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COVER STORY The Indian Institute of Management, Ahmedabad, is rated the counrty's best B-school. But how long will it stay on top? By Pareen Kawatra and Nanda Majumdar
They don't teach this case study at the Indian Institute of Management, Ahmedabad (IIM-A) -- even though it could well be part of the curriculum at the McKinsey Business School in 2005. To be sure, the empirical evaluation confirms a status that capricious reputation bestowed on it long ago. The Big B of B-schools is still up there -- but only just. And the hold of the IIM-A, arguably the management institute with the longest pedigree in the country, over the top of that exclusive band, India's Best B-Schools, 1998, is precarious. True, with top-ranking positions in 10 out of the 15 parameters employed for the survey, straddling the spectrum from factual factors like infrastructure and placement ratios to perceptual ones like alumni and student ratings, the august academe should be revelling in the reinforcement of its standing. Confirming its global aura, which earned it the first rank among Asian B-schools in Asia Inc.'s September, 1997, survey, the IIM-a had an incredible 17 per cent of the Class of 98, 34 MBAs, being picked up by global recruiters.
The most chronic of them, ironically, is one that every MBA student is warned about in Marketing 101: Marketing Myopia. Or, an advanced stage of strategic short-sightedness, in which a company, obsessed with its products, turns a blind eye to the need of the customer. The IIM-a has lost touch with the primary demand that corporates make of their management trainees: the ability to manage real-life situations, not to analyse and solve problems. According to a survey of corporate recruiters conducted by the Xavier Labour Relations Institute in 1997, problem-solving ability only comes after teamwork potential, on-the-job performance, and leadership skills as the qualities that corporates value the most in their MBAs. Ignoring such shifts, the IIM-a is still focusing on imparting analytical skills to its students, alienating recruiters like Mahendra Swaroop, 43, the executive director of the Rs 1,000-crore Pepsico India, who no longer visits its campuses. ''Students with merely excellent academic track-records make only excellent management trainees. They are inherently averse to risk-taking. Once they are on their own in the real world, they are extremely poor at coping. The IIM-A is producing managers today whereas they need to produce leaders for tomorrow,'' he complains. Indeed, many companies that still hire MBAs off the IIM-A campus may only be using the B-school's stringent admission procedure as a screening device to guarantee themselves highly intelligent people rather than trained managers-in-the-making. Admits Nachiket More, 34, deputy general manager, ICICI (Class of 87): ''When it comes to recruiting management trainees, we have two issues in mind. One of them is excellent raw material. And there's no denying that IIM-a students have been sifted out of a competitive and rigorous entrance regime.'' The lack of contact with the corporate sector, which is the obvious cause, is palpable. The IIM-A's linkages with business are restricted to 11 chairs endowed by companies in various subjects -- six of them unoccupied -- 42 short-term management development programmes (MDP), and sporadic consulting assignments taken on by some members of the faculty. The fact that Indian business realities are being ignored is evident from one telling development: since 1990, the IIM-A has stopped teaching business history. The gulf springs from the IIM-A's focus on the management sciences rather than on preparing managers. However, even by those standards, it has produced virtually no world-class theoretical work. Admits Shekhar Chaudhuri, 46, professor (international management & business policy) and chairman (research and publications), IIM-A: ''I don't think we have made landmark contributions in terms of new concepts relating to strategy or international management. Our contribution has been more in the field of applications.'' Nor is the institute trying to achieve global standards, either qualitatively or in terms of technology and teaching methodology, by benchmarking against international B-schools or exploring their practices. Could that explain why, every year, about 1,000 graduates enroll in US B-schools, preferring to go abroad than to compete for a seat at India's best B-school? Of course, catching up with global standards will need investments. But, stuck as it still is in the mode of being government-funded, the IIM-a is naturally hamstrung for resources. Only in November, 1991, when the Human Resource Development Ministry froze the ceiling on the government's revenue grant to the institute at Rs 4.26 crore, did it wake up to the compulsion of generating revenues under its own steam to pay its bills. However, even in 1996-97, the institute took a net grant of Rs 4.02 crore from the government, even as it amassed a surplus of Rs 6.85 crore for transferring to its endowment corpus. Unfortunately, however, instead of stepping up consultancy projects to boost revenues, the IIM-A actually allowed their contribution to sink from Rs 2.13 crore in 1995-96 to Rs 1.92 crore in 1996-97. The takings from its short-term MDPs, another potential high-income source, also slipped from Rs 3.66 crore to Rs 3.65 crore. It was primarily the jump in tuition fees from its bread-and-butter post-graduate programme, from Rs 2.43 crore to Rs 3.07 crore -- coupled with an increase in its interest income from Rs 1.99 crore to Rs 2.95 crore -- that enabled it to boost its self-earned revenues from Rs 11.92 crore to Rs 14.16 crore. At this slow rate of progress towards self-sufficiency, making new investments once government funds stop flowing -- as they surely must soon -- will not be easy. No wonder the country's premier management institute is finally becoming introspective. And in no one is this more manifest than in the IIM-A's 55-year-old director, Jahar Saha. Diminutive, soft-spoken, self-assured, Saha exudes a relaxed demeanour that belies a spark of intent and restlessness about him. As the caretaker of a national icon, Saha has an unenviable, and unquestionably difficult, agenda before him: shield, sustain, and perpetuate a legacy. ''When you've scaled a peak, you have no choice but to find a higher peak, or slide. Since the IIM-A has no plans for the latter, we have to convert our introspection into hard decisions and action,'' says he. With Saha wielding the baton, the IIM-A must also claw back from the management abyss into which it had plunged under the directorship of Pradip Khandwalla, 58 (1991-96). During Khandwalla's second tenure, the rifts between him and several members of the faculty were so sharp that, in many cases, the antagonists were not even on talking terms -- a sorry state of affairs at the country's premier B-school. Worse, the focus of attention shifted from education to such farcical issues as permission for the teachers to install cable TV connections at their campus accommodation. Indeed, at one point in 1996, there were more than 10 court cases raging between different teachers on one side and Khandwalla on the other. Not surprisingly, teaching took a distinct backseat. Unless the real business of teaching returns to centrestage on the stylish Louis Kahn-designed brick-and-grass campus of the IIM-A, IIM, Bangalore (IIM-B), which is snapping at the No. 1's heels, could well overtake it. Says Ram Mohan Rao, 56, director, IIM-B: ''While others have been rather inward-looking, we've worked at gaining global exposure and visibility.'' In fact, the very features that once put the IIM-A head and shoulders above the rest -- infrastructure and teaching methodology -- have been meticulously imitated by aspiring competitors. What's missing at the IIM-A, however, is hands-on experience of any kind. And the fact hasn't been lost on corporates. Points out P. Dwarakanath, 46, the vice-president (hr) of the Rs 580-crore SmithKline Beecham Consumer Healthcare: ''The students from all the IIMs are conceptually strong, but have no practical knowledge whatsoever due to lack of exposure to industry. They are very bright, but how much value is added by the IIM-A?'' Not as much as today's brainpower industries expect from it. So, the IIM-A's biggest threats as it prepares to defend its premium position from the country's other, fast-growing B-schools had better be its biggest concerns too. |
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As he hummed his favourite Louis Armstrong song,
Manish Choudhury was conscious of not enjoying his morning walks as much as he used to.
Promoted earlier that year to the post of director at the 37-year-old Institute of
Management Education (IME), Hyderabad, easily the country's most reputed B-school,
Choudhury had realised quickly just how perilous that leadership position was. Unlike most
of his predecessors, Choudhury was a pusher. He interacted regularly with students,
faculty, companies, and other management institutes, worked 70-hour weeks, and tried to
clear up the atmosphere of mistrust and intrigue that he had inherited, desperately
attempting to refocus the institution on its primary task of providing state-of-the-art
management education. And he was aware of the problems only too keenly. The IME was losing
touch with the real needs of the corporates that thronged its campus, and was turning out
MBAs who did not really possess the skills that today's workplace demanded. Worse, it was
not aware of this gap between its perspective on management education and the changing
qualifications of the job-ready management graduate. Meanwhile, other B-schools in the
country were quickly adapting their curricula to emerging needs, and threatened to
overtake the IME soon despite its reputation. Choudhury's troubles were compounded by a
lack of receptivity among his colleagues: indeed, most members of the faculty were just
too old to be in tune with the times. When goaded to change, they simply pointed out that
IME students still commanded the highest campus salaries and had the largest number of job
offers to choose from. A frustrated Choudhury knew that he also had to tackle the issue of
changing the teaching methodology, which revolved around the now-antiquated case-study
method. And as he fretted about the theory-heavy curriculum, and a poor research and
consulting record, Choudhury knew that he had all the makings of a downslide on his
hands... 
Just why, then, is the 37-year-old B-school -- which has given corporate
India CEOs like, inter alia, the Rs 4,493.53-crore Industrial Credit & Investment
Corporation of India's K.V. Kamath, 47 (Class of 71), the Rs 978-crore Colgate-Palmolive's
N. Jayaraman, 43 (Class of 75), the Rs 425-crore Johnson & Johnson's N.K. Ambwani, 49
(Class of 72), the Rs 284-crore Digital Equipment's Som Mittal, 45 (Class of 75), the Rs
107-crore Amtrex Appliances' Arvind Nair, 42 (Class of 79), the Rs 84-crore Timex Watches'
R.J. Masilamani, 52 (Class of 70), the Rs 5.63-crore GE Lighting's Pradeep Bhargava, 44,
(Class of 79) -- providing cause for concern rather than celebration? Primarily because
the problems challenging the 1961-born pioneer's numero uno position are palpable. 