Tuesday, December 02, 2014

Business Education in India: Reimagine The Business!

Business Education in India is in some sort of crisis. The applicants for Combined Admission Tests are falling, indicating sluggish demand even for the top business schools. The lesser schools are in deeper crisis, their lack of placements making headlines in the newspapers. 

There are a number of reasons for the dead-end that most schools are facing. Chief among them is perhaps lack of innovation, despite the changing marketplace. Indeed, the Indian regulatory structure is decidedly anti-innovation, and it rewards conformity rather than trying to do anything new. But, there are structural reasons for lack of innovation in the business schools - that they are really too small in most cases, with only a few hundred students at best! In turn, the small number of students is a result of these business schools depending on a narrow range of courses, MBA and its variants, and being completely oblivious of the fact that a large number of students may want to study business at the undergraduate level. 

In fact, what ails Indian business schools is their overt dependence on post-graduate students. The Indian employment market has changed considerably over the last decade, powered by the growth of the domestic market (and the industries that serve it - insurance, pharma, healthcare, retail, telecom, education). The export-facing industries stagnated or grown slowly, and the charm of IT and BPO, whose dollar-denominated salaries justified the expenses on a post-graduate course, quickly faded out. The industries serving domestic market could do with undergraduates coming out of general streams, and did so, undermining the premium paid for MBA education altogether.

One may wonder why the Indian Business Schools are somewhat disconnected from the changing needs of the market. The Indian educational institutions, in general, are less sensitive to the student preferences for a variety of reasons. The paternalistic culture of public institutions, where most of today's educators and education administrators were trained, has shaped the approach: A decidedly elitist and patronising one. The condition of excess demand, which was indeed the state of the market when the private business schools took off, also contributed to the culture of insensitivity to student preferences. While today's students, socially networked and technologically savvy, often use platforms which engage in irreverent discussions about business schools and their practises (www.pagalguy.com being one of the examples of such community activity), the inherent power differences in Indian culture allow the business educators a strange sort of insularity.

The business schools have also failed the employers, not just by missing the shift towards domestic demand but also failing to adequately broad-base the educational offering to bring in not just a few elite managers (who always shift abroad as soon as they can) but a generally educated workforce. Their failure to collectively promote an employment-orientated undergraduate education is a key reason for this; their narrow instrumentalist focus prepared their students for a certain kind of role and not others. One could possibly argue that the job of the business schools is to produce managers and bankers, and nothing else: However, in the context of the widespread failure of the education system, producing more bankers and managers, and not feeding the business ecosystem, is an inevitable recipe for disaster. This is exactly what has now come about.

The crisis of employability in business schools, indeed leading to a credibility crisis of the sector as a whole, therefore, stems from the failure of business schools to practise what they preach: To anticipate and understand demand and act accordingly. This is perhaps expected within an overbearing and intrusive regulatory regime, which imposes itself as the main 'customer' of any educational enterprise, forcing the institutions to follow the whims and fancies of the regulator and forget the people they serve, both students and employers.

With this background, the Business Schools in India are at a point when they need to be re-imagined. Indian educational institutions are ill at ease with strategic thinking, but the seeming crisis should force them into some rethinking. My recommendation to Business Schools that I know usually revolve around few key themes, which are as follows:

First, build a strong and varied undergraduate offering. India's skills crisis is primarily at the middle management level,  and for Indian businesses to remain competitive and expand, they need a huge pool of middle management talent. Positioning the business schools at the post-graduate professional level is a mistake, because that is not serving the business ecosystem. Building undergraduate offering may also solve the challenge of size, and attract a wide range of students into business schools - allowing innovation. 

Second, lead the movement towards professionalisation of domestic industry. There is a strange indifference towards skills and expertise in the industries that serve domestic customers, particularly the low-income ones. The inherent assumption seems to be that they won't care about value or service, though the opposite is indeed the case. In many ways, lack of sophisticated business thinking aimed at domestic consumption, indeed primarily at the middle management level, is one of the key reasons for sluggish growth of the Indian consumer market. There are some notable exceptions already, and the business schools, rather than aping Western practises and forever hoping the IT and Banking sector to ride to their rescue, need to lead with research and innovation aimed at this market.

Third, rethink the costs of business education. While the business schools have followed blindly the Western model of creating a business elite, in India, their job is to create the whole business ecosystem. Apart from a few top ones, which are government funded and low cost in any case, the other institutions need to become value sensitive than merely being prestige orientated. It is indeed surprising how little technology most Indian business schools use, or even aware of, when technology, both for enhancing student experience and for driving down costs, is one of the key innovation areas across the education sector. 

In summary, the key point is that the current model of business education, a prestige seeking educational cluster stuck in a limbo within the general void of business innovation (despite notable exceptions) and an antiquated business culture, needs to change, because its founding assumption, a generally educated workforce which need to be managed, does not hold true in India. To be successful, business schools need to rethink their business, reconnect with wider society, transform their culture and play a part in creating the professional ecosystem.



 

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