Jayabrata Bhaduri is a start-up founder in the process of steering his venture from the incubation stage to an independent company. His company Capacloud works on technology that enables vertical landscaping i.e. growing plants on walls and has mostly corporate clients including Kalaari Capital, Haldiram, and Lemon Tree Hotels among others. His start-up was invited by IIM Calcutta’s Centre for Entrepreneurship and Innovation (CEI) after he won a competition organised jointly by CEI and the government of West Bengal.
Today, it’s been around ten months since he signed a two-year contract with CEI in return for a minority stake in his company as observer and board member. He has access to ‘world-class facilities’ including fully furnished office space, conference rooms and other business infrastructure in IIM Calcutta Innovation Park. He recently raised an undisclosed amount from SIDBI and says CEI helped him a lot in clinching the deal. “We received a lot of guidance in the preparation of a business plan, presentation, discussion and negotiation with investors, as well as final due diligence before the funding,” he says.
On the mentorship front, Abhinav Girdhar, founder, Bodhi Health, says IIM Calcutta assigns a faculty member as an academic mentor and an experienced industry figure as an industry mentor.
While the industry mentor helps them expand their business by introducing them to potential customers, the academic mentor helps them fine-tune their business model. “As a result of their guidance, we have expanded our potential customer base from one segment to three segments. Initially, we were focused on government hospitals since the scale was huge. We made some inroads in some states, but progress was slow. Our mentor recommended we expand our focus to the private sector, and IIM Calcutta soon helped us land our first customer: an eye care chain in the North East. Soon, we went a step further and are now also catering to academic institutions. The change in focus really helped us sustain the business, considerably shortening our working capital requirement and sales cycle,” says Girdhar.
Interestingly, Girdhar’s start-up has received early-stage funding from IIM Ahmedabad’s Centre for Innovation, Incubation & Entrepreneurship (CIIE), indicating healthy collaboration from incubators across B-schools. They also have funding from a couple of angel investors who were introduced to them by IIM Calcutta.
Progress on the start-up is reviewed periodically. “There is an informal review process every week or biweekly, we also have to send monthly reports detailing financials and product development, and then there are quarterly board meetings,” says Bhaduri. Both Bhaduri and Girdhar say the main advantage of a B-school incubator is access to the best talent. “IIM students often join us as interns, something not possible for us otherwise with our limited financial resources,” says Girdhar.
Welcome to a world where B-schools, known to be training grounds for a lucrative corporate career, are climbing the start-up bandwagon and increasingly backing start-ups and training students in entrepreneurial thinking.
Too cool for school
The two major trends in the last decade to have affected management education in the country are the digital democratisation of education (in the form of MOOCs- Massive Open Online Courses) and the emergence of an indigenous start-up culture. While management education has retained its allure among aspirants, evident by the steady number of CAT applicants, institutions are nevertheless attempting to keep up with the times.
To begin with, institutes are introducing new courses focused on entrepreneurship, many of which are compulsory in their flagship PGDM courses. “Last year, we introduced two new compulsory workshop courses — one on entrepreneurial orientation and second one on innovation and design thinking — in the first year of PGP. The objective was to make sure that our students have exposure to entrepreneurial orientation. While everybody may not become entrepreneurs, some may require these skills in corporate jobs,” says Rishikesha Krishnan, director, IIM Indore. In addition, IIM Indore is also planning to offer PGP students the option of starting their own venture instead of taking up elective courses. “Students can straight away start working on their business plan. Their venture will be graded and carry credits. It will be subject to periodic reviews and mentors will evaluate and grade them,” says Krishnan.
“We have courses on basics of entrepreneurship, social entrepreneurship, managing new ventures, and entrepreneurial finance as part of our curriculum,” says Ashok Banerjee, professor, IIM Calcutta. XLRI has a six-month residential programme for budding entrepreneurs. “Our six-month Post Graduate Programme for Certificate in Entrepreneurship Management (PGP-CEM) was launched in March, 2010. Over 250 students have benefited from this program,” says Sunil Varughese, chief brand and sustainability officer, XLRI.
Such initiatives are in line with the explosion of incubators at B-schools. Over the last decade, many schools have also set up incubators with support from government bodies like the Department of Science & Technology (DST), which recognises these as Technology Business Incubators (TBIs). “Set up in March
2000, the NS. Raghavan Centre for Entrepreneurial Learning (NSRCEL) has incubated over 60 successful startups, including student-run ventures and graduate-run ventures. We are proud to state that NSRCEL’s incubatee Mesh Labs Software has been acquired by Nasdaq-listed Pegasystems Inc in 2014. In FY16, NSRCEL incubated over 10 student enterprises. Being sector-agnostic, the centre attracts a variety of start-ups from high technology ones to social enterprises,” says K Kumar, professor, IIM Bangalore and chairperson, NSRCEL.
IIM Calcutta set up its incubator, CEI in 2014 with funding from DST. “So far, we have incubated 17 start-ups and out of which three have already graduated. We provide mentorship and seed fund, typically in the range of Rs.10 lakh to Rs.25 lakh. While we are sector-agnostic, we have two main focus areas: social enterprise and MSMEs, which form around 60% of the ventures incubated,” says Banerjee. IIM Ahmedabad’s CIIE was set up in 2002 with grants from the Gujarat government and DST. It became a full-fledged incubation centre in 2007.
Many other institutions which haven’t set up incubators yet are in the process of launching one. “IIM-K is starting an incubator and entrepreneurship development cell with the aim to incubate at least 20 start-ups by end of 5 years. In the first year itself, it hopes to identify most promising 5 incubatees. The business incubator is called IIM-K LIVE (Laboratory for Innovation, Venturing and Entrepreneurship) and has fetched a grant from DST,” says Keyoor Purani, professor, IIM Kozhikode.
Other institutes in the process of setting up incubators are tapping different sources of funding such as NITI Aayog’s Atal Innovation Mission (AIM). “AIM intends to establish Atal Incubation Centres (AIC) across India by providing them financial support. AIM will provide a grant-in-aid of Rs.10 crore to each AIC for a maximum of 5 years to cover the capital and operational expenditure cost in running the centre. The applicant would have to provide a built-up space of at least 10,000 sq. ft to qualify for the financial support,” notes the NITI Aayog website. Applicant institutions will also have to match AIM’s investment in the incubator. So far, 3,658 institutions have applied for setting up AICs, with 1,719 academic institutions and 1,939 non-academic institutions, such as corporates and business parks. IIM Indore and Great Lakes Institute of Management are among the academic institutions that have applied for the AIM grant. “We are happy to say that a couple of Indian MNCs have given in-principle consent to be our partners to set up and drive the incubator,” says RS Veeravalli, director, PGXPM, who is also the head of Centre for Innovation & Entrepreneurship & associate professor, Great Lakes Institute of Management.
Incubatees in B-school incubators do not necessarily have to be students; in fact, majority of them are external entrepreneurs, as is also the case with Bhaduri. This is not surprising given that students who opt for management education tend to be risk-averse. For students, the MBA degree is an investment that pays off through an enhanced pay package received after graduation. They also take significant education loans in the range of Rs.10 lakh-Rs.15 lakh to fund their education. This makes it unlikely that fresh MBA graduates will launch their own start-up immediately after graduation since they have EMIs to pay. “The metric most MBA schools look at is how many students venture out on their own in a five-year horizon,” says Veeravalli.
Nevertheless, almost all business schools offer students the option of deferred placements: students can start-up immediately after graduation and if things don’t work out, sit for placements after two to three years. However, the number of students who opt for deferred placements are in the single digits.
Meanwhile, MOOCs are becoming vital in increasing the reach of education. Coursera, Udacity and edX are some prominent examples with a global reach. MOOCs usually have a set start and end date, and are usually structured courses encompassing discussion forums, assignments and video lectures.
Already, B-schools such as IIM Bangalore and IIM Calcutta have been running distance e-learning programmes for many years now in order to increase student outreach. These are different from MOOCs in the sense that they are paid (not free of cost), and the lectures are in real-time (synchronous) and not pre-recorded. They are usually targeted towards executives who attend real-time lectures remotely.
“IIM-K pioneered interactive distance learning programs for working executives on technology platform way back in 2001. Today it runs an internationally (AMBA, UK) accredited 2-year executive PG Programme through technology platform that provide synchronous learning over distance. It is the only IIM to have an executive diploma program over interactive distance learning platform,” says Purani of IIM-K. He says the program has become popular among aspiring mid-career executives and corporate looking for experienced executives certified by an IIM for lateral recruitment.
“Apart from the two-year executive PG diploma, IIM-K conducts medium-duration certificate programmes and short-duration development programmes in specialised area of management for working executives. The diploma program through interactive distance learning platform is popular as a large number of executives with technical expertise compete for managerial roles and feel the need for formal management education without having to leave their jobs and families and yet have high quality education accessible through satellite or broadband technology,” he adds.
As far as MOOCs are concerned, National Programme on Technology Enhanced Learning (NPTEL), a joint initiative of IITs and IISc, is a prominent MOOC offering from India. B-schools in India, however, are a little behind the curve in adopting MOOC, with a few notable exceptions such as IIM Bangalore, which has launched MOOCs on the Harvard-MIT platform edX. However, professors at other B-schools independently offer courses on government-led platforms like AgMOOCs (agri-focused MOOCs) and Swayam. The latter is the government’s flagship MOOCs platform, currently in beta stage, that will offer over 2,000 courses on a variety of subjects to over 3 crore students.
“From the launch of the first IIMBx course in July 2015, IIMBx has grown rapidly and has 28 courses on offer (including nine reruns). During FY16 IIM-B has delivered MOOCs in three formats including Open MOOCs on edX, Blended MOOCs (as part of executive education programme) and Faculty Development Programme (for adopting IIMBx MOOCs),” says PD Jose, chairperson, MOOCs initiative at IIM Bangalore. IIMBx MOOCs have a total enrolment of more than 300,000 and attracts learners from almost every country, with more than 4.5 lakh complete video views and more than 2,000 average learners per week. Indians comprise 32% of learners, followed by the US with 15%, UK with 3% and others like Egypt, Canada, and Brazil. A course on ‘Do Your Venture: Entrepreneurship for Everyone’ was offered in June 2016. “This course is meant for those with an entrepreneurial intent and who do not know how to convert this intent into a potential venture,” says Jose.
“In FY16, IIMBx MOOCs have used a balanced mix of videos, readings quizzes, discussions and other learning elements to provide the right online learning experience. In addition, most MOOCs include a virtual live session on WebEx to help learners with difficult topics, problem solving, Q&A, etc. This has led to an average 70% completion rate for paid certificates and 5% overall completion rate, in line with global standards experienced by other edX partner schools,” says Jose.
These low overall completion rates have led some to comment on the limitations of MOOCs in influencing learning outcomes, given lack of interactivity — inspite of discussion forums — compared to classroom learning. This is true especially in management education where class participation forms around 10% component of most courses; many students are known to indulge in DCP (desperate class participation) in an attempt to corner this possibly crucial 10% component.
“Institutionally, we are not moving forward in the MOOCs direction so far. One or two faculty are offering some programmes on their own. Long distance programmes are in the pipeline; they will become online in a few months. Personally, I feel MOOCs are not sustainable. My understanding is that learning is a very difficult thing. To make classes interesting, they have to be interactive. MOOCs generally have one sided lectures, therefore attention span is very low. It’s no use if thousands are registering for these programmes but very few are completing the course,” says Sanjay Verma, professor, IIM Ahmedabad.
At the same time online courses are beginning to complement classroom learning. Many professors are increasingly adopting aspects of MOOCs via the flipped classroom model where students view video lectures before attending class which makes the classroom more conducive to reflection and discussion.
Krishnan of IIM Indore feels the major motivation for B-schools to start MOOCs, in the absence of any tangible financial incentive, is to popularise their brands in unknown markets and on a global scale. “MOOCs will work well when institutes can offer distinctive content. If say an institute offers a course on statistics, why will anyone sign up for it when the world’s best statistics professor is already offering a MOOC. Institutions will have to offer something which others can’t,” says Krishnan.
The dilemma of investing in this segment is justified since the most successful MOOCs platforms haven’t yet figured out their business model. “None of the platforms are in the green,” says Runa Sarkar, professor, IIM Calcutta. Sarkar says there are flaws with the beta version of Swayam, the MHRD’s MOOCs platform, on which some IIM Calcutta professors among others are willing to offer courses. “It needs to be recognised that most students will be first-time users of online education. But this version of Swayam has not activated a help tab for these students yet,” she says.
Mainly, the success of MOOCs in terms of completion rates and widespread adoption will depend on how well-designed the course is. Sarkar feels the major challenges for MOOCs will be because of the dry presentation of courses. “Dissemination of knowledge is becoming a performance. Most of the established MOOCs have course design specialists who help design and present the course in an effective manner. MOOCs here don’t have that kind of sophisticated presentation. Given this, it is questionable how beneficial MOOCs are going to be in influencing learning outcomes."