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IIM MBAs: Wealth creators? Wealth chasers?

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Last updated on: March 29, 2004 13:20 IST
From the high decibel noise that is being generated about the IIM fee issue, one would think that the whole country's economy depends on the IIM and their products. How relevant are the IIMs really, and what exactly is their contribution to the country? Are the IIMs national treasures, or just private clubs and nose-in-the-air gymkhanas ? Are they doing more harm than good?

The IIMs are in the news for the fee cuts in the Post Graduate Program in Management, popularly known as the MBA.

Some questions on what the IIM MBA is all about:

Does an MBA measure his professional success by how much he earns?

An annual ritual (currently on) in all the IIMs is the great tom-tomming of the pay packets of their fresh MBA graduates. How many professions have you heard of where so much noise is made of the starting salary of graduates?

If this is how an IIM graduate's success is measured at the start of his career, no wonder he uses money as the measure of his success throughout his career. And this is what his institute has taught him. By this yardstick, if a company is doing badly and its low-paid manager turns it around and makes it profitable, he is less successful than a highly paid manager of an already successful company.

If an IIM MBA is ever in the news, it is for how much he earns. Have you ever seen a newspaper headline like 'IIM MBA manages difficult turnaround of sinking company'?

Can only engineers manage?

For some strange reason, IIM entrance tests are designed so that you have a greater chance of getting through if you an engineer. Typically, 80% of entrants to IIMs are engineers. Does this mean only engineers can manage? What if you are a lawyer wanting to manage your law firm better, or a journalist wanting to manage your newspaper better, or a biochemist wanting to manage your R&D company better? The IIMs have already decided that you are unfit to be a manager. IIM-B's web site on the contrary says 'candidates from diverse backgrounds are selected.'

The MBA course is either designed to impart business skills to engineers, or the entrance tests are flawed. If it is the former, why not make an engineering degree mandatory for admission? If it is the latter, the tests must be redesigned.

Why do you need engineers to sell shampoo or manage mutual funds?

Typically, 80% IIM entrants are engineers, but only 10% join engineering companies. 90% sell consumer products, manage mutual funds, or join IT companies.

When they do their engineering courses, these people obviously have no intention of becoming engineers. They are using their engineering education merely to give them an edge over other competitors at the IIM entrance examination. Incidentally, 30% of them are from IITs and being an IIT-IIM graduate is considered to be a badge of honor.

The world over, engineers do an MBA to acquire skills to manage their engineering industry better, not to switch to alternate high paying careers.

If the army promotes a raw NDA graduate as a general will you have any faith in it?

The NDA teaches a person the theory of fighting and managing the army. After this he typically puts in about 35 years actual fighting on the front, logistics management, man management, etc before he can become a general.

If you have started work at the bottom rung in a company (that's if you were not fortunate enough to be the heir to an existing business) you know that it takes a couple of years before you can get a reasonable grasp of what is going on around you. It can be many more years before you are good at the job.

Seventy-two percent of IIM-C's graduates in 2004 have no work experience, and 20% have two years experience. After a one-and-a-half year course, the fresh MBA is thought fit to advise company presidents on how to run their business. How can you run a business without knowing what the business is all about?

Exposure can never replace experience.

Complete coverage: The IIMs controversy

Does the IIM turn out hares rather than tortoises?

An MBA is never in it for the long haul. He looks for instant personal gains. This is probably the reason why MBAs prefer to work for consumer products, finance and IT companies. You will seldom find them in manufacturing; power or telecom industries, where gestation periods are long and you require perseverance, patience and a long distance vision. The typical tenure of an MBA in a company is 2 to 3 years, while the gestation periods in the these industries are measured in decades.

Is an MBA the proverbial rat which deserts the sinking ship?

Every business has cycles, and has its ups and downs. The down cycle does not mean that it is sinking. It may happen because of external factors like the country's economy. You are unfit to handle a business if you cannot take the downs with the ups. An MBA is generally known to be a fair weather friend, joining a company on its rising curve and jumping ship when the going gets tough. He is trained by the IIM to be self-centric rather than company-centric.

Why should the government subsidise engineers who sell toothpaste?

It is a reasonable assumption to make that an engineer joining an IIM has studied in a government subsidised college, and the government has spent Rs 400,000 on him for the course (Rs 800,000 if he has studied in an IIT. This means the taxpayer is paying for the engineering education of a person who has no intention of using his engineering. This definitely is not the intention of government subsidy of engineering education?

Why don't MBAs join manufacturing companies?

Manufacturing requires technical knowledge, man management and business sense. It requires dirtying your hands, leading from the front and talking straight. Maybe MBAs are incapable of this? Typically, less than 5% of IIM graduates get into manufacturing. IIM-A's professed aim, in its own words: 'It also aims to professionalise some of the vital sectors of India's economy such as agriculture, education, health, transportation, population control, energy, and public administration.' How many MBAs do you find in these areas?

Are IIMs turning out wealth creators or wealth chasers?

There are wealth creators, and wealth chasers. A wealth creator has a skill that enables him to create something. An organization develops around this creation, to produce and sell it and make money out of it. The creation could be a newspaper, an automobile, medical services or a thousand other things. The creator must be a highly skilled as a journalist, an automobile engineer, a doctor etc. A typical IIM MBA joins the course after 1 or 2 years of experience in industry. This is not enough to learn a skill to create anything.

This is the reason that you rarely find an MBA entrepreneur. Someone else always has to create an organisation, which the MBA is then happy to manage. IIMs are not about creating entrepreneurs, individuals with a passion for ideas, for risk taking.

Just 4 the of 209 IIM-B graduates this year plan to start their own enterprises or join their family businesses. Impressed?

Are IIMs creating managers or leaders?

A leader sets the direction, a manager follows. A manager takes care of where you are. A leader takes you to a new place. It is unlikely that you'll see an IIM MBA taking you to a new place. The professed aim of the IIMs is to create 'world-class business leaders.' They have only succeeded in creating business managers, with 'world class' being debatable.

An IIM graduate is unlikely to ever be an Ambani, a Tata or a Birla.

So what are the IIMs all about?

About branding yourself? About getting placed in a high paying job when you graduate? About converting engineers into non-engineers? About churning out risk-averse job hoppers jumping from one safe ship to another? Are they about education at all?

The IIMs want autonomy from the government. Autonomy to do what? They do not seem to be clear about what they want to do.


Srihari D