ISB – The Mckinsey Brainchild

Technorati Profile
When Rajat Gupta first articulated the idea of a world-class management institute, that is now the Indian School of Business (ISB) in Hyderabad, a year had passed since he had taken the reins of McKinsey & Company worldwide.

Back then, in late-1995, the concept driving ISB was a radical thought in India’s higher-education milieu. Gupta was clear about addressing a latent need of industry: professionals with experience and exposure to global practices. For this, the institute he helped set up introduced one-year MBA programmes designed specially for working professionals. The course duration was cut by half, but the fee (currently more than Rs 17 lakh) was double that of conventional MBA programmes. Not surprisingly, ISB had many critics and sceptics.

Nonetheless, ISB was an idea that had come of age. With India Inc on the cusp of unprecedented prosperity, working professionals took to it. Many likened the one-year study period to two years of learning and internship. And their numbers have grown. ISB began its first class in 2000 with 128 students. The batch of 2010 has 579 students. While it got 960 applications for its first batch, the figure crossed 4,100 this year. In the period up to 2008, the industry had absorbed all young managers to come out of ISB. In 2008, it clocked revenues of Rs 31.8 crore and was ranked 15 in the Financial Times’ list of top 100 global B-schools.

Those associated with the project say ISB’s journey to fruition may have taken longer and been far more arduous if it wasn’t for Rajat Gupta. His stature as Managing Director of McKinsey helped bag commitments from global corporate honchos and B-schools, and engage political leaders from Prime Minister Dr Manmohan Singh to US President George W Bush. More markedly, his approach to ISB was based on the quality he has upheld most through his career: team building. Lastly, there has been the underlying ‘McKinsey Way’.

The McKinsey Way in the corporate world, typically, involves assembling a team, managing a hierarchy, doing research, conducting interviews, brainstorming and

executing swiftly. In the academic landscape, Gupta had a core team to build on his idea of setting up a world-class institute offering an accelerated MBA experience for working professionals.

His team comprised McKinsey kinsmen Anil Kumar and Dr Pramath Sinha, apart from Neeraj Bharadwaj, then Country Head of Apax Partners, a private equity firm. In June 2001, Sinha would take a year off from McKinsey to become its Founding Dean.

The legwork and execution involved over 30 McKinsey associates. “McKinsey did a fair amount of work with the fund-raising strategy and feasibility study,” recalls Gupta in a telephonic interview from New York. “Right in the beginning, there were 12 equity investors or donors who were all corporate leaders. It didn’t take huge amounts of time on my part because there was collective leadership on the board,” says Gupta, who is now Senior Partner Emeritus at McKinsey, citing Anil Ambani, KV Kamath and Rahul Bajaj, who were already on board.

“We wanted to cater to industry, and not just build a business school,” says Sinha, who is now Co-founder and Managing Director of Nine Dot Nine Mediaworx, a media company. “For this, we needed to first understand from industry and potential employers the kind of students they wanted, design a programme to cater to those needs, and then get their commitment to recruit these students because people ultimately come to B-schools to get good jobs,” he explains.

Gupta played a pivotal role, as he knew many CEOs. He wanted to bring the power of business connections to build a B-school in India.

By the time, its 260-acre campus was sanctioned by the Andhra Pradesh government in September 1998, ISB had corporate patronage. Its governing board, comprising the 12 corporate leaders, was involved in giving inputs for a higher-education offering for experienced students. “The country needed an international business school,” recalls Anil Kumar, now MD of McKinsey Asia Center. “When McKinsey was recruiting from India’s premier B-schools, we realised the students are razor sharp, but they didn’t have global exposure,” he explains. This made the participation of global B-schools as indispensable as that of corporate leaders.

Laws of Attraction

Sure enough, ISB’s fledgling phase has drawn immensely from Rajat Gupta’s stature at McKinsey. His ascent at the global consulting firm was well known, which lent credibility to the ISB project. For instance, former Andhra Pradesh Chief Minister Chandrababu Naidu wanted the ISB campus in his state after Shiv Sena leader Bal Thackeray demanded reservation for locals when the initial idea was to set up the institute in Mumbai. The first phase of investments for ISB called for Rs 175 crore, most of which was towards infrastructure.

In Corporate India, Anil Kumar managed the task of engaging with leaders seamlessly. If the fact that the executive board had 12 corporate head honchos even before the first batch of students arrived was impressive, it features as many as 30 corporate chief executives today. To get the project going, each sponsor in India contributed a million dollars.

The executive board had 12 corporate head honchos even before the first batch of students arrived. Today, it boasts of as many as 30 CEOs.

As early as 1997, ISB had firmed up associations with Wharton and Kellogg. Kumar, a Wharton alumnus, helped bring Thomas P Gerrity, then Dean of Wharton Business School, on board. Gupta was instrumental in evincing the interest of Donald Jacobs, then the Dean of Kellogg School of Management. Two years later, Gupta roped in management guru and academician, the late Dr Sumantra Ghoshal, who, in turn, was instrumental in bringing on board London Business School in December 2000. The tie-ups have enabled student exchange programmes and have been instrumental in making ISB’s course offerings more global.

“Rajat was the global leader who was sitting in New York, Chicago and Stanford, helping us get partnerships, raising money using his networks there, and getting those people on to the ISB Board,” says Sinha. There is the story of the first non-board donation (of $2 million) to come ISB’s way in the late-1990s from Dan Vasella, CEO of pharma giant Novartis. Gupta placed the ISB proposition before several such CEOs, besides convincing people on the board to put in the seed money.

“Rajat played a pivotal role because he knew so many CEOs around the world,” says Kumar. “His first phone call for the international governing board was to Hank Paulson in Goldman Sachs. We literally invited 30 global CEOs to the governing board, of which, 25 said ‘yes’. Gupta wanted to bring the power of those business connections to build a business school in India.”

By Industry, For Industry

Given its whole-hearted thrust towards industry and the high-profile executive board, ISB would appear to foster an uninhibited spirit of capitalism. Parallel to the industry flavour, however, there has been an emphasis on spawning the spirit of entrepreneurship, and more recently on themes such as inclusive growth and low-cost innovations in pharma, in the context of free markets. “We try to influence industry trends,” says Ajit Rangnekar, the current Dean of ISB. “If we just mirror and follow, we won’t be doing our job.”

Even with the executive board that ISB has, Rangnekar values the independence of academia above all else. Since 2003, the institute has built its permanent faculty to constitute 30 academicians. “You need good faculty because that attracts good students. Also, applied research is necessary, for which, we must have a good faculty,” says MR Rao, who was Dean from 2004 to 2009.

True to Rajat Gupta’s vision, ISB has managed its proposition in the value chain. “We are not competing with the Indian Institutes of Management (IIMs),” says Sinha, the Founding Dean. “We always wanted a distinctive identity: the focus on developing talent among working professionals. That was one way to distance ourselves from the IIMs.” Today, both the IIMs and ISBs (which now has another campus in Mohali, Chandigarh) operate at different points of the higher-learning value chain.

“Even before ISB started operations, Rajat insisted on meritocracy when there was political pressure in Maharashtra,” says Dr Bala Balachandran, Founder of Great Lakes Institute of Management, a B-school in Chennai. Dr Balachandran taught at ISB for three years and was part of the academic board from the inception stage, prior to which he taught at Kellogg.

Gupta has maintained a hands-off approach in ISB’s operations, but there hasn’t been a convocation ceremony in the B-school yet without him around. ISB has been a project close to his heart. It has many faces, but the most recognisable one is Gupta’s.

Source: Outlook Business (India)

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