The MBA degree has lost its lustre

The management education sector is in limbo, as the economy refuses to perk up. The excitement about MBA is gone and the crowds of students and hirers at B-schools are much thinner. The number of applicants taking CAT has fallen by one-third since its peak popularity in 2008 when nearly three lakh applicants appeared for CAT. Hundreds of the 4,000-odd B-schools have been mothballed or downscaled during the past few years. Employers are no longer queuing up before them with fat cheque books. They no longer want to pay top rupees for mere management graduates. Now they want rainmakers who can improve company fortunes immediately after signing up.

Clearly, the management education sector in India is in a crisis.

A task force appointed by the All India Management Association (AIMA) and consisting of B-school heads, CEOs and consultants has analysed the state of management education in the country, flagged the areas of concern, and recommended action for all stakeholders in management education. The task force’s report has been presented to the Secretary, department of higher education, ministry of human resource development for shaping the government’s policy towards management education.

From industry’s point of view, the report addresses many key issues that have been sources of concern, especially the disconnect between management education and the real need of businesses in India. Despite the much acknowledged need for a synchronised and closer relationship between industry and education, neither B-schools nor companies have stepped out of their comfort zone. Both want the other to make all the effort and investment. B-schools are comfortable being mass-production factories with repetitive curriculum and teaching tools whereas companies want graduates with trendy knowledge and skills. The regulator’s one-size-fits-all approach fixes the standards at the lowest common denominator. Eventually, everybody loses.

The employer is the ultimate arbiter of education and, therefore, the onus is on industry to force change in management education. Industry has to not only set the benchmarks for instruction, testing and certification, it has to take the responsibility of providing the latest knowledge and skills. Students must learn more of what is current and not just what has gone before. More importantly, they have to learn about developing trends in industry and management.

Experience shows that occasional visits of industry executives do help B-schools develop meaningful learning programmes. The tokenism has to give way to sustained engagement. There is greater value in management teachers and students spending time in the corporate environment than in executives spending time in B-schools. Students and teachers observing corporate activities live, writing case studies from the inside, and conducting consulting projects can be of much greater help to both themselves and the industry. For this to happen, industry has to open itself to academic research and consulting.

Another recommendation of the task force that is of particular interest to the industry is for diversity and dynamism in management education content. Industry would welcome sector-oriented, degree/diploma programmes. This would allow B-schools to be in tune with the changing industry trends and allocate greater resources to the high-growth and emerging sectors.

In fact, industry’s frustration with the generic management education is making many business houses set up their own schools or sponsor courses tailored to their unique requirements. This is happening increasingly in high-growth sectors such as IT, banking, finance, pharma, healthcare and realty. Customised courses allow for greater attention to important but ignored management areas such as agriculture, rural manufacturing and small businesses.

Globalising management education is of great interest to the industry. The task force found that the majority of MBA programmes across the world are too local and do not prepare management graduates to work in multi-location corporations. Given the economics of most B-schools and policy constraints, the quicker way to bring a global perspective to management education is to collaborate with foreign B-schools. The task force points out that such collaboration is more forthcoming from new and smaller institutes. It cites ISB as a model for globalising India’s management education, as it has faculty support from some big brand B-schools of the world.

However, the better way to globalise Indian management education would be to allow competition from foreign B-schools. India could learn from the UAE which is trying to change into a knowledge economy from a resource economy and has created global campuses in a short time. Importantly, India needs to shed its paranoia of profit in at least higher education and try to profit from the boom in the global education market by becoming a hub of internationally accepted qualifications. The AIMA task force recommends developing 50 international B-schools in India.

Technology will change the education industry radically, according to the task force. Digitisation will not only change the way learning is packaged and delivered by the existing B-schools, it will also spawn disruptive business models and startups in the education sector. The proliferation of mobile screens and high-speed internet will create new intermediaries and aggregators, just like it has happened in the media, retail and transport sectors. Most importantly, before long, students may not have to pay for management classes and pay only for testing and certification. Branding of courses and institutions will become even more important and the education market will split many ways, offering alternatives to students at different levels of paying capacity and at different stages of their careers.

In a radical recommendation, the AIMA task force wants management to be regarded as a profession and not merely a vocation. It wants the government to revive the moribund All India Board of Management Studies as the regulatory body or create a new Management Education Council of India with representation from all stakeholders. That, it believes, will guarantee a high quality of management education. However, it is difficult to see an MBA getting a law-backed right to practice management as is the case with the qualifications in engineering, law or accounting. Management is considered more an open art than a precise science or a legal authority.

Indian industry desperately needs better management education in the country and it must put its money where its mouth is. It can help itself only by helping B-schools produce not just qualified managers but capable managers and leaders.

The writer is the president of AIMA and executive vice-chairman of Essar Steel

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