Madhav V Rajan, Dean, Booth School of Business, and George Pratt Shultz Professor of Accounting, University of Chicago, says management schools have to evolve to meet student and industry expectations. A 1984 commerce graduate from Vivekananda College, University of Madras, Rajan went on to do an MS in Accounting, an MS in Industrial Administration, and a Ph.D in Accounting from Carnegie Mellon University. He took over as Dean of Booth School of Business on July 1. Booth has been in the news recently for the Nobel Prize that Richard Thaler, a faculty member, received for his contributions to behavioural economics. Booth is also where former RBI Governor Raghuram Rajan is a Professor of Finance. The two are not related, though; Dean Rajan quips that he will always be the lesser known Rajan!
Rajan, who was in Chennai to deliver the keynote address at the 6th Annual Pan-India Booth Alumni Retreat (PIBAR), spoke to BusinessLine on Campus on academic innovations and rigour at Booth, on whether the MBA needs to be redefined, and on the Booth School's focus on entrepreneurship. Here are excerpts from the interview (video above):
Do you think the MBA in its present form needs to be restructured?
MBA programmes have to adjust. They are adjusting, particularly the ones that have the flexibility to adjust. The way schools are trying to bridge it is by having more classes that are experiential in nature. It is not just that you are sitting in the class all the time, but you also have chances to apply that in practice. We have what we call lab classes. You take a class in venture capital or private equity. We allow you to go and work with a PE or a VC firm not during your class time but outside of that, to put into practice what you have learnt. The good schools are innovating.
You have said management has to be adaptive, nimble and flexible…
We cannot say that the core two-year MBA has to be the same that it was 30-40 years ago. Students now demand a lot more of application relative to a focus on just theory. Even if you are teaching a theoretical sort of finance course, they want to know where to apply this. One part of the flexibility comes from faculty adapting their course to make it more relevant to students. The other is, as a school, putting forward courses that students need.
If I talk to recruiters like Amazon, they would say — ‘we would really like students to come in having known how to program in R. We really would like them to know something about machine learning.’ It is up to us as a school to be innovative and make sure that is done. At Chicago we give innovation credits to faculty. If you teach a new class, you get a teaching credit for doing that and that has spurred a lot of innovation in terms of the classes that we have come up with.
We have a new course, for example, being offered this year in fintech. Ten years ago, nobody would know what fintech was. Now it has become a big area. As a school, the sort of curriculum that you put in has to be adaptive. We have to be organisationally more nimble. Universities are famously very bureaucratic and it is hard to get things done. I think we have to operate more like a business in many ways and figure out what are the things that are working and invest in them, and things that are not working, shut them down.
What new programme has Booth unveiled to keep up with the current requirements of the industry?
Booth has been quite innovative. Most people think of Chicago Booth as a finance school. Our top concentration now is entrepreneurship, which has been a dramatic change in the past five years. We have an entrepreneurship centre called the Polsky Center which has become a magnet for students who want to learn how to set up new companies. We have a new venture challenge that we run which has become popular. One of the big innovations is just giving more courses in how you set up a small business, how you run it, what are the tools you need to manage it better.
The second big shift is something that really speaks to Booth’s strength, which is that it has always been a place that believed in data. It has always been a place that believed in evidence and rigour and questioning.
The world has moved to where Booth has always been. Which is the world of Big Data and Analytics. We have a lot of courses now in digital marketing and marketing analytics, programming in R, courses in artificial intelligence.
An interesting fact is the top employer for summer interns is Amazon. They have made it their stated goal that they want to be our number one full time employer too. They love the students who come out of Booth because they feel they are rigorously trained in data sciences and analytics. It has been really great from that standpoint that we have always been a finance school, but we now have three pillars: finance; consulting, which is strong, about 30 per cent of the students take jobs in the McKinseys, BCGs and Bains; now technology has become a third pillar for us.
What percentage of your students become entrepreneurs?
At Stanford, when I was running the MBA programme, it was 16 per cent of the MBA students. At Chicago, it is probably close to 4 per cent, which is sort of the norm at other schools. What is happening is, these are people taking jobs in companies, in many ways to say let us pay off our student debt.
Let us learn a little bit about different types of jobs and then eventually I am going to start my own company. If we are to track them three-five years out, you will see many more of them working in start-ups or starting their own companies.
They just don’t do it right out of school. The external environment is different in Silicon Valley where the money is much easier and it is easier just to start ideas. In Chicago this isn’t the case. This is true even if you look at the Whartons and the Harvards.
I think 16 per cent is too many, 4 per cent might be too small. The ideal is somewhere in the middle.
What would Booth need to do to equip its students in fintech and healthcare?
We have the best finance group in the world, particularly with Raghuram Rajan coming back to teach.
We will see a lot of people play a big role in fintech. If you look at the finance industry, there are a lot of companies that are dominated by Booth graduates. You will see a lot of those big companies make big investments in fintech. Booth will play a role in that sector.
We have to deliberately invest in healthcare, which is a hard area. The ideal is to have students do an MD (medicine) and an MBA at the same time. Those joint programmes are hard to do, because the MD is not a monolithic degree. The way for us is to set up an MD-MBA joint degree and figure out how best to scale that.
Increasingly, you need people who are doctors but also are able to run these big healthcare maintenance organisations and hospitals. That is the biggest sector of the GDP. It is 17 per cent of the US GDP.
We need to consciously make investments to become better in that space.
It is good for students to do joint degrees. We now have a joint degree with computer science at Booth.