Article (July-2017)


Is this Kodak moment for MBA Education?

Dr. A Jagan Mohan Reddy

Designation : -   Professor (HR)

Organization : -  Symbiosis Institute of Business Management, Symbiosis International University, Ranga Reddy District (Telangana)


With $16 billion in revenues and tens of new products, Kodak's value to the world was unquestionable in the 90s and none of its executives could foresaw the company going bankrupt in less than 20 years because of the digital camera. The irony was that, a Kodak engineer invented the digital camera back in 1975 but his bosses shut him up. As we go through annals of history, we notice that several industries have experienced their Kodak moments by ignoring a changing world. Music was changed by iTunes; retailing and books by Amazon; auto by Tesla; hotels by Airbnb; taxis by Uber and technology infrastructure by Amazon web services. But unlike with Kodak and photography, industries are transforming faster than ever before. In other words, people in general and companies in particular realized that innovation is the key and success mantra in the VUCA times of today is observe, adopt and improve.

What's the Issue?
India has at least 5,500 B-schools in operation now and as per the latest ASSOCHAM report only 7 per cent of MBA graduates from Indian business schools, excluding those from the top 20 schools, get a job straight after completing their course. Around 220 B-schools had shut down in the last two years in cities such as Delhi-NCR, Mumbai, Kolkata, Bangalore, Ahmadabad, Lucknow, Hyderabad, Dehradun etc., and few more are expected to wind up in the current year. Campus recruitments have gone down by 45 per cent from 2014 to 2016 and there are more seats than the takers in the B-schools.

In the last five years, the number of B-school seats has tripled. For instance, in 2015-16, these schools offered a total of 5, 20,000 seats in MBA courses, compared to 3, 60,000 in 2011-12. On an average each student spends nearly Rs 3 to Rs 5 lakh on a two-year MBA programme but their current monthly salary is a measly Rs 8,000 to Rs 10,000, adds the report. Even the quality of IIM/IIT students coming out now compared to the last 15 years seems to have come down due to the quality of school education.

The Problem?
Lack of quality control and infrastructure, low-paying jobs through campus placement and poor faculty are the major reasons for India's unfolding B-school disaster. Few people enter the teaching profession due to low salaries. There is an urgent need to update and re-train faculty in emerging global business perspectives, which is practically absent in many B-schools, especially tier 2 & 3 b-schools, often making the course content redundant. ASSOCHAM report points out the mismatch between aspirations of students and their level of preparation, as most of the fresh graduates are afraid of getting their hands dirty. Added to this is the negligible hands-on training provided at Tier 2 and 3 colleges.

Of the 15 lakh engineering graduates India produces every year, 20-30% of them do not find jobs and many other get jobs well below their technical qualification. There is clearly a rush towards engineering, that which is engineered largely by parents and the society.  Indian economy is not growing at the same rate as the number of engineers. It is only the IT sector that absorbs engineers in large numbers, between 50-75%. There is a large mismatch in the aspirations of graduating engineers and their job readiness. 97% engineers aspire for a job in IT and core engineering.

As new technologies such as automation, robotics and artificial intelligence increasingly take over low and mid-level jobs in Indian IT companies, the IT industry is facing a serious challenge to its earlier role of a mass job creator. For instance, Indian IT services sector may lose 0.64 mn 'low-skilled' jobs to automation over the next five years and by 2025, about 260 mn jobs will be replaced or augmented by tech worldwide, says a Nasscom report. Nasscom has underlined designing, developing and rolling out a massive re-skilling programme to train and reskill 4-5 mn people as a top priority over the next few years.

Many MBA professors quote examples from Amazon on how the company not only disrupted itself but also the publishing industry by launching the Kindle. But most are shy to disrupt their own classes by going online and extending themselves to a wider world. They fail to notice that people are skipping GMAT altogether and taking their money elsewhere. Udemy, Lynda (owned by LinkedIn), CreativeLive, Teachable have democratized management education by tapping into a market cold-shouldered by traditional MBA programs.

The world is changing fast. Soon, 40% of the US workforce will be made up of freelancers and robots will replace the average industry worker who at an earlier time needed managers. Advances in 3D printing, drones, Internet of things, virtual reality, synthetic biology and genetics will need management thinking of a different kind. It's not a world that traditional MBA programs are ready for. MBA programs have transformed countless lives and as such MBA education needs to stay relevant. It needs to transform its Kodak moment into a Kindle moment.