Raising the standards of business education

(The article was first published in Jan-Feb 2014 edition of Aurora.)

AURORA: How important is advertising and marketing for an institution such as yours?
DR SHAUKAT ALI BRAH: Looking at global best practices you find that typically, although schools do not advertise in general, the business schools, especially the MBA and executive programmes do so regularly. This is a global phenomenon and not unique to Pakistan. Good schools like KSBL, IBA (Institute of Business Administration) and LUMS (Lahore University of Management Sciences) do not make money on their degree programmes; in fact they lose money. I was Dean at LUMS for two and a half years and until 2010 all our degree programmes were losing money and all the degree programmes at KSBL will lose money, even 10 years down the road. The only reason why LUMS is in the black is because of the executive education programmes it offers and the only way KSBL will ever be in the black will also be because of our executive education programmes. And we don’t apologise for the huge margins there; we lose money over the degree programmes. I would assume that in five years time KSBL will make enough money from executive education to compensate for the losses in the degree programmes. At present, the deficit is huge.

A: Who funds KSBL?
SAB: Our trustees and they do not intend to make any money out of the proposition. I can say this about these three institutions (KSBL, LUMS and IBA); I cannot say the same thing about other institutions which have mushroomed across Pakistan, and which to my mind as an educationist bring a bad name to what is otherwise a noble profession. However, this does not mean that the faculty in institutions such as ours should be asked to make sacrifices. Most of the time they do make great sacrifices, but they also have bills to pay, and if the money is not coming from tuition, it has to come through the executive education programmes. In our case, in the interim the trustees are funding the deficit.

A: Is it a globally accepted practice for executive programmes to subsidise the degree programmes?
SAB: It is universal. At the NUS Business School in Singapore, where I was Associate Professor, we ran a very successful executive programme and we charged a lot more than we do here, and the faculty compensation was also much higher. It’s a function of demand and supply and business school faculty are much more in demand compared to other faculty. For example, in the US the compensation for a full professor of mathematics or English or science is less than that of an assistant professor in business.

A: As a new entrant, will KSBL position itself differently from IBA and LUMS, or will it replicate their formula?
SAB: I have said many times at public forums that the major contribution of institutions such as IBA and LUMS is to raise the bar. In the 1950s when IBA was established they raised the level, then in the mid-80s LUMS came up and they raised the level further and now KSBL aspires to raise the bar even higher. The benefits are that the schools next in line have to catch up. The Lahore School of Economics is where it is today because of LUMS. IBA is reshaping itself because of LUMS.

"My advice to people who are taking a degree from an institution which only enables them to earn Rs 20,000 is to think again. If you have the potential to apply at a higher level, you should make that investment because it will be beneficial; your starting point is not only higher, your growth curve will be much higher if you are an IBA, LUMS or KSBL graduate."

A: How will KSBL raise the bar?
SAB: The model for business education is simple. You bring in top class faculty, top class students will follow and reputation is just a matter of time. I will give you a simple example. In 1986, the IBA had 35 to 40 faculty members, but only two PhD professors, Dr Abdul Wahab and Dr Mateen A. Khan. When I joined LUMS in 1989 as junior faculty, I was faculty number 10 and PhD number eight, and that to me was a distinguishing competitive advantage for LUMS and it raised the bar because of the quality of the faculty. I already have 11 faculty members at KSBL, 10 are former LUMS professors and arguably five of us are the top professors in Pakistan and beyond in our disciplines.

A: Do all three institutes charge more or less the same fee for their degree programmes?
SAB: Our tuition fees are pegged at the same level as LUMS; IBA is probably half of that. IBA’s model of faculty to student ratio is what is known as a teaching university model in North America, where faculty teach four courses a semester. There is no school I know of where you can teach four courses a semester and still be able to do research. LUMS and KSBL, on the other hand, follow the research school model where the teaching load is halved. Typically under this model the faculty cost is 60 to 70% of the total operational cost. Yet even after so many years the degree programmes at LUMS still lose money.

A: Doesn’t this limit the number of people who can afford to apply for a degree programme?
SAB:** The beauty of institutions like LUMS and KSBL is that we have a need-blind admission policy and it’s not as though anyone will be denied admission because of the high tuition cost. However, it is possible that someone may be deterred from applying when they see a sticker price which is twice that of IBA it is also possible, that someone may think this institution is meant for the rich and that is probably not true of LUMS and it certainly is not true of KSBL. In our first year, we gave 60% back as loans and scholarships.

A: What options do you offer deserving candidates?
SAB: Several; scholarship or a loan or you can be fully funded by Zakat, but we believe that some level of fiscal responsibility should be put on the student. You don’t have the money, that’s okay; pay us whenever you have it, otherwise you may not value the gift you are receiving. So some level of fiscal responsibility needs to be in place. But I am also making a case for merit scholarships in order to bring in top talent.

"For the generation joining today’s workforce, it is almost a requirement globally to have a professional certification and professional bodies have realised that you cannot rely on the knowledge you gained five years ago."

A: Don’t schools like IBA, LUMS and KSBL end up catering to the elite?
SAB: I would say intellectual elite and we should not apologise for this.

A: Unfortunately in Pakistan the intellectual elite are also the economic elite.
SAB: That is factually not correct. Half of our population doesn’t even go to school. Is that fair? The answer is absolutely not, and we are failing at the national level. About 10% of the population will have the possibility of accessing these institutions and of those only five percent will be able to apply. Of course this pool has to be increased. Students are dropping out at 10th 12th or 16th grade level, so a lot of pruning is already taking place. What we can do at our level is to allow access to as high a number of students as possible. It is a national level responsibility to worry about increasing the pool of people who can think of applying to institutions such as ours. But once you are in that pool, then it is my job to make sure that you have an equal opportunity of gaining admission into a programme. But if you are not even in that pool… then it is the responsibility of the politicians to do something about the model. The benefit of benchmark institutions such as KSBL, LUMS and IBA is that they force others to raise their level. Pakistan needs a dozen IBAs, half a dozen LUMS and half a dozen KSBLs.

A: Why are the other business schools, the ones you earlier said were mushrooming, unable to raise their standard to the same level as institutions such as yours?
SAB: LUMS is a non-profit organisation. Others are not.

A: IBA and KSBL are also non-profit?
SAB: KSBL and LUMS are similar. There is huge amount of money coming in with no expectation of a financial return; the expectation is that the return will be in kind and that we will turn out quality graduates and as a result the business community will benefit. This was the concept behind LUMS. Initially, it was a business school only. Later, they saw the need to become a full-fledged university and establish a school of science and engineering. IBA is a non-profit venture, although it is publicly funded.

A: Are you saying that business schools based on a non-profit model are the ones able to take standards higher?
SAB: They have higher motivation to do this. The other thing is the market. People have to see the difference – especially MBA and executive MBA graduates – in the salary they can eventually command, and there is certainly a premium for IBA and LUMS and Insh’Allah KSBL graduates. Out in the market you have graduates earning Rs 100,000 per month and you have graduates earning Rs 20,000. My advice to people who are taking a degree from an institution which only enables them to earn Rs 20,000 is to think again. If you have the potential to apply at a higher level, you should make that investment because it will be beneficial; your starting point is not only higher, your growth curve will be much higher if you are an IBA, LUMS or KSBL graduate.

"Professors are evaluated by the number of papers they write, the quality of their research and of the journal they are published in. So the analogy is very simple. When you stop writing papers, you stop reading and when you stop reading, you stop teaching."

A: How do you ensure that your executive programmes turn out managers of the calibre required for Pakistani companies to stay competitive?
SAB: For the generation joining today’s workforce, it is almost a requirement globally to have a professional certification and professional bodies have realised that you cannot rely on the knowledge you gained five years ago. You have to upgrade because things are moving very fast and that goes for product lifecycles as well. It used to be 15 to 20 years; in my youth it was down to five and seven years and today sometimes it is six months, although three years is the average. Many electronic products are obsolete even before they are launched and that goes for individuals sometimes as well. Our programmes are continuously reinvented. We have a world class faculty and we keep updating the curriculum.

A: Who develops the curriculum and how do you work with client companies?
SAB: The executive education programmes are usually developed individually. Our MBA curriculum was developed in consultation with the Cambridge Judge Business School. We carry out a needs assessment survey for our client companies and they include the Aga Khan University Hospital, KESC, ICI and Novartis. In some cases we invite foreign faculty to come as co-instructors to develop a strategy for top management. A lot of our faculty also teach executive programmes overseas on a regular basis; they are in demand internationally; it is not as though I have nominated them to go there. So we have an internationally mobile faculty and we bring in world class scholars as well.

A: Just as much as top executives need to keep upgrading themselves, how do you ensure that your faculty goes through a similar process?
SAB: I am often asked why we do esoteric research which nobody reads and my answer is that it is the journey that matters. It is the rigor of the process that you go through which makes you a scholar. For example, to ensure my presence on Google Scholar I have to continuously write for top international academic journals. Professors are evaluated by the number of papers they write, the quality of their research and of the journal they are published in. So the analogy is very simple. When you stop writing papers, you stop reading and when you stop reading, you stop teaching. And if you want to ensure that you are able to teach something to your student body you better do this because if you stop this chain, it will not work. Scholars have to keep publishing in top-quality journals. In the top schools, numbers don’t matter; it is the quality of the publications your work appears in. But if I haven’t published anything in the last three years, then of course the numbers become relevant; I need to continuously publish and always at a higher level. To write an article for a top journal takes three to five years of hard work.

A: What are the main challenges that come with running a successful business school?
SAB: Because we are in the inception stage, the challenge is to create a balance between our ambition and our resources. As Dean, I feel that a critical mass of 40 to 50 faculty members is required to create an impact; I am currently at 11 faculty members. Of course, if I have more resources I can grow faster. Launching a new business school requires a huge financial commitment and our trustees are playing their part. But we need to do more. We need to excite the community; the institution must be owned by the community. They must have confidence in the professors and be prepared to compensate competitively to retain that intellectual component. Eighty percent of my faculty can easily find employment in the Middle East, so the gap has to be bridged. Law and order is another dimension. These are realities. As the economy becomes a little more vibrant the challenges will become lesser. The demand for quality education is very, very high and the community needs to believe that it has access to a top school as good as any in Europe or North America in their own backyard. Many of our clients are beginning to have this faith and in less than 15 months this is an amazing success story. But we need to do more. We need to have even higher level of support so that I can reduce my deficit and not have to draw water from the same wells. If I start cutting down on costs - faculty, staff and other things – it will have an effect in the longer term and hurt my ability to recruit quality faculty and quality staff. We need to be owned more passionately by the community.

Dr Shaukat Ali Brah was in conversation with Mariam Ali Baig. For feedback, email, aurora@dawn.com