By Ajit Rangnekar
These are tumultuous times, and most of the world is troubled by the tepid global markets. Wealth distribution is uneven, and income disparities are rising, creating new resentment against the established order, reflected in spontaneous movements like "Occupy Wall Street" in the U.S., or the Anna Hazare movement in India. But these are exciting times too. New markets of opportunity are emerging, and innovation and the spirit of enterprise are showing exciting results in rising economies. Technology that previously broke business barriers is now breaking down social barriers as well.
What does all of this mean for management educators? What challenge does it pose for institutions in the business of grooming leaders who will navigate the world through these changing times? How can we educate our students to influence and enable societal change, while generating wealth at the same time? One way would be to bring our knowledge and competencies to devise profit-making solutions for real issues that benefit society. And, such issues abound—at a scale well beyond the capacity of any single government or organization. In this article, I touch upon the economic and the social dimension of one such issue pointing to the kind of interventions that business schools can play in the future.
A mega trend expected to impact India over the next few decades is the mass migration of people from rural areas to urban centres. A 2010 McKinsey report on urbanization projects that India alone is looking at a movement of about 250 million people toward urban centres over the next 20 years. This could potentially translate to a demand for 700-900 million of square metres of commercial and residential space (almost a new Chicago!) every year, and 2.5 billion square metres of roads to be paved. It also is estimated that about 1.2 trillion USD capital investment will be necessary to meet the projected demand in India's cities. As per current trends, a sharp decline is expected in the quality of urban services, including a shortage of 38 million units of affordable housing and 92 billion liters per day of water supply.
This staggering pace of urbanization poses not only an unprecedented managerial and policy challenge for the country, but also a great opportunity to transform the face of the nation through inclusive and sustainable growth. People will need jobs, homes, education, healthcare, and a decent quality of living. Cities will have to provide basic infrastructure like roads, water, sanitation, power, etc. How do we deliver these services at a large scale, across a large country, at very low prices? Are there any new leaps we can make in the use of technology, business models or pricing models for achieving such scale? Who will make these investments? Who will govern these cities and ensure that the investors get their returns? These are societal issues requiring fair and equitable participation by all sections of society. Who will prepare the leaders to work in harmony with diverse stakeholders in this new society?
Countries like India will need a significant increase in capacity of its government and private sector talent in order to find affordable and profitable solutions through public-private partnerships. The investments too, required for making these cities livable and productive is enormous. In developing countries like India, the government's ability to invest in this infrastructure is extremely limited. The individual also has a limited capacity to pay for the services. Hence, it is necessary to find affordable, and profitable solutions to projects on a mammoth scale. If these investments are profitable, they will naturally attract funds. This requires a complete reevaluation of how we approach a problem.
India has seen examples of social entrepreneurs achieving huge scale and cost reductions through such rethinking. Such innovative approaches are the key for growth and development in this part of the world. Instead of addressing the lack of skilled manpower as a problem, business schools must teach their students to find an affordable and verifiable way of delivering quality training to millions is a business opportunity. Access to finance and unrealistic perceptions of risk often make it difficult for entrepreneurs to find the funding necessary to be successful. Business schools are ideally placed to identify the real risks and costs, simplify processes to reduce costs, and offer new business models which allow the needy to get the services at price points they can afford.
To enable such a transformation, academia, industry, government, and civil society must all work together. The collective goal of these partnerships will be to innovate locally and responsibly, and to adapt and replicate these successes on a national and global scale. This means that the traditional way of imparting education has to change. We will have to work with those delivering the services and products to quickly find the answers to problems that arise. We will have to train our students to be creative and to integrate their learning from the business world to these solutions. This education needs to provide the necessary bridge between local challenges, opportunities and the entrepreneurial spirit of the individual on the one hand, with seamless integration with of global knowledge, technology and money, on the other.
The economic issue is perhaps finding funds to finance the infrastructure. But, the social issue is ensuring that the growth is equitable. Providing services to the 'poor' has many moral challenges, since making profit from such businesses can be perceived as exploitation of the poor. Sensitivity to social perceptions will be vital to these entrepreneurs, making it imperative that underlying these efforts should be a strong, unyielding belief in ethics. Values and ethics must form the basis of our education. It is only when we can truly educate students to believe in the power of "business as a force of good" that we can claim success in this endeavor.
This is obviously not an easy task, nor can it be accomplished overnight. It may even sound utopian and unrealistic. Our training as scholars mandates that we check and verify every experience rigorously so we can teach what truly qualifies as "education." That will inevitably take time. Fortunately, our location in India is a great advantage, with the manpower to leverage the technical and scientific global knowledge with entrepreneurial spirit to create game changing solutions serving the needs of society. It also has scholars who can study these developments and draw appropriate lessons. India can be the crucible for testing new business models with potential of global scale and impact in areas such as healthcare, education, energy, food and water, and financial services, to name a few areas of big transformational potential. The ISB, as a school, is ready to play a role in providing such education that shapes the economy.