Friday, 20 February 2009

B Schools need to nurture misfits

A common misconception is that the IIM’s do not produce enough entrepreneurs.

Last weekend I attended the twenty year reunion of my class at IIM Ahmedabad. It was fun - going back to campus and schmoozing with old friends, catching up on each others’ lives, imbibing bootlegged liquor surreptitiously and also finding time for some serious discussion.
One of the recurring themes in many of the discussions was how so many people in the class had ended up pursuing entrepreneurship as a career – out of 175 in the class more than 35 have founded companies. At least seven of these companies have achieved scale, three have listed and several others are expected to grow big in the years to come.

This is a very high strike rate by any standard. So what is it that made the Class of 89 different.

Unquestionably timing and circumstance had something to do with it. When the economy began to open up in 1991 many in the class were in the right place at the right time. We had gained some work experience, yet were still green enough to not have mentally committed to a long term career as an employee manager. We were earning relatively low salaries (the average starting salary in our graduating class was Rs. 3800/- per month) and so the opportunity cost of entrepreneurship wasn’t very high – we could take the risk and not lose a very fancy salary. When we went out to get business for the companies we started the growing economy gave us the breaks. To a large extent we were products of economic liberalization.

But it wasn’t just timing and circumstance that made the difference. There were other factors at play.

In the eighties the admission policy at IIM A ensured that there was diversity in the class - you had students from different academic backgrounds and different kinds of work experience. There could be a maximum of 50% of the students in the class from any one academic background. This made for a 360 degree experience with several points of view on the table during class discussions. There were a fair number of mavericks and independent thinkers – many of us simply did not want to work as employee managers and we had said so in the admission interview. Today India’s best business schools including IIMA seem to be ignoring the value of diversity in the class. Today, the admission policy at IIM A has changed - 93% of the students in the current first year batch are engineers – a retrograde move. If you reduce diversity you produce clones. And a class of clones is likely to produce fewer entrepreneurs.

The second factor is what we were exposed to at IIM A. There was a whole suite of courses that were relevant to entrepreneurship. In most other B Schools there is one course on entrepreneurship – I ended up doing five such courses. In fact till the early eighties there was even an Entrepreneurship Concentration Package which you could do. There were case studies of start ups and small enterprises – an entire body of knowledge had been created. Today this has expanded into a centre for innovation, incubation and entrepreneurship.

The third factor at play was the demonstration effect. One by one as more and more people in the class started companies, others mustered up the courage to do the same. And we are not done yet. Some more are likely to become entrepreneurs in the future.

So what should a business school do if it wants more of its students to become entrepreneurs?

First admit a more diverse class without compromising on academic rigour. In order to do this do not rely simply on hard criteria such as the CAT score – do a 360 degree assessment of the candidate. The best business schools in the world look at the GMAT score as only one out of half a dozen criteria for admission.

Second create a separate academic department for entrepreneurship and introduce a number of relevant courses in that area. Create and source material relevant to entrepreneurship – case studies, handouts, books etc. Allow students to major in entrepreneurship.

B Schools need to stop bragging about their success using average salaries, people placed overseas and placement rate. These indicate a mindset of managerialism. Instead celebrate successful alumni entrepreneurs. Lionise entrepreneurs who can be role models. The decision to quit a well paying job and start a company is frequently an emotional and irrational one – people need to be inspired to do it.

Encourage frequent interaction with entrepreneurs – let the students know their stories.
Finally the goal of every good business school should be to produce a fair number of misfits – because that is what entrepreneurs are. They do not see themselves fitting into existing corporate structures.


Anonymous said...

Very good and helpful.


Anonymous said...

Another good post, but I think subject is sort of misleading.

Sugandha Srivastava said...

Very ggod post Sir.

I would also like to add something here. IIMs, or for that matter almost all schools should also stop stressing on factors as mundane as marks in class Xth. Yes, past background is important but it cannot be a criteria for rejection, esp a class Xth or XIIth. This time IIM A has given a 75% weightage to class 10th and IIMB & L have given 10-15% weightage to 10th - which is absurd.

Moreover to create entrepreneurs it is important to look at non-scholastic acievemnts. A lot of enterprising students are rejected simply because of low academic performance in 10th, 12th or grads.

It seems our B-schools simply want a collection of toppers & not a diverse batch of young, enterprising people.

dialectic said...

Hi Bikhchandani,
Great to see two posts in two days. Please keep them coming.
I think if you promote your blog a bit and get traffic you will be more motivated.

Amazon Widgets said...

I do agree with you on diversity. However, in 1980's the number of engineers in India were very few and many of them chose to stay in engineering. With so many engineers graduating every year, the percentage of engineers in IIMA is reflection of the applicant pool and not necessarily the admission criteria.

Amazon Widgets said...

and regarding entrepreneurship, I am class of 2002 from an IIT and 4/32 are successful entrepreneurs from my department. And it is just 2008.

Anonymous said...

dear sir,

nice post, hence we should not question on the ability of IIM... ofcourse they have produced number of sucessfull entrpnr and CEO'S of what ever designation we ill say

IIM Rocks

Thanks & Regards

Anonymous said...


Well said. I wonder when would IIM(A) take the lead on this or maybe the ISB.

Probably get you, rashmi & a couple of others on their pragmatic, reality advisory board.:)

Unknown said...

Thought Provoking post!

Sidharth said...

Excellent post Sir...

I really appreciate your thought that "They do not see themselves fitting into existing corporate structures."

yep, they don't fit into existing but they have to potential to create one of their own... and fit ppl into it...

plz keep posting !!!


For SidFx
Making Indian Weblife a comfortable journey...

Utopianthots said...

You nailed it- but I beleive two things that B-schools or educational insititutes in India need to do is cultivate an apetite for risk and have lesser emphasis on academeic excellence.

arshi said...


nice topic to discuss...vry relevant n important for d gen next!!


Indian Handicrafts

SanjeevBikhchandani said...

This comment came in from Satsheel. I rejected it by mistake

Very interesting proposition. I agree with you producing more misfits - totally. But, one has to understand that to address issues of increasing diversity, the current decision makers need to be engaged in a dialogue. None would disagree on the need of doing so, but the success of such change will need entrepreneurial community & academia to come together for practical solutions. I think in popular context entrepreneurship has become more of a buzzword, and may be the reason for perceived reluctance of academia. The start can very well be small, but sure.

Would love to read more of your thought on role of academia as enabler for entrepreneurship.

pankaj gangwani said...

Hi Sanjeev,

totally agree that b school needs to enter more such courses on entrepreneurship but in my opinion books merely help in al this and you need to be more pragmatic in decision making.

But one question always strikes my mind that, from where the courage will come to start on your own.

As you are the role model of many including me, and I am hopeful that I will start on my own before my MBA gets over(I still have one year left).

pankaj Gangwani
PROTON b school

Amit said...

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