B-schools need to focus on under-managed sectors

7 Nov

As India plans to open up the higher education sector through a proposed legislation, the Indian Institutes of Management (IIMs) are seeking more autonomy from the government and plan to market their brand globally and admit foreign students. M. Damodaran, a former chief of markets regulator Securities and Exchange Board of India and current chairman of IIM-Tiruchirappalli (Trichy), says business schools need to focus on under-managed areas to be a part of nation-building. Edited excerpts from an interview:

Do you think the government is serious about autonomy for the IIMs or is it more of a bureaucratic exercise?

My understanding is that if you want to exercise power legitimately in public interest, I don’t think anyone has a shortage of powers. It is a question of how do you identify those powers that you need to exercise in a manner that is of public interest. Because, that is the justification ultimately of the power.

I think today it won’t be unfair to say that you don’t have power. I think powers exists. All of us who have powers want more power, but we still need to ask ourselves: are we exercising the powers we already have. And this is just not confined to only the IIMs, but across the table.

There are certain things that laws, rules and regulation tell you what you can do. Some tell you specifically what you cannot do, and there is an area in between where it is silent.

You should not see (this) as forbidden territory. Because what the laws, etc., not either expressly or by necessary implication proscribe, you must see that as your legitimate… If you look at it that way, then you will see that there is a lot of empowerment. It is a question of how quickly you exercise those powers.

How relevant is the current management education provided by the IIMs for the country?

We have deliberated on whether the management education provided today is relevant to the India growth story.

If management education is aimed at producing only investment bankers for foreign companies or management personnel for multinationals, and not looking at under-managed sectors like health, education, physical infrastructure or agriculture. They need management as much as the areas of finance or marketing. To what extent is the IIM bunch contributing towards this (under-managed sector)—as of today, hardly anything.

So we have to look at those under-managed sectors. We have to see how thousands of management institutes with the IIMs in the forefront address some of those.

What are the challenges?

We have more institutes (IIMs) now; secondly, some thought is being given to improving the quality of the faculty and incentivizing them for producing better results. (The process of) selecting good students is in place. In terms of empowerment of faculty and people who run the institutes, I don’t think anyone can complain. There is complete functional autonomy. It’s not like independence. You don’t fly a flag and say you are independent.

But to the extent you need powers to run a good institute, they are all in place. The new IIMs will take some time because there is an issue of branding. They don’t have a brand like the IIMs at Ahmedabad, Bangalore or Calcutta. So, getting faculty to the new IIMs is a bit of challenge, but it’s not insurmountable.

What is going to improve management education are three, four things—good students; good, committed faculty; and (a management) that sees itself as a part of transformation to take people with hardly any experience, and moulding them into good managers.

To become global brands, the IIMs are talking about marketing themselves worldwide in the face of foreign institutes showing an interest in India. Your view?

I think the IITs (Indian Institutes of Technology) and IIMs are two Indian brands already known. Within India, there is a huge demand for management education. The IIMs are not positioned to fulfil those numbers today. That’s why new IIMs are being set up. Institutions from outside are recognizing that there are a whole lot of Indian students seeking admission outside… They say why not move to India. There is a space for everybody and will lead to competition, better quality and, of course, more choice for students.

This is something we need to welcome. It will ensure that our IIMs do better than what they are doing right now. Just that these people are coming does not mean they are superior. Maybe their brand story is better known, maybe the foreign tag appeals to some Indian students. As we manage to market our brand better globally, and as newer IIMs establish them, there is no reason to feel threatened by anyone.

But a faculty crunch is hampering their growth and the quality of education.

We recognize that a good faculty is always a constraint because you are looking for top-class faculty for a larger number of institutions. When you are doing that, you discover that it is not available. Of course, there are issues that industry pays much more than academic institutions. A lot of people don’t see teaching as their lifetime occupation and you have all those issues. Yet there are a bunch of new youngsters who think they can bring new things to the table.

What we are looking at is how quickly you can make new IIMs institutions of great learning. If you wait for everyone to have their own faculty and have their own processes, then it will take longer. One of the ways to do that is to pool resources (among the IIMs). But you will not see them function as mirror images of each other. They have to cooperate to become stronger, yet remain competitors. They will compete for better students and better faculties.

There were talks about a joint interview among the 13 IIMs for selecting students. Why was that abandoned?

What the ministry wanted was that students seeking admission go from one town to another for interviews. You don’t know in a competitive situation whether you will get selected. Let’s recognize the travel time and money.

Now, what has been talked about is can we ensure not that you do it jointly, but do it in a manner so that students don’t face much problems. Do interviews on subsequent days (in the same city) so that students don’t have to travel from town to town.

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