Business schools are increasingly becoming global in nature and content, and that is the way forward for them, according to Geoffrey Garrett, Dean of the Wharton School of the University of Pennsylvania. Wharton, the world's first collegiate business school, was established in 1881 by American entrepreneur and industrialist Joseph Wharton. Business Today's Sarika Malhotra caught up with Garrett during his recent visit to India. Edited excerpts from the interview.
Q. How is the landscape changing for management education in the US and globally? And how is Wharton responding to it?
A. The number of unique GMAT test takers has declined in the US in the last 10 years, but the total number of GMAT test takers has grown on account of Asian demand, led by Indian and Chinese test takers. B-schools are probably the most global parts of university education today and, going ahead, they will become even more global. I believe that the combination of immigration and innovation, with universities at the core, has been the secret source for the American economy for a very long time, and business schools are on the leading edge of that. Most business schools are located in the US, but they are increasingly going global. Take the case of Wharton: we opened a centre in Beijing, we are in Delhi today, we have a global faculty, we conduct global modular classes where students can go around the world and learn. Sometimes we think that the 1990s was the globalisation decade, but globalisation of business education is happening now.
Wharton's commitment to globalising business schools is evident by the fact that we have played a founding role in three Asian B-schools in two decades. ISB was a fantastic accomplishment, and we are very proud of how ISB has gone up in the international MBA rankings. We also helped found the Singapore Management University in Singapore and co-founded Sasin B-school in Thailand. The ISB relationship is a very powerful one for us; it reflects the case of human capital in India. There is a two-way relationship between Wharton and other business schools, and the US and other countries. We have a lot to offer, a lot of history, but we also have a lot to learn. There was a concern 20 years ago that the US, as a country, wanted to recreate a lot of the world in its own image. Twenty years later, we understand that the world truly is a flatter place. A case such as ISB highlights how well interconnectedness can work.
Q. What effect did the 2008 crisis have on business school education? Did B-schools have to reinvent themselves post Lehman?
A. The innovation that happened in finance, led by the US but not limited to the US, over a period of 15 years before Lehman was immense. Post 2008, we observed that our students became much more balanced in their career choices. At the MBA level, one third of our graduates go into financial services, another third go into technology and the remaining third into everything else, with consulting as the leading career choice. The breadth of career choices reflects the opportunities available now, rather than any reaction to 2008. We are living in a period where the role of the private sector is going to be unprecedentedly large. Social needs are rising and the ability of the government to cater to these needs is limited, especially in the West, as public debt is high and it cost as much to avert another depression. In a country like India or Indonesia, where infrastructure challenges are immense, the government alone can't be expected to pay for that infrastructure; so the role of the private sector will just get bigger. Rather than looking at the world post 2008, we have to be more forward looking - technology is here to stay and the role of the private sector will be bigger than before, which will make business schools even more important institutions.
Q. With emerging economies becoming big, how are B-schools adapting to this changing economic world?
A. Business schools are increasingly becoming global in nature and content. There are three ways through which we can look at globalising the curriculum: have more global content relative to American content in all our offerings; second is to have non-American classes such as the multinational group in our management department and the third is to have global modular classes. These short, intensive, immersive experiences can go a long way in providing real ground experiences to our students. For these modular classes, we decided to match course content with location and with the intensity of the calendar and built a set of twelve electives based in multiple continents. For example, we have a course on supply chains in China, where students go to twelve factories in China, work through them and share experiences. Similarly, there is a course on luxury brands in Milan, a course in innovation and entrepreneurship in Bangalore, and also a course on Indian consumers taught in Mumbai.
We believe that students, in addition to classroom content and faculty expertise, need to live the experience. And business schools need to provide the opportunity for students to take advantage of the greatest trends where they are shaping. Also, all B-schools have a challenge with the weight of activities that must happen on the campus, not only in terms of course work, but also making sure that their MBAs live 24X7 lives. Real experience is priceless, that's why we are spending as much time in planes, even when we could make do with video conferencing.
Q. A lot of graduates are opting to be entrepreneurs or joining start-ups. How is Wharton adapting to these changes, given that it has traditionally been very strong on the finance side?
A. There are many indicators that point towards the growing trend. One third of our graduates are going into technology companies which tend to be smaller. The other indicator is geographic location of our graduates - the number one destination is New York and that is not only on account of New York being the finance hub, but because it is a very diversified economy now with a number of start-ups in the South and West side of Manhattan. The second most preferred destination is the Bay Area where the combination of technology and analytics is phenomenal. It is fantastic that Wharton has a campus at San Francisco where most of the big technology companies are present. We also have an extraordinary alumni base in the Bay Area that we leverage. Our San Francisco campus is an asset that can really help us project the school forward. We are the oldest business school in the world, have history and heritage, but we have to leverage that for the future. It is imperative to draw connections. We tend to think of start-ups, finance and technology as being different, but they are not. For example, financial services, growth of hedge funds, private equity, venture capital...these have been real innovations in the finance world. All the people who did that, including Wharton graduates, started in big firms and created their own firms gradually. So, financial entrepreneurship isn't an oxymoron, it has actually been an important part of the start-up story. However, it is with some caveats that we want our students to get in the start-up ecosystem as entrepreneurs, since the risks involved can be very high. Rather than expecting our students to immediately go into a start-up environment, we would like to see those students with three to five years of work experience after graduation to look at turning entrepreneurs. By this time, they should have acquired some know-how and some cash! We should increasingly focus on helping such graduates become entrepreneurs by providing them access to co-working spaces and funding.
Q.With new-age, technology-based sectors such as e-commerce and analytics coming up, are demands of employers changing? How are B-schools coping with the demands of traditional and new-age recruiters?
A. When one thinks about Wharton as the finance school, one is looking at quantitative skills and the ability to use data and analyse it to make better decisions. When we look at the marketplace, we all tend to fall in love with a very trendy app; but behind the app there is typically analytics at the core of those businesses. For example, Uber has a great app, but the reason Uber works is because it knows where the customers and drivers are. It's an analytics company and not just an app. If you think about successful start-ups, of course there is a great idea at the core, but there is a long way between a great idea and a successful business. And all the skills one requires to turn a great idea into a successful business are the things that the Wharton School imparts. We are thinking about a branding move to highlight this; we're thinking of calling it the 'Scale School'.
Recently, a study was done of Silicon Valley and C-Suite executives, and Wharton was the number two provider of C-Suite executives in Silicon Valley. All the skills of building a business, be it financial model, management or marketing, are what Wharton is good at. Yes, one can argue that finance, entrepreneurship and analytics are different worlds; however, we are always looking at intersections in the circle and believe that these are actually connected.
Q. What are the biggest challenges that B-schools face?
A. The biggest challenge for B-schools is the sheer opportunity cost of doing a full-time MBA, both for employers and students. In a world of very high opportunity cost, gradually shorter and online MBAs will come in. We, at Wharton, are not going to go for either, as we believe that the value of our degree must be really high. At the same time, we have to be well aware of the opportunity cost that our students are taking to be students and, therefore, give them the best possible management education in those two years. The opportunity cost will probably lead to segmenting the market. A relatively small number of elite global schools will be attractive for the on-campus traditional MBA, but for a lot of other universities the opportunity cost will be too high to educate as many students on campus. MBAs will go online and become shorter.
Q. Do Indians and Chinese form the biggest applicant pool at Wharton? What are the strengths of Indians?
A. At Wharton, the number of Indian admits is higher than Chinese. There are around 177 Indian students with a majority at the MBA level. The quality of technical education in India and China is very good. Also, Indians have an advantage with English that particularly helps at the MBA level. The other factor is the success of ethnic Indians who are not counted per say as Indians. So, our Indian numbers significantly underestimate the impact India makes. Indians love to debate and are interested in politics; if you combine that skill set with their science and mathematics training, it's a powerful combination. Also, the quality of work experience that Indian students bring is very good. They have global exposure along with their skill set. Not only in Wharton, but throughout the American economy their contribution is notable. We are very proud that one of our alumni Sundar Pichai has become the CEO of Google. The breadth of Indian engagement at the elite levels of the US economy is extraordinary.
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