By Neelima Mahajan-Bansal, contributor
(poetsandquants.com) — Ajit Rangnekar, the mild-mannered dean of the Hyderabad-based Indian School of Business, is looking forward to April 2012 for a whole host of reasons.
For one, the business school will launch its second campus in Mohali. A big bet for the school, the Mohali campus will mark the beginning of the second chapter of ISB’s unusual story.
The milestone will also mark the end of one of the most traumatic periods in the school’s short history. The institution saw one of its key founders, former McKinsey & Co. managing director Rajat Gupta, become embroiled in a massive insider trading scandal in the U.S. that led to Gupta’s resignation as chairman of the school in March.
ISB was Gupta’s brainchild, and it was he who brought the academic brains and the corporate forces together to establish the school in 2001. The same case also claimed another prominent ISB board member, Anil Kumar, who has pleaded guilty to securities fraud.
Rangnekar claims the scandal has had no impact on the school. “The important thing is that not a single one of our most important stakeholders — recruiters, students, incoming faculty — has expressed concern about the ISB as a consequence of that,” he maintains. “We all recognize that these things have happened because of what those people did or didn’t do outside of ISB.”
As if Gupta’s resignation wasn’t enough, an earlier scandal pushed Rangnekar, deputy dean of ISB from 2003 to 2009, into the dean’s role in January 2010. The school’s previous head, Mendu Rammohan Rao, had to step down in the wake of an infamous scandal at the IT company Satyam Computer Services, where he was an independent director.
Those were tough times, concedes Rangnekar. “One day we had a dean and the next day we didn’t have a dean,” he says. “Also, this happened at a time when the economy was in shambles. So was it unpleasant? Absolutely. Was it unfortunate? Totally. But what do you do? You are faced with it, you have to fight it.”
Yet it’s not an especially auspicious start for a school that aims to be among the top five business schools in the world. After a 10-year run, the school still has not been able to attract a highly diverse student population. Only 5.5% of the class of 2012 is composed of non-Indian passport holders and only 29% of the students are female. But the class has a respectable median GMAT of 710, and graduates of its one-year business program have done exceptionally well in the job market. This year, the 310 grads received 661 job offers and garnered average starting salaries of $121,008, roughly 2.3 times the salaries they were earning just before they entered business school.
The school’s new campus will increase the student population by 200 (the Hyderabad campus has a total enrollment of about 570 including part-timers) and also help ISB break new ground in manufacturing, healthcare, public policy, and infrastructure through four institutes specifically focused on these areas. “For a long time, we have been wondering what being relevant to India means,” Rangnekar says. “We concluded that there are some major national priorities and that’s how we honed in on those four areas.”
The Mohali campus is crucial to Rangnekar. “My biggest priority over the next two to three years is to make Mohali a success,” he says.
In many ways, it is an audacious plan. Four leading Indian industrialists have made an initial investment of some $44 million in this new venture and three international schools — MIT Sloan School of Management, the Wharton School and the Fletcher School of Law and Diplomacy at Tufts University — have joined as academic partners.
ISB has been known to take bold risks all along. When it was set up in 2001, the school broke the mold for management education in India. Positioned as India’s global school, ISB came with strong academic partnerships with the Wharton School and Kellogg School of Management — people like then Kellogg Dean Don Jacobs, then Wharton Dean Tom Gerrity, and London Business School’s Sumantra Ghoshal were personally involved in the planning.
But ISB’s biggest point of differentiation was that it offered a one-year MBA, a new concept in the Indian market. Unlike other Indian business schools operating at the time, ISB placed a huge emphasis on experience and diversity. “We gave the market a very different product. They were not just another substitute for the Indian Institute of Management (IIM) graduates, but a different category of people — more mature and more well-rounded,” says Rangnekar.
Accreditation woes and financial strain
ISB seemed like a great project from the word go — the right academic backing, strong corporate supporters, and an audacious plan. But it wasn’t always smooth sailing. Soon after launching in July 2001, the market turned south. In the wake of 9/11, a few star professors backed out and the school’s finances came under strain.
The next year, when the first batch of graduates hit the market, jobs were in short supply. Corporate investors grew concerned. “Back then, there were a whole lot of skeptics, and even among the believers, almost everyone thought that it would take a lot longer for ISB to reach where it is today,” says Rangnekar.
A constant source of pain for ISB is its tussle with the All India Council for Technical Education (AICTE), India’s higher education regulator, which simply refuses to recognize a one-year MBA.
“The tragedy of our relationship with AICTE is that we actually want to be regulated,” says Rangnekar. “AICTE just believes that you cannot have a one-year MBA program.”
The result: The school still can’t offer an MBA degree, but instead grants a post-graduate program in management (PGP) degree. ISB is pinning its hopes on new government regulations that are in development.
Meantime, Rangnekar is applying for accreditation with the Association to Advance Collegiate Schools of Business and the school’s first review is in October.
ISB’s success with its one-year business degree has created a brand new market. Today, several other institutions in India — including the hallowed Indian Institutes of Management (IIMs) — also offer similar one-year degrees for experienced students.
Moving forward
Over the years, ISB has built a formidable reputation within the Asia-Pacific region. “We did what everyone said was impossible,” insists Rangnekar. “We ramped up capacity from 120 to 560 in about eight years and everyone said we will dilute quality. But we were absolutely convinced that there is no shortage of talent in this country and nor is there a shortage of demand,” says Rangnekar.
Going forward, Rangnekar wants to provide a much greater emphasis on leadership and values-based education — not just ethics, but responsibility. “Basically, how do we incorporate ethical decision-making into everything students do? And while we have a few ideas, I don’t think we have found solutions to it,” he says.
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