graduate education is particularly bleak. Demand for professional courses in management, engineering, and medicine far outweighs the number

of seats available at public universities and institutes. Private professional schools have proliferated, but many of the more than 900 management schools are of poor quality — either strapped for funds or purely money-making ventures that focus on fees rather than on faculty. Meanwhile the business community complains loudly about the limited supply of well-trained managers who can help companies negotiate an increasingly sophisticated, internationally competitive market.

"As India is growing rapidly, it needs more of all kinds of institutions of higher education," says Rajat Gupta, founder of the Indian School of Business. "If we get complacent about our education system, we will run out of qualified people. A business school like ISB is important for economic growth, to create enterprises and to provide leadership to existing businesses."

Mr. Gupta is a senior partner worldwide and a former managing director at the consulting firm McKinsey & Company. The school's governing board and executive board also include Rahul Bajaj, chairman of Bajaj Auto Ltd., one of the world's largest manufacturers of motorcycles and scooters; Michael Dell, chairman of Dell Computer Corporation; Patrick Harker, dean of the Wharton School; and Laura D. Tyson, dean of the London Business School. Its backers include Indian financiers, expatriate Indian technology entrepreneurs, and corporations including Novartis, Goldman Sachs, and Citigroup.

Not surprisingly, the school opened with considerable hype, touted as India's answer to Harvard Business School. But there were teething troubles: High tuition discouraged prospective students, and potential employers were slow to accept the school's accelerated program.

But the school has justified all the hoopla, say academic observers and corporate human-resources managers.

"In 2001 most of the Indians taking the GMAT submitted their scores to Harvard," says David A. Wilson, chief executive of the Graduate Management Admission Council, which provides the Graduate Management Admission Test. "In 2005 the largest number of candidates taking the GMAT in India sent their scores to the ISB, replacing Harvard as their top choice. That's really a substantial shift."

Mr. Wilson, who visited the institute in May, says he was impressed by the depth of the faculty and the quality of the students.

The dean, Mendu Rammohan Rao, announced in April that a 2006 graduate had been offered the highest salary among all of India's management graduates this year — $233,800 for a position in Britain. That status previously was earned almost exclusively by graduates of the six prestigious public Indian Institutes of Management. Three other graduates of the Indian School of Business bagged offers with salaries over $200,000.

The school's one-year postgraduate program in management costs students up to $32,000, and still operates at a loss.

By comparison, the Indian Institutes of Managements' two-year master's of business administration costs $6,500 to $7,500.

Mr. Gupta, who is now chairman of the Indian School of Business, says the high tuition is necessary to "build a world-class institute with the best infrastructure and faculty in India, without government help."

Students say the cost is worth it. Members of the 2006 graduating class made $11,200 a year, on average, when they enrolled, and received offers of $26,155, on average, upon graduation.

"We can easily get bank loans now, and we know we will be well placed after graduation to be able to pay off the loans," says Megha Kapoor, a student. Admission is need-blind, and the school offers financial-aid packages to students who do not qualify for loans.

But Mr. Gupta and Mr. Rao play down the financial incentive.

"An exciting career, not necessarily the big bucks, is the prime criterion," says the dean, pointing out that graduates are entering fields that M.B.A.'s do not usually join, like media, health care, and real estate.

"The program is very innovative, and the elective subjects taught incorporate all the latest developments in business," says Premchand Palety, head of the Centre for Forecasting and Research, an independent research firm in India, and one of the authors of The Outlook Guide to the Best Business Schools in India.

"I found that even the IIM's [Indian Institutes of Management], until some years ago, were teaching case studies from as far back as the 1960s and 1970s," says Mr. Palety. The Indian Business School is unique in the country, he believes, in that it teaches live cases. "At a time when things are changing so fast in the business world in India and globally, one has to keep up," he says. "The IIM's take too long to change anything."

Because the Indian Business School did not seek government accreditation, it cannot call its graduate program a degree. Trying to get accreditation from the government bureaucracy would have taken forever, says Ajit Rangnekar, deputy dean. "Early on we realized we have to be smart about which rules to break," he says.

Now other business schools in India are adopting some of the Indian Business School's ideas. The Indian Institute of Management at Ahmadabad, for example, has started a one-year graduate program for people with work experience.

Rashmi Bansal, a graduate of Ahmadabad who has written extensively for local magazines about business programs in India, says the Indian Institutes of Management are looking for new ways to expand and are even considering hiring foreign visiting faculty. "As alumni we are encouraging these things," she says, "because now there is an ISB to contend with. All these years the IIM's ruled the roost, and there was no competition."

Prakash Apte, director of the Indian Institute of Management at Bangalore, declined to talk about the Indian School of Business and whether it was inspiring changes. Administrators at the institutes in Ahmadabad and Calcutta did not return calls requesting interviews.

International Perspective

With a program designed so a visiting faculty member can teach an entire course with only a six-week commitment to living in India, the young school has attracted an impressive roster of scholars from a number of the world's top business institutes.

"My motivation to teach at ISB is that India is a neat place," says Richard P. Waterman, an associate professor at the Wharton School who has been part of the Indian School of Business's faculty for four years. "It is changing rapidly, and it is fascinating to see that. Teaching here also gives me a broader perspective on what students are interested in generally and what careers they are looking at."

Employers and students alike say the exposure to business professors who have an international perspective is a key selling point of the school.

"I didn't apply to Wharton, because there I would have had only faculty from Wharton," says Shaista Vadra, one of the 428 students enrolled in the one-year management program. "Here I have teachers from Wharton, London School of Business, Kellogg, and so many other top schools."

But to be ranked among the world's top business schools, and to gain accreditation from AACSB International: the Association to Advance Collegiate Schools of Business — goals that it hopes to reach — the Indian School of Business needs to build up its permanent faculty enough to strengthen its research programs. The school has 20 permanent and 80 visiting faculty members.

Arthur Kraft, chairman of the accrediting group, says it has strict standards regarding the number of "actively participating faculty." The association, he notes, looks carefully at how much visiting faculty members get involved in a program.

"For visiting faculty to be counted, it has to be actively involved in developing curriculum, mentoring other faculty and students," he says. "Visiting faculty can have a very positive effect."

"The faculty question is a key one," says Mr. Gupta. "We have to increase permanent faculty, but that takes time, especially if we want to have quality." In order to retain a global character, he says, the school will specify that at least 40 percent of the professors be visiting from abroad.

Meanwhile, to recruit more permanent faculty members, it has started devising what it calls "centers of excellence" — in entrepreneurship and development, analytics and finances, global logistics and manufacturing — that are financed by companies or individual donors. At these centers, a focus on emerging markets will underlie all research. The school has one endowed chair, for research in real estate; more are in the offing.

An executive training program started five years ago has helped the Indian School of Business as a whole break even, but it will need a lot more money in the years ahead to keep its facilities up to date and to continue to attract good faculty members. But Mr. Gupta is bullish. He is convinced that by tapping the top executives and companies represented on the school's governing board — potential donors so far excluded from fund-raising efforts — he can build a significant endowment in just 15 years.

That would be an impressive accomplishment. "Most of the top institutions in the U.S. are hundreds of years old," says Mr. Gupta. "We are just six years old. That's a small period in the life of an institution."

Monday, September 18, 2006

legalize gay sex

Prominent overseas Indians Vikram Seth and Amartya Sen have called for the repeal of India's anti-sodomy law, a holdover from the Raj. However, with attitudes toward homosexuality still very negative--many confusing homosexuality with pedophilia and backing the "unnatural" tag of section 377 with table-thumping enthusiasm--I suggest that the campaign will have to continue a few more years. That's not to say "India isn't ready," parroting the argument of the bigots who oppose a repeal of the law. It's just to say that there are too many bigots, and too few people brave enough to oppose them. Two or three years ago I unwisely wrote an article about the anti-377 campaign that implied the Supreme Court was close to a repeal--I won't say the same again.

i'm sorry you feel that way--or how i know the pope's not married

I love how everybody reports the pope's "apology" and subsequent reaction with a straight face. As anybody who's ever been married knows, it doesn't count if you're sorry that your spouse got angry, it only counts if you're sorry for what you did. When the pope apologized for "the reaction" to his words rather than saying, "I'm sorry that I unknowingly chose a passage that would offend people so deeply," he was essentially saying "it's too bad you guys are a bunch of irrational fanatics like that ancient scholar said because otherwise you wouldn't have gotten so mad." Some apology.

I'm sorry for a lot of things like that. I'm sorry my boss gets pissed off when I come to work hung over. I'm sorry my wife doesn't like it when I look up after ten minutes of "conversation" and say, "Sorry?" But right now, most of all, I'm sorry that the pope is starting to show the diplomatic skills of one George W.

Saturday, September 16, 2006

why i'm an 'india basher'

India's inevitable rise, increasing in pace, is the hot story. Unquestionably, most things are getting better, business-wise. But that doesn't mean India doesn't have any problems, or that the problems that do exist no longer merit our attention because trickle-down economics will eventually solve them. Mention that there are grays and browns out there when you take off the rose-colored glasses, however, and you risk being attacked as an India basher.

Recently, India scored poorly in a survey of managers rating business climates around the world, signaling that while red tape has been reduced there's more to be done. Infrastructure, though improving, may not be improving fast enough, as places like Delhi, Mumbai, Bangalore, Gurgaon et al readily demonstrate to residents, who face worsening traffic problems, airport congestion, etc. Electricity and water supply, too, is problematic--even for relatively affluent residents like myself.

More importantly, the problems faced by the poor aren't being solved at anywhere close to the same rate as the economy is growing. Polio infections continue, and now India is exporting the "eradicated" disease to other countries. Poverty reduction is coming, but at the expense of rising inequality. Caste discrimination remains an unpleasant reality. Sanitation is a joke and environmental degradation a big problem.

Thankfully, here on the ground, India bashers are alive and well. Hence, it's Indian publications that break the story of declining standards in engineering education and other "off-message" stories. But many NRIs--apparently charmed by malls and multiplexes on their brief, selective visits--seem to have forgotten that all India's problems aren't going away easily--if at all. I say, come back and have a look--and not just at the big malls and mummy-daddy's servant-filled house. Rent your own apartment and you'll soon see why the Gurgaon palaces with water and power backup are so popular. Yes, things are a lot better. That's what we keep writing about -- see every business article on India published over the past two years. Apart from "yes, but" comparisons to China, India receives a resounding thumbs up. However, it doesn't mean everything is perfect. Nor will pointing out some of the ways in which India has a frontier atmosphere--where hardships as well as opportunities abound--make the story of the country's rise any less real.

Tuesday, September 12, 2006

the separation of temple and state

With the Supreme Court deliberating on an Allahabad High Court ruling to stop all subsidies for Indian Muslims wishing to make the Haj, or pilgrimage to Mecca, I thought it might be a good time to talk about the need for India to separate Temple and State. As most readers of this blog know, India's idea of secularism has always differed from America's*, in that India's secularism believes that all religions should be propped up by the state rather than (legally at least) ignored except to prevent discrimination. For this reason, countless holidays are enshrined in the official calendar--including, in recent years, more and more minor Hindu festivals. Temples and other religious structures get the benefit of state aid or concessionary land prices. A separate civil code protects the chauvinistic marriage and inheritance laws of the major religions instead of ensuring equal human rights for all Indians. And a small number of Muslims receive a subsidy to attend the Haj. So, too, the government spends huge sums to facilitate Hindu pilgrimages like the Kumbh mela--held in Allahabad--though I'm not sure whether there is any government aid given to poor people who wish to attend.

Unfortunately, nobody seems to see the ways in which Hindu rites and festivals receive support, but everybody is easily convinced by dodgy statistics and jingoistic arguments regarding the subsidy and other support that India's Muslims receive. How much money does the government really spend on the Haj subsidy? (Unverified) Published sources suggest that the government spends more than Rs. 1200 crores on the Kumbh mela, as an example, while the subsidy given Muslims to reduce the travel costs amounts to a state-funded boost to Air India and only totals around 150 crore. (Feel free to update these figures by comment if you find the government's sanctioned totals, but please don't add conflicting unofficial numbers.)

But my (main) point is not that India's Muslims are being singled out. My point is that India should not be funding or supporting any of these activities. Not only will religion fund itself--as has been shown in countless examples. There is also much evidence to suggest that we would all be better off with a little less of it. (No more communal riots. No more suicide bombers. And no more deafening prayers sung over crackling and screeching public address systems.) But most important of all, religion, or in its less browbeating form, spiritualism, is a private matter. No doubt faith that there is a plan, that you are part of it, and that it means something is comforting, if not uplifting. But it loses most of its value when you turn it into a product to be advertised and sold.

So - No more allowing religious groups to ignore the Supreme Court's prohibitions on loudspeakers and other noise pollution after 10 p.m. No more competition for which religion gets the most public holidays -- let the members of each group honor their own holidays for a total of seven days per year, in addition to regular leave, while the rest of the country gets on with life. And keep the booze shops open. Nobody's forcing the abstainers to buy the stuff. No more Haj subsidy, no more tax breaks for temples etc, no more railway tickets for religious rites, etc.

Or, if that's out of the question, muddle on with the system you've got--where everybody gets a piece of the government dole, regardless of the team he plays for.

*America's so-called separation of church and state is also plagued with problems, BTW, but mainly because the government doesn't follow its own principles.

Monday, September 11, 2006

conspiracy theory

For what may be the first time, Indian police are investigating Hindu extremists as well as Muslim groups in their search for the perpetrators of a terrorist attack outside a mosque in the Maharashtra town of Malegaon. But it looks like certain "security experts" are keen to push the blame onto Muslim radicals, once again suggesting that Muslim terrorists have deviously attacked their own community to try to spark communal riots. The so-called smoking gun, once again, is the discovery that the bombs in question contained RDX.

Is it just me, or does this line of reasoning sound a bit suspect absent any other evidence?

First, consider the risk/reward equation of attacking your own "constituents" in the hope that they'll believe their enemies did it. The potential reward is a communal riot, in which the Muslims generally take the heaviest losses, which in turn *might* encourage more Indian Muslims to join the radical fringe and would allow Pakistan (of course we see the foreign hand everywhere) to crow about how bad things are for Muslims in India. On the risk side, though, exposure as ruthless killers that target the very people you are supposed to be fighting for would do ten times the damage. Unfortunately, the same analysts/writers who see this logic as impeccable when applied to conspiracy theories that it was "the Jews" or "the CIA" that executed the attack on the World Trade Center don't seem to see how it applies here in India.

Second, consider the use of RDX as "evidence." Isn't this rather like saying that those seeking to blow something up used explosives to accomplish the job? And, if RDX is such damning evidence, why not say that it must be Sikh terrorists, as the police used to do in the old days? This hardly qualifies as an M.O.

Allow me to predict the solution to this engaging mystery. A few days or weeks from now, the police will announce that they found the culprits, a couple Muslim guys, but unfortunately they gunned them down in a heroic firefight. After the fact, of course, they found various Pakistani documents on the corpses. The witnesses or snitches that led them to these guys will never be produced, and the investigation will go no further, as it would of course be a waste of resources to try to establish whether the dead men were guilty or innocent.

I know. I sound like one of those conspiracy theory guys. The next thing you know, I'll be writing columns filled with ad hominem attacks on myself to cleverly drum up sympathy.

Saturday, September 09, 2006

keeping up with the joneses

When reporter Ed Luce (whom I've never met, in case you're fantasizing about some Year of Living Dangerously-esque foreign correspondents' club) launched his new book about India "In Spite of the Gods" last week, he made the interesting statement that India is unquestionably emerging as one of the most important countries in the world, but it remains strangely obsessed with getting the stamp of approval from its former colonizers and (increasingly) the good ole US of A. (Clearly I'm paraphrasing). I wasn't in attendance, so I'm not sure whether Luce elaborated on this point. But I think it bears some thought. In the arts, for instance, why is it that the true mark of excellence in Indian letters is a publishing contract from a house in the UK? Yes, there are at least two very good reasons -- the UK houses pay real money in advance and to a degree they have standards, while the Indian publishing business is a hair's breadth away from a vanity press. But I think it cuts deeper than that. Witness the fact that most of these books are peddling the same tired cliches about India--arranged marriages consummated under banyan trees or on the backs of elephants with lots of cardamom, coconut and chili thrown in for good measure. Each one of these very low brow books is greeted with great fanfare as though it has something new to say, when all but a very few are the made-for-television versions of better works. Representing a big market is great when it inspires a Nokia or Honda to come to India and open up a factory that employs thousands of people, despite an unfriendly business climate. But when it means publishers churn out execrable tripe and call it literature (OK, I won't name names), something has to be done.

Speaking of Nokia and Honda: now to touch on an area that Luce more likely had in mind.

One of India's public obsessions over the past four years that I've been paying attention is its dearth of FDI compared with China. I am nearly certain that this obsession is another manifestation of India's desperate need for validation from the West, stemming from countless articles comparing India's rise unfavorably to China's. But too little attention has been paid to the purpose and risks of massive FDI, as India races to keep up with the Joneses next door. Though it is more liberal today, China extracted MAJOR concessions from foreign companies for the first few decades that it allowed foreign investment, parlaying a foothold in its giant market for technology and preferential trading terms. Today, India appears to offer more sops to investors than China, without clarifying how it will benefit from the trade-off. Why? Is India's big market less attractive than China's? Is India in 2006 so much less a draw for capital than China in 1996? Moreover, is FDI the only way to growth?

The most recent manifestation of this way of thinking is the new "unlimited" policy for special economic zones. Not satisfied with an attempt to turn Mumbai into Shanghai (note the goal!), now India wants its own 4,000-odd SEZ to match the neighbors. And to do so, planners are willing to forego petty matters like collecting taxes while they make a few rich industrialists hundreds of times richer by giving them land to develop--in full knowledge that perhaps 65-75 percent of it will be turned into residential property or malls, rather than employment-generating industries. Bear in mind, folks: When China launched its SEZs, the government owned all property, there was 100% employment and housing for all and there was no such thing as a private residence.

india's adult tv

Apart from the nipple exposing on FTV's "Midnight Hot," India's idea of adult programming appears to be shows with America's MA14 rating due to sexual situations. In this "more bullets less sex" stance, the culture that came up with the Kama Sutra is demonstrating one more way in which it has more affinity with America than with Europe.

Ironically, the debate is raging in Bombay of all places, a city otherwise known for its laise faire attitude to hotties in strapless blouses and sheer saris (thank you very much). I ask you: What's all the fuss about? From several overly frank discussions with students in India's hinterlands, I humbly submit that Indian boys could do with a non-intrusive outlet for their peek-and-grope starved hormones.

But a bigger question is why India is coming to look and sound more and more like America, despite the frequent criticisms of the world's big brother? The country's class-based society would seem to have more affinity with the old world than the new, and its ancient roots would seem to have more parallels with, say, Italy than with cultureless Bushland. My bet is that the love for all things American in India and Asia generally is inspired by the headoverheels rush to make money, in which all other concerns--fairness, quality of life, fine food, the environment, relaxation, etc--lose their meaning. That's American if I ever saw anything that was. Our best statue was dynamited out of the side of a mountain, and our best cultural artifact is an amusement park inspired by a cartoon mouse.

Careful, India, lest you follow China down the same path, with nothing but fastfood and peasant fare, eaten beside roadside mockups of the Louvre and mini Eiffel Towers. To my mind, a prudish middle class morality is the first step.