Last weekend I attended the 20-year reunion of my class at Indian Institute of Management, Ahmedabad (IIM-A). 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.
A recurring theme in many discussions was how so many people in the class had ended up pursuing entrepreneurship as a career—out of 175 in the class, at least 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 high strike rate by any standard. A common belief is that IIMs do not produce enough entrepreneurs.
So what is it that made the class of 1989 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 not to 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 Rs3,800 per month) and so the opportunity cost of entrepreneurship wasn’t 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.
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But it wasn’t just timing and circumstance that made the difference. There were other factors at play.
In the 1980s, 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 students in a 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 IIM-A, 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 1980s 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 common admission test, or CAT, score—do a 360-degree assessment of the candidate. The best business schools in the world look at the graduate management admission test, or 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, among others. 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. Lionize 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.
The author is co-founder and chief executive officer, Info Edge (India) Ltd, which runs the Web portal Naukri.com. He writes a monthly column on careers and enterprise.
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