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Are our IIMs overly US-centric?

By Ajit Balakrishnan
October 13, 2007 08:44 IST
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Twenty-six of us were seated around a long U-shaped table. It was late in the afternoon. The room was semi-dark. Each of us had a plate of sweets and a bottle of mineral water in front.

A third of the people seated here were CEOs of large and famous Indian companies, some recently retired, others still very active in business. Another third were high-level civil servants.

The rest was a mix of senior company executives and academics. A slightly graying 40-something man stood at the head of the U in front of a brightly-lit screen. Everyone was intently focused on what the man was saying, straining to take in every word above the whirring sound of the air-conditioners valiantly battling to beat down the heat from the October afternoon sun.

We were at IIM Calcutta's quarterly board meeting. The professor on the podium was walking us through some pretty revolutionary ideas for updating the curriculum for the flagship two-year post-graduate programme in management - the result of nearly three years of debate within the faculty.

A mandatory course in a foreign language other than English was the first of the many such ideas. The world is increasingly globalised, explained the professor, and our students need to be comfortable in dealing with people of other cultures. It was one of those ideas that catch you by surprise because once you hear it you wonder why you didn't think of it earlier.

A compulsory course on Ethics was the next big idea. Of course, the professor quickly added, it's not that we think we can "teach" people issues like ethics but it certainly was worthwhile to explore with young and impressionable minds what constitutes unethical behaviour in business.

Explore with them how to deal with bosses who sail too close to the wind in ethical matters. Perhaps even demonstrate to students that ethical companies get practical rewards such as higher stock market valuations. None of us around the table could quarrel with this either.

There were a few murmurs around the table when the professor mooted his next big idea - increase and emphasise the mathematical content of the programme. More and more stock trading is being done based on mathematical models, he pointed out, and since the majority of the graduating class finds its way to financial service and consulting companies, being adept at mathematical modelling is likely to be useful.

That was when a really revolutionary idea was sprung on us, by a board member who is a retired CEO. Is it possible, he asked, that our IIMs espouse essentially an American way of managing businesses? Should we not be opening our minds to looking at other ways of managing, too? Aren't there lessons to be learnt, for example, from successful Japanese companies? Companies such as Toyota have used a subcontracting system to rise to the top of the world auto industry.

What are the practices they have instituted to make co-operation with suppliers possible over the long term? What makes it possible for Japanese companies and their partners to exploit complementary assets? What allows them to have a convergence of purpose with their suppliers? How do they so successfully manage the interface between themselves and their suppliers? Is this something in the Japanese industry structure? Or something in Japanese society?

While our meeting ended with all of us promising to think about this issue, that evening as I drove back into Calcutta city along the Ganges, I asked myself: are ways of managing businesses different across countries?

Prof. Bruce Kogut of Wharton and INSEAD, writing in the journal Management Science, is someone who believes that the institutional environment in which large firms operate differs significantly across countries. Boards of US companies, for example, are much more powerful than boards in France or Japan. Institutional investors have a large say in how large US firms are run whereas in France and Japan it's not institutional investors but government bureaucrats that wield this kind of power.

In Germany, commercial banks and labour unions have strong voices on company boards. Again, in Germany, there are few industrial groups whereas in Japan groups of large companies are tied together in keiretsu with a large firm and a bank as the hub. These differences in the institutional environment play a crucial role in how management plays out.

Maybe management thought, to be powerful, ought be like the Ganges itself - springing from many different sources. The Alaknanda river meets the Dhauliganga, then the Mandakini at Nandprayag, then the Pindar at Karnaprayag, and finally the Bhagirathi at Devaprayag to form the Ganges. Then the Ganges emerges from the Himalayas at Haridwar, and flows for 800 km till the Yamuna joins it at Allahabad. Then it picks up speed as rivers such as the Kosi, Son, Gandak and Ghaghra join it. When it reaches Bengal, the Meghna River joins it before it flows into the Bay of Bengal.

Maybe what we teach at our IIMs needs to be like the Ganges, nourished from many different sources.

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Ajit Balakrishnan

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