School profile: IIM-A seeks to escape its shackles

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The squat brick buildings on the campus of the Indian Institute of Management Ahmedabad (IIM-A) bake in the heat of north-western India’s searing sun. But within buildings incised with the sweeping circles and arcs of the architect Louis Khan, students are gathered in an air-conditioned classroom to present their final projects – an evaluation of a major US power company.

These are not ordinary students, however. ”You have not come here as freshers, you’ve come here with experience,” declares M.R. Dixit, gesturing animatedly as he begins class.

Prof Dixit’s students are two dozen senior executives in their 40s and 50s from one of India’s biggest state-owned companies. They are on the penultimate day of a week-long course at IIM-A. The class is being taken so seriously that their chairman will attend the following day to hear the students’ analysis of their own company, complete with suggestions.

The class represents a sea change in corporate India. Sleepy, bureaucratic state-owned enterprises that have enjoyed monopolies for decades must now compete with aggressive private companies seeking the fruits of India’s new deregulation.

Public sector companies have ample reason to be stepping up their game. In a nearby building, managers in the India office of a foreign electronics company are mulling a case study during their own week-long management course. Public sector and private companies of all sizes are looking to business schools to give them an edge in India’s increasingly competitive market.

Change is also afoot at IIM-A, widely considered the best of India’s six elite managements schools established over the last three decades. IIM-A too must adapt to the demands of India’s booming economy that has clocked up 8 per cent annual growth for the past four years and seen the fast modernisation of many sectors.

Companies are racing to meet urgent demand for managers who can help them establish a foothold in fast-growing India. The information technology sector alone hires tens of thousands of people each year, illustrating one of the most pressing concerns for many companies: how to hire and retain top talent.

In stepping up its own game, IIM-A has rolled out a new one-year “executive” MBA program for students with prior management experience, as well as a new degree in public policy management; partnered with Duke Corporate Education to create customised corporate programmes; offered more executive education programmes; and established exchanges with four dozen business schools worldwide, most recently with Columbia in New York.

Not to mention that IIM-A aims to significantly boost enrolment in all its programmes and expand its ”new campus” that is connected by an underpass to the one Louis Khan designed in the 1960s.

IIM-A also offers a degree in agricultural management, which reflects IIM-A’s identity as not just a business school but also an institute that teaches management across all sectors, says IIM-A director Bakul Dholakia, an economist by training. Agriculture often gets overshadowed by high-profile services and industry, but 70 per cent of India’s population of 1.1bn rely on farming and its growth is ”crucial to the development of the Indian economy.”

This is a dizzying menu of new initiatives at IIM-A. Yet these are heady times when demand for top talent in India is so high that some companies have begun offering a handful of IIM-A graduates, most in their mid-20s, jobs with six-figure (dollar) salaries – unthinkable for India just a few years ago.

Prof Dholakia has lofty ambitions of vaulting IIM-A to the next level. It is already one of the world’s most selective business schools, with only 250 students admitted out of 170,000 applications for its flagship two-year MBA programme. It was ranked 69 out of 100 best full-time MBA programmes – the only Indian school to make the list – by the Economist Intelligence Unit in 2005.

IIM-A is modelled after Harvard Business School and was nurtured by HBS professors from its establishment in 1961 to 1967, because of a strong relationship forged by IIM-A’s founder, physicist Vikram Sarabhai. As such, IIM-A uses the case study method of teaching and prides itself on rigor; MBA students typically go through 900 cases in two years, says Prof MM Monippally, former head of that programme.

Others are also keen for a taste of what India has to offer. In the last academic year, IIM-A counted 75 incoming foreign exchange students, outnumbering the 64 Indian students who went abroad. IIM-A is also trying to woo more visiting faculty from overseas.

In a reflection of India’s growing presence on the global stage, IIM-A courses are becoming more international in flavour. The new one-year MBA programme requires students to study outside of India, as well as a course on managing across cultures. Graduates ”will be working for companies that are international in scope. They must understand that underlying premise across cultures,” says Prof Arvind Sahay, who heads the one-year MBA programme.

IIM-A is also establishing more overseas partnernerships. It offers a double-degree programme with Essec Business School in France and conducts executive education programmes overseas in Singapore, Egypt, Oman, Dubai, Thailand, China and the US.

Sector-specific research centres have been established in the past few years to create niches of expertise for professors who consult and publish in that field. IIM-A faculty are also doing joint-research at overseas universities including Stanford and McGill and are awarded bonuses to publish in renowned international journals.

But for all of IIM-A’s ambitions it is still severely shackled by government restrictions. Prof Dholakia’s temper flares when he describes IIM-A’s largest challenge: coping with interference from India’s bureaucratic government.

”We can’t set salaries for our faculty. We pay them peanuts!” he laments. IIM-A’s 80 professors typically get paid about Rs 50,000 ($1,200) per month and so must supplement their income with consulting.

Professors at top US business schools can make about $200,000 so it was little surprise that 15 faculty left IIM-A in 2001 for universities overseas or for corporate jobs. Since Prof Dholakia launched efforts to retain faculty, only seven or eight have left in the last four years since he became director.

But there is a host of other limitations. India’s government bars IIM-A from the option of setting up a campus overseas. Government-funded universities are subject to a controversial new law that mandates that 27 per cent of places be “reserved” for members of “other backward classes’” This “reservations” policy attempts to level the playing field for India’s disadvantaged groups but many critics say it is a game of politics that jeopardises quality education.

And IIM-A is hamstrung by the budget constraints of what was until recently a government-funded institution. ”We don’t even have an IT manager because we can’t afford one!” cries Prof Dholakia.

To pry itself from government constraints, Prof Dholakia stopped accepting government funding for IIM-A more than three years ago. ”We’re not a burden on the taxpayer, so why should we be prevented from pursuing our agenda?” he argues.

This “hunger strike” response also explains IIM-A’s recent push to generate new sources of income through more programmes. While annual expenses for its two-year MBA programme are Rs 160,000 or about $3,500 (compared to $73,000 for one top US business school), IIM-A’s one-year programme for executives charges Rs 1m, or about $23,000.

IIM-A’s growth strategy is borne not only of ambition but also survival. ”We’ve stood up to the government and kept them at bay. We’ve allowed greater freedom to the faculty and insulated them from government interference,” says Prof Dholakia.

What will happen when Prof Dholakia finishes his five-year tenure this autumn is uncertain. A government-approved successor (yet another regulation) will take the reins at IIM-A.

But he seems sure of one thing. ”The full potential of IIM-A is prevented from being realised,” Prof Dholakia bluntly proclaims. ”That’s good news for western business schools. Otherwise we could give the best business schools in the world a run for their money.”

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