Management Education in India: Innovation rather than Invention

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Anil Ambani once said that the key to success of Reliance was innovation and not invention. The Indian model of management education has been modeled on the West; this has been successful to some extent in India and largely successful in the West. The last century was dominated by the west and their success can be attributed to their management practices. For a while it was ok to follow this mode however with the global economic chessboard undergoing changes the system needs to change as well.

The paper first attempts to give a clear and correct understanding of the current status of management education in India. It then lists out the major challenges that are being faced by the sector and how these challenges cannot be faced by the current system in place.

In the following paper, we are attempting to make certain changes in the existing management education structure in India. Now since the system is well established and functioning, we are trying not to being any radical changes in the existing setup, but minor modifications or certain measures through which we aim to gain substantial gains, and take the existing setup to a level where it helps fulfills the demands of both, national and international marketplace.

The paper explores the areas where changes can be made in the existing setup, and simultaneously recommends probable solutions to make the system evolve for the betterment of the coming generations. The paper touches upon certain critical aspects of management education like mentorship programs, faculty crises, status of higher education, etc.

The paper proposes emphasis on certain systems which are already in place such as the doctorate programmes while also experimenting with newer ideas such as company centric MBAs.

In this paper we have tried to give accurate examples which we feel are worth learning from and that their successful implementation can be repeated in our system.

The paper also caters to the demand of the industry, so as to lead to the evolution of future creative leaders which would prove their mettle not in local environment, but also prove their worth in ever changing international environment.

Why Reforms?

According to UNESCO, "higher education is no longer a luxury; it is essential to national, social and economic development". As India surges ahead in the world economy the need is for managers who can take the challenge to the world MNCs. The MBA India has one of the lowest percentage of educated graduates opting for a PG. Gross enrollment percentage of youth in higher education is 7%, as compared to 92% in US, 52% in UK, 45% in Japan, 11.1% in all Asia, even 10.3% in all developing countries. If we consider the number of MBAs required by the industry and the number passing out each year, we find that there is a gap and with each passing year it is growing.

There has been a significant rise in the number of colleges offering a post graduation in management. The last few years have seen the formation of a bubble in the number of the B-schools opening up. In spite of this management education faces the following challenges.

Wide gap between tope B-schools and the rest.

Faculty Crunch

Syllabus Issues

Inability to meet industry demands.

Current Status:

There are approximately 2000 B schools in the country which are approved by the AICTE and together they provide close to 2, 00,000 seats for management education. India boasts of institutes such as the IIM-A which are recognized internationally for their excellence. There are three categories of B-schools today:

The Ivy League

The Good ones

Everyone Else

A major reason for this is the lack of good faculty at most of these B-schools. The crisis is not just restricted to the other league B-schools but is slowly spreading to the Ivy League as well. Dun & Bradstreet India, a business information company which released a report on business schools of India states that only 50% of the faculties in top B-schools are PhDs, whereas a majority of faculty in Type II and III schools is merely MBAs themselves. The study revealed that of the total faculty, 54% are full-time teachers and 38% are visiting professors The reasons for this are plenty but two major reasons stand out. The first is that the Indian teachers are not paid enough remuneration and second and more importantly there is too much of teaching being done as opposed to research. These two clubbed together make the universities abroad much more attractive for Indian teachers. Also the rate at which the B-schools are opening up all across the country is much higher than the rate at which there are people who are joining B-schools for teaching. This not only creates a faculty crunch overall but also increases faculty poaching between institutes. The lack of competition in some cases also makes the faculty complacent and leads to a drop in evaluation standards. The sector for management education should avoid repeating the mistakes of engineering colleges where too many colleges without appropriate faculty are producing unemployable engineers. The same study also showed that that student from anonymous B-schools get a far less meaty starting salary than those who graduate from the premier colleges. In 2009, while graduates of top schools bagged an average annual salary of Rs 8.77 lakh, those from lesser known schools received Rs 1.93 lakh.

A number of universities across India offering MBA programmes have been unable to fill their seats completely. Examples include the recent admissions to Nagpur University and

Hyderabad University.

The last few years have seen Indian companies make big strides in the corporate world. Indian companies have acquired firms many terms their size. While this is great news for the Indian economy one must remember that approximately 60% of cross border M and A fail i.e. they don't earn their cost of capital for the buyer. Of the top 15 largest cross-border deals transacted by Japanese companies during 1980-2001 only four were successful.

The challenges that the Indian companies face will be multiple and diverse. Indian IT and

Auto companies have the lead in the world today nonetheless in order to make sure that they don't suffer the fate of the American auto industry it is essential to have managers who can integrate operations globally while catering to local needs. Global management involves issues like cultural differences, inappropriate governance structures, loss of talent, a limited cadre of global managers, and the inability to export distinctive home market capabilities to new countries. Also for Indian companies to expand successfully on their own we need managers who have a thorough understanding of the world scenario.

The 20th century was the century of knowledge however the 21st century is going to be the century of ideas. The industry needs managers who can see the opportunity in an industry before it becomes obvious. This will only be possible if rather than spending all their time learning and memorizing management theories students spend a sizeable percentage of their time researching and in industries of their choice. B-schools abroad also earn quite a lot from executive training and consultancy to MNCs. For Indian B-schools fee collection is the major source of revenue. This deprives the students of valuable industry knowledge as well as increases the cost of education substantially. Use of out of date syllabus is also a need for concern.

Being in India is a boon for managers as the diversity and the complexity of the challenges that a manager faces is very different from those in the west. Here selling of a product requires different approaches in different parts of the country, yet some of the brands have easily been able to establish themselves. The promotion of thumbs up

A manager in India faces challenges such as cultural sensitivity, different levels of governance, and differences in infrastructure among others. Indian B-schools need to prepare managers who can adapt and innovate to combat these challenges. The promotion of thumbs up using Akshay Kumar in the north and Mahesh Babu in the south is an excellent example of how adaptation and improvisation are the key to management.

Proposed Reforms:

In order to meet the different challenges that are being faced by the B-Schools we propose the following reforms to tackle the problems with the current system of management education.

Bridging the Gap: Mentorship

The gap between the various B-schools of the country needs to be bridged. This can be done by introducing the mentorship system as is currently being followed by a few IIMs. The IIMs used to follow this system themselves before they became world class institutes. IIM Kolkata had collaboration with Sloan School of Management, MIT and they helped in building up the programme. Initially IIM-A was associated with Harvard Business Schools. These schools discussed their approaches with IIMs but in the end rather than imposing they allowed their Indian counterparts to develop their own model. This system should now be extended to institutes across India where successful universities will act as mentors to other departments.

Faculty Generation:

Creating a pool of teachers who can take charge of the management education in the country. Since this cannot be done immediately, it can be done in a phased manner by making it compulsory for all B-schools to have a fellowship management programme within 5 years of their inception. B-schools which are already established and do not have a fellowship programme should be asked to implement the same as well. This will not only create a pool of teachers but also invite more live projects from the industry and can result in increased revenues for the colleges. This will also mean an increase in the amount of original research done by the institute which will lead to more up to date case studies and syllabus for the students of the institute. Although some of the top 100 odd B-schools of the country do have a Fellowship Programme as of now it is mostly the IIMs which earn money from consultancy and that too comes mostly from government and quasi-government organizations. The programme should compulsorily involve a certain number of industry projects and a certain number of research projects. The 2010 GMAC Application Trends Survey found that part-time MBA programs -- which appeal to people looking to pursue their studies while managing jobs, families or other responsibilities -- may be gradually emerging from a period of slowing application growth that began two years ago. About 43 percent of the part-time programs in the survey reported a year-over-year increase in applications volume, the same as in 2009.

The institutes in can also look at online doctoral programmes where professionals need to spend minimal time on campus to cater to this rising trend. The programme will lead to increased flexibility specifically in India where the earners have a large number of people dependent on them. It will allow professionals who have families to continue their studies without giving up their income. The programme can be of a longer duration and will allow students to finish it at their own pace without compromising on the quality. They should also make a binding agreement with the proposed degree holders that they will take specific number of lectures at the institute. At Harvard University The University Management Fellowship Program was created in July 2003 by then-President Summers to recruit the best of Harvard's talented graduates to work on key Central Administrative initiatives and ultimately to attract some to careers in higher education administration. The program started with 8 Fellows participating in 6 different departments of Central Administration. It has since expanded, reaching to almost every unit within Central Administration and to some of the Schools of Harvard including Faculty of Arts and Sciences (FAS) and Harvard Medical School. Since its inception, over 70 Harvard Graduates have contributed to the success of the program. According to the U.S. Census Bureau, doctorate degree holders will earn, on average, just under one million dollars more than their masters degree holding counterparts over the course of their working lives. If financial incentive were the only consideration, doctorate degree holders would have sufficient justification to pursue advanced degrees

Although this programme will have considerable advantages there are a few hindrances as well. In-case of a full time doctorate programme the families of the individuals pose a problem since most of the B-schools in the country have a residential programme. Also a person who is pursuing a doctorate programme will have to forgo a significant percentage of their market earnings. These two points make it difficult to convince individuals to pursue doctoral studies.. The research projects being invited from the industry will require that the schools establish themselves first and that the projects be performed under somebody who is experienced, this pool is again small. The online programme eliminates the problems of a full time doctorate programme but a major challenge for it is that online degrees are not universally accepted by state regulated employers. Also it prevents a large amount of interaction not only between the students and their professors but also between students themselves. Thus strong networking which might have been developed in a regular programme is lost. Anand Mahindra gave Harvard a $10 million gift recently!

Although each of these programmes will have certain merits and demerits the idea is to provide a large range of individuals with the option of a doctorate.

Revamping the Curriculum:

Indian managers need to understand and face local challenges. For this it is essential that their learning take place in an Indian context. The case-studies that they take must be local as should the text books being used. Also the course materials needs to be updated to match pace with the technology. There should also be an increase in the number of electives being offered. The current syllabus has a large number of compulsory courses which takes up most of the students time. The students need to be given more time to work on independent ideas, B-schools world over along with corporations are following this Harvard offers about 100 electives while in Wharton the number reaches almost 200, Google allows its employees to spend 20% of their time working on their own ideas.

The fact that during the merger between Tata and Corus only a small percentage of the negotiation team was that of Indians also stresses the need for Indian B-schools to focus on global scenarios.

Meeting the Demands of the Industry with the Industry:

The GMAC Application Trends Survey found that Executive MBA (EMBA) programs -- designed for people with substantial work experience -- posted the most notable gains among all programs in the survey. Fifty-nine percent of these programs saw more applications in 2010 than they did a year ago, compared with the 37 percent that reported gains a year ago, reversing a one-year slide that coincided with the deepest part of the Great Recession. This means that there is an increasing demand from the market for people who are better trained and suited to their needs.

In order to fill the gap between industry demands and b-schools, the various colleges across the country can have MBA programmes in partnership with organizations. The organizations will tell the institutes exactly what kind of training do they require for their prospective candidates. The candidates for the programmes can come directly from the organizations or the programme can be advertised as such. The condition being that upon completing the program successfully the students will be recruited by the organization. The advantage here is that all sides are getting what they want. In the IT industry the top firms already have huge training facilities to train their professionals. Since the demand for managers is high but not as high as in the case of IT the model allows companies to train and recruit managers exactly as per their needs. In the past few years, executive M.B.A. programs have seen an uptick in students from small businesses-some of which are even helping pay the students' tuitions.

Blein Consulting, a 20-person firm based in Monterrey, Mexico, pays half of the tuition for its consultants to attend E.M.B.A. programs. To cater to the smaller segment of companies which cannot afford full time collaboration the institutes can also offer some electives as opposed to a whole programme. The electives will be for certain specific companies which are interested in recruiting from the campus. This will allow smaller companies to recruit managers who meet their needs even of they are not tailor made for the jobs at hand. The advantage to the students is that they have both a management degree as well as the knowledge that the industry demands.

However the disadvantage of such a program is that the demands of the industry are dependent on the market situation, hence by the time the student finishes the course the job may not exist or in some worst case scenario the company might seize to exist. Also while the program will make the individual highly specialized and master of one the chance is that the program may not allow him the opportunity in other sectors or companies which a general MBA does.

Formation of Apex Body:

All of the changes proposed here will be more effectively implemented if there exists an apex body which over sees the entire process of reforms and is independent of the bureaucracy that plagues the other governing bodies. If there exists an apex body then it will also be possible to have certificate examinations which can be taken by individuals much like certifications for technical courses or specific of degrees of management. The apex body will also oversee the autonomy that the various B-schools of the industry have. It will provide the basic set of guidelines that all the B-schools of the country should follow and also the basic set of courses.

If implemented the above mentioned changes should yield managers who can tackle the challenges of both the world and Indian economy.