February 29, 2016

Re-Imagineering MBA education in India

Management education in India is in crisis. Enrollment is falling as students realise that jobs for freshly minted MBAs are nowhere as abundant or glitzy as they used to be in the past. MBAs still get recruited because earlier batches of MBAs are in middle management positions and they need more of their type to keep their own brand value high but in the upper echelons of corporate India their presence is rare. Finally hordes of B-schools, all trying to model themselves as third cousins of IIM Ahmedabad, and handing out PGDBMs by the hundreds have reduced the value of the certificate to the level of a B.A. or B.Com. degree. Necessary but not sufficient for low paying, white collar “executive” jobs so beloved of middle-class India.

But management skills is really, really what India needs. There is no dearth of high technology in the corridors of organisations like TCS, L&T, ISRO, SBI, Mahindra, NTPC, ONGC, DRDO and yet we somehow cannot bring it all together in a manner that can deliver higher standards of living. Cynical, sectarian and political skulduggery aside, sound management principles are essential for this country to thrive and prosper. In this article, we reimagine management education and explore how we could break free from its current state of dejected stagnancy.

The problem starts with the nomenclature itself - Master of Business Administration. Administration is what the District Magistrate does -- given a set of rule and regulations, all bound up in red-tape, the DM is expected to work within a set of constraints and execute on a plan articulated by an elected politician. A manager however, is expected to create a transcendent yet cohesive vision that can be articulated and implemented. This perspective is missing in our business curriculum that is broken up into narrow slots like finance, marketing, operations and human resources. These slots are skills that lure people with the promise of a great placement in investment banking, brand management or management consultancy. But these skills are, conceptually speaking, not really different from that possessed by a roadside mechanic! Roadside mechanics are absolutely essential when your car breaks down, what we really need are mechanical engineers who can design cars or better still, scientists who understand the mechanics of Isaac Newton and can extend it into the quantum mechanics of Heisenberg and Schrodinger!

So the keystone of any new curriculum must be Leadership -  in thought and deed. Leadership is the tip of the arrow but to be a thought leader in the corporate world, as opposed to a political or religious leader, one must have a thorough understanding of technology that is the prime driver, the motive force, that propels an enterprise in this age of age of competition. However the raw thrust of technology must be measured, modulated and controlled by a raft of quantitative techniques and behavioural sciences that constitute the nuts and bolts of managing an enterprise. Putting all this together we have the first draft of a new curriculum with four basic components.

Let us now drill down into the figure and see what lies inside each box. If we open the technology box we see that there are four fundamental areas that shape human society, namely energy, agriculture and bio sciences, materials and of course computers. Any successful commercial enterprise must be drive on any one of the core technologies.  So for tomorrow’s visions to take shape, management students today, need a solid grounding in the technical and commercial aspects of these technologies.

In the area of quantitative techniques, we begin with data analytics, a combination of descriptive statistics enhanced with database systems and the effective use of spreadsheets. Predictive statistics and simulation gets clubbed into modelling. Operations and operations research are addressed through optimisation and all this is supported through a roll-up-your-sleeves style computer programming. In today’s digital world, managers must realise that programming is as important as reading, writing and arithmetic was in an earlier era.

Moving into behavioural sciences, managers need to learn not only about consumer and organisational behaviour but also about interpersonal behaviour as evident in clean, crisp and effective communications. Conflicts are inevitable and so a knowledge of business law needs to be extended to include the larger issues of conflict resolution.

We finally reach the tip-of-the-arrow and teach business strategy but this needs to be tied closely to entrepreneurship. While every student need not start his own company, it is the spirit of enterprise that must be inculcated from day one, so that the student knows how to push forward relentlessly, on their own, without waiting to be told what to do. But for the good of society, this whatever-it-takes attitude to success must be tempered with an understanding of ethics and equity and the ability to handle the expectations of the political and social environment in which enterprises operate.

Now we have a magic quadrant of 16 compulsory subjects that the student takes in the first year. However, typical 2-year management program in India requires a student to take 32 subjects and complete 96 credits. So the remaining 16 subjects, drawn from the traditional areas of specialisation, namely, marketing, finance, operations and human resources, can be distributed in the second year. If we are happy with the traditional 2-year, 4-semester format with a summer internship sandwiched in between, then we are done!

But can we do any better?

This 96 credit requirement in Indian B-Schools is far higher than that required in most well known US B-Schools like Harvard (60), Wharton (63), Haas-Berkeley (51), Stern NYU (60) and Kellogg's (72). But do all those extra credits really add any significant managerial value to the students? Not really. Management encompasses so many diverse and specialist skills that it is impossible to have a syllabus that will cover everything. So let us not even try because beyond a certain point we have academic fatigue and the law of diminishing returns kicks in.

Instead, let us add 2 more compulsory subjects, namely Financial Accounting and Marketing and 4 electives from any area of specialisation and wrap up with 22 subjects and 66 credits. Such a program can now be comfortably accommodated in three semesters and students students need to be on campus for only a year. This will significantly reduce the student’s investment in both and time and money and automatically increase the ROI and hence the attractiveness of the program.

What is missing from this scheme is the summer internship that in its current form is quite a farce and more of a formality. Most line managers view interns as an imposition and use them as cheap labour for unpleasant tasks like data collection whose pedagogical value is minimal. A better option would be to replace the internship with an equivalent probation period in the company where the student is finally placed because the student will now take his work seriously and the company would have a vested interest in investing its manager’s time for the training of an actual employee and not a transient intern. Also the placement process will become shorter and simpler since there is no additional process for summer internship.

Net-net we are looking at a one year program that will equip students with the breadth of vision that is necessary to be a leader in thought and deed, not someone who waits for and follows orders. Deeper technical skills in specific areas can always be picked up, from the web, from online courses or from short term management development programs offered by B-schools themselves as and when it is required without having to burden, bloat and increase the cost and duration of the core program.

Will a new-age management  program like this be acceptable to companies that recruit on campus? Will they be able to wean themselves away from the comfort zone of hiring from the standard, “cookie cutter” management programs? Big brand corporates whose corridors are crawling with standard issue MBAs may find it too difficult to make the transition but smaller, nimbler and smarter companies should show the way. Once recruiters start visiting these campuses, more and more students will join these programs leading to even more interest from recruiters and the start of a virtuous cycle as HR managers in large corporates eventually decide to follow the herd.

As a way to prime the pump, enterprising B-Schools, may be some of the new IIMs, could experiment with two parallel programs where both will share the new, first year curriculum. Then students will have the option of either finishing the program in the third summer term with a Masters of Management  (MM) degree or, go for a traditional summer internship and come back to finish the two year program for an eXtended MMX degree. That way, we still rock the boat, but not enough to capsize it. Then as corporates see value in this new approach there will be a smooth transition to the new program.

This article was first published in Swarajya magazine.

February 20, 2016

Bitcoin, Blockchain and the Crypto Corporation

If 2013 was the year of Bitcoin, the enigmatic crypto-currency created by the anonymous Satoshi Nakamoto, then 2016 is going to be year of the BlockChain -- the shared public ledger technology that provides the platform on which Bitcoin works. In fact, Bitcoin is just ONE of the many applications that can be built on the blockchain and this fact is gradually dawning on the world of technology as different groups are racing to create new products.

While many strange and wonderful products like an automatic Uber-like car service have been proposed, the most powerful applications seem to be coming out of Wall Street. This is because of two reasons
  1. The fundamental premise behind the blockchain is control and transfer of assets and this is what Wall Street does for a living
  2. Wall Street has realised that rather than resisting the arrival of a disruptive technology it is better adopt it first. Resistance is futile. Just as retailers who ignored the eCommerce revolution got wiped out by the arrival of Amazon and eBay, dealers in financial securities could face the same problem. Hence the urgency to board the blockchain bandwagon
In fact so urgent is the desire to join the blockchain that DTCC, the body that controls the transfer of trillions of dollars of financial assets in the US market has teamed up with The Linux Foundation to plan for that "once-in-a-generation change of technology infrastructure" to create the HyperLedger and the Securities and Exchange Commission has authorised the release of equity shares on this alternate trading platform. The adoption of blockchain technology for the management of financial assets is as fundamental, if not truly tectonic, as the move from physical shares to de-materialised shares that we saw in the US in the 1970s and then in India in the 1990s.

But what on earth is this blockchain? That is difficult to explain in a few words without trivializing the concept. Please be patient and work your way through these three slide decks and hopefully you will understand what this marvelous technology is all about.

The first slide deck explains the basics of cryptography that are essential to understand how the bitcoins and other crypto-currency work. If you are already familiar with public and private keys you may skip this, but the idea of smart contracts is introduced here.

The second slide deck is where the bulk of the bitcoin protocol is explained. We also explain how bitcoin or any other equivalent crypto-asset can be managed with the shared ledger also known as the blockchain.

Finally, in the third slide deck we leave bitcoin behind and step into the mind-bending concept of an autonomous corporation. Where we look at futuristic concepts like programmable money and also some of the projects that are happening now and today.

The blockchain creates new way to hold and transfer assets that represent real life "value". It is going to transform the finance industry in the same way that the internet has transformed the way information is transferred and consumed. But could it  also go a long way to create a new kind of robotic entity and would that entity follow Asimov's famous Three Laws of Robotics?

In fact this technology is so significant that I would not be surprised if someone proposes that Satoshi Nakamoto be awarded the Nobel Prize for Economics even in absentia!