It’s the perfect fusion of business and academe. Its goal is to create a world-class business school environment that will produce students capable of working at top companies anywhere in the world, though they may have a bias toward those headquartered in India. And it will produce its first class of MBA graduates in June 2002. Hello, world—the Indian School of Business has just opened its doors.
The brainchild of a handful of American citizens of Indian origin— but the creation of legions of professors and business pros— the ISB is a business school truly designed by business. Among the multinational corporations that contributed heavily to its founding are DaimlerBenz, Goldman Sachs, Citibank, and McKinsey & Co. Indian contributors include ITC Limited (the former Imperial Tobacco Company), Hindustan Lever, Godrej Group, and Bajaj Auto Limited. Representatives from many of these companies are also on the governing board of the new school.
The school is being organized and run by two highly respected business schools: Northwestern University’s J.L. Kellogg Graduate School of Management in Evanston, Illinois, and The Wharton School, University of Pennsylvania, Philadelphia. Both schools are heavily involved in recruiting faculty and devising the curriculum. When ISB students graduate, their diplomas will bear the seals of ISB, Kellogg, and Wharton. Another powerhouse, the London Business School, has recently signed up as a partner in the new school. London Business School professor Sumantra Goshal, a former teacher at INSEAD and MIT, has been named ISB’s new dean.
The pedigree is impressive enough to catch the attention of the most wary corporate donor, but it’s not the only reason major corporations have made generous contributions to the new school. “I am positive that they honestly and genuinely believe in education and are trying to promote it, regardless of personal benefit,” says Bala V. Balachandran, distinguished professor of accounting, information systems, and decision sciences at Kellogg, and chairman of the academic advisory committee for ISB. “But I am also positive there is a personal benefit directly tangible to them, because they will be vested in the school. They will have an identity with the school. Right now, we have a class of 130 students who would be good enough to be admitted to Wharton or Kellogg or any other school. Of that 130, I wouldn’t be surprised if 110 someday will be working in one of the companies that sponsored the ISB.”
Not only do sponsoring companies get the benefit of highly qualified and highly motivated new workers, those workers aren’t averse to going back to India for a three- or four-year tour of duty if the parent company needs a representative overseas. They have an emotional bond with the country, Balachandran points out, as well as loyalty to the company sending them there.
Why India, Why Now?
Balachandran, one of the core group of people who came up with the original idea for the ISB, says that he had long considered the benefits of founding a “world-class” school in some country outside the U.S., perhaps in Asia, perhaps in Israel. But his neighbor Rajat Gupta—who also happened to be managing director of investment company McKinsey & Co.—helped him turn his focus to India. That bias might be natural, considering they’re both of Indian origin; but then, so are a large number of other individuals in corporate and academic America.
Balachandran can recite a long list of Indian deans and faculty members at prominent business schools, and he notes that Indians are highly placed in corporations all over the world. In fact, in Silicon Valley alone, the tales of Indian success stories are rife. A White House fact sheet estimates that in the late 1990s, 16 percent of all start-ups in Silicon Valley involved a partner of Indian origin. Anna Lee Saxenian, a professor of community and regional development at the University of California–Berkeley, has done research that says these high-tech Silicon Valley businesses account for more than $16 billion in gross revenue and more than 50,000 jobs (www.ppic.org/publications/PPIC120/ index.html). These statistics don’t even take into account the hard-to-measure impact of Indians engaged in e-business.
Taken together, the signs were hard to miss in the late ’90s. The time seemed right to invest in a first-rate Indian business school. Balachandran canvassed Indian academics; Gupta, now chairman of the board at ISB, sounded out industry leaders. The response was overwhelmingly positive as Indians who had become citizens of countries around the world warmed to the idea of “giving a payback to their motherland without compromising on quality,” says Balachandran.
They also could help create an institution that was truly global, that would give students from around the world a chance to study at an American-style school located in an emerging economy. The quality would be just as high, but the experience would be radically different, enabling students to absorb the differences between cultures and the impact of such differences on the business strategies of multinational enterprises.
“In the context of the global economy, it is important not to think of the world as just the segment that is the U.S.,” says Sridhar Ramamoorti, a principal with Andersen in Chicago, and formerly a member of the accountancy faculty at the University of Illinois at Urbana–Champaign. Ramamoorti, who recently visited the ISB in Hyderabad, is among the Indian American businessmen who are extremely enthusiastic about the new school. He strongly believes that a high-quality education on foreign soil helps students learn first-hand that values and customs differ sharply in different parts of the world. As an example, he looks at American advertising, where puns and wordplay form the basis of many of the messages. Such tactics won’t work in India.
“We want clearly diverse, different cultures with truly international colors.” —Bala V. Balachandran
“A large percentage of the population of India is still illiterate,” says Ramamoorti. “There are millions of Indians—perhaps exceeding the entire population of the U.S.—who can’t read or write. And you think research on consumer behavior would show that you should play word games with them? Come on.”
A student pursuing a degree in India would learn that fact very quickly, drawing on experiential learning instead of textbook learning, Ramamoorti notes. “The point is, you have a different mindset. You become receptive to these kinds of issues, and you have a strategy that is more focused on the local context and the community and the cultures to which you will be exposed,” he says. “Whereas if you are coming from more advanced countries where other business or marketing strategies are already being used, you can be misled into believing that these strategies will succeed in less developed countries—and that would be a mistake. In large populations, like those found in India or China, labor-friendly strategies are far more likely to succeed than capital-intensive approaches. You can only get these kinds of lessons if you pursue your education in a foreign context.”
Planning the Program
While Gupta and Balachandran first came up with their business school concept in the early ’90s, it was not until 1997 that the school actually began to take shape. As the idea for the school turned into a reality, Balachandran was put in charge of recruiting faculty and was also named head of the dean search committee. Professors at Wharton, as well as those at Northwestern, began to design the curriculum. A state-of-the art facility in Hyderabad began construction. In June 2001, the school opened its doors.
ISB is concentrating on three areas: a one-year MBA, a Ph.D. program, and a series of executive education programs. The MBA program is unusual for two reasons. One, it only costs about $15,000 in U.S. dollars. Two, its 12-month structure allows students to get a degree faster than they would at many universities. Core courses are taught in the first six months; electives are offered in the second six months. During the second half of the year, MBA students can choose to take some of their classes at Northwestern or Wharton, though this is not required—and, because of the extra cost involved, it may not be an option that many students choose.
By contrast, students in the Ph.D. program will be expected to do the first year of study at Kellogg or Wharton. They will conduct their fieldwork and thesis work in India. By pursing their degrees in both locations, students will have a better understanding of both cultures, Balachandran believes. “Students will be globally oriented but able to analyze local problems,” he says.
The executive education classes will fill a need for working professionals who might not have had a chance to enroll in topflight education programs in the past. Since the ISB’s faculty roster ultimately will consist of half permanent faculty and half visiting faculty, respected professors from all over the world will have a chance to teach for a few days or a few weeks at a time. Balachandran expects these faculty superstars not only to offer courses at ISB, but to take a few opportunities to put on programs at local corporations that otherwise could never import such high-powered talent.
In addition to faculty members from India, America, and Europe, Balachandran plans to bring in, as guest lecturers, a wide range of high-ranking government officials from India and Asia. These include a governor from an Indian state, the president of Sri Lanka, and a former member of the ministry of economics who was involved in shifting the country to its present economic status. “Americans might imagine having the governor of Illinois, who is also a Ph.D., who is also a professor of a business school, teaching a class,” he says.
Competing for Students
While its plans are ambitious, ISB is not the only Indian business school seeking promising students and world-renowned faculty. India already has a set of management institutions that are legendary for their high standards and tough course requirements. The six Indian Institutes of Management are government-sponsored schools that are usually among the top-ranked business schools in Asia. IIM applicants are selected, in part, based on their scores on the Common Admissions Test, which people who have taken both consider more difficult than the GMAT.
“I would say that it’s crucial to create a community of leading global universities—and not just universities in general, but business schools in particular.” —Ron Frank
“What I’m going to say next is astonishing,” says Ramamoorti of Andersen. “In the early 1990s, some 30,000 students took the CAT exam every year. Approximately three percent got into the IIMs, which means that more than 29,000 students were rejected. Clearly those who got in were not only very bright, but they were the crème de la crème. But I can’t imagine that the remaining 29,000 were all that different. I would think that at least ten percent of that 30,000, or about 3,000 students, were really good enough to make it at the institute. Clearly, there is a capacity problem here for grooming managerial talent and globally savvy executives.”
The ISB wants to tap into this pool of talent, but everyone is aware that the IIMs will provide fierce competition. The IIMs are not only well-established, but they, too, have international affiliations, with schools like Harvard and MIT.
Nevertheless, the ISB’s first class is an impressive one: It includes Indian government officials who have taken one-year educational leaves, a handful of full-time employees from companies such as Andersen and PricewaterhouseCoopers, and the runner-up in the Miss India competition, who is also a sports gold medallist. She’s in good company, since about 25 percent of the class is female. Says Balachandran, “It’s a great class. The average GMAT score was 687. For every applicant we admitted, we had at least ten good applicants rejected.”
His one disappointment is that this first class has fallen short of its goal of admitting ten percent to 12 percent non-Indian students; the number was closer to six percent. “We want clearly diverse, different cultures with truly international colors,” he says.
He expects to reach that goal in the future as he and his colleagues begin recruiting for future classes. Ghoshal will use his contacts to recruit in Europe; Balachandran will continue to focus on recruiting in America, and he also expects to start promoting the school more heavily in Australia and New Zealand.
Naturally, ISB did recruit international students for the June 2001 start date, but it was handicapped by not having a track record. “Unfortunately, it’s our first year, so we don’t have anything to show,” says Balachandran. “People are skeptical. Next year, I can say, ‘These are our 130 graduates, this is where we placed them, these are the number of offers they got and their average salary.’ Then I am playing in a different ballgame.”
That game will be conducted on a playing field that grows more international with every passing year. The ISB is dedicated to generating a team that can play in countries around the world and yet always feel right at home.