5.1.1. IIMB’s mission as a project of Western-inspired modernity

Founded in 1973, the IIMB is a world-class business school that attracts talent from all over India. It is part of a network of management institutes established by the Indian government in 1961. The IIMs were inspired by the model of the most prestigious North American business schools and aimed to meet the demand for highly specialized managers in the public and private sectors (Narayanaswamy Balasubramanian 1999). In 1959, the Planning Commission invited Prof. George Robbins of the University of California to support the creation of a new class of Indian business schools. Based on his recommendations, the Indian government decided to set up two elite management institutes, the first two IIMs (in Kolkata and Ahmedabad) being founded in 1961 (Bhargava et al. 2008). A few years later, as remuneration in the public sector started to rise, the Indian government decided to make large investments to strengthen the quality of its managerial elites. As a result, the IIMB in Karnataka was designed to provide qualified young managers to the expanding public sector. By 1991, economic liberalization and globalization dynamics had reshaped the original mission of the Institute. With the boom of the IT industry, the IIMB became a key center for the training of a new class of young Indian managers that would serve the burgeoning, vibrant private sector in the region. The IIMB is characterized by a strong focus on innovation processes and on the study of BOP dynamics.

Drawing on knowledge procured from the IIMs, innovation centers, incubators and accelerators are mushrooming in India. Indeed, virtually every IIM has its own center for innovation and business incubation, including the IIMB. The Institute promotes the “NSRCEL”, a business incubator founded in 2002 that encourages the creation of innovation-driven start-ups based on values of inclusion and social responsibility. The incubator brings together technical experts and innovative entrepreneurs with investors, business mentors and management scholars, supporting start-ups that comply with three criteria: they must be innovative, i.e. offer a new service or product, they must have a clear financial and/or social impact, and they must be reasonably viable. As K Kumar, IIMB Professor of Entrepreneurship and Strategic Management of New Ventures and a member of the advisory board of the NSRCEL, summarized, the incubator is designed to deliver “innovation, implementation and impact”. The Centre is supported by a board of nine mentors, including professionals and entrepreneurs with experience spanning a wide range of sectors. The Centre supports companies such as WonderGrass, which is committed to introducing traditional Indian construction techniques into the mainstream construction industry. Their marketing and sales manager, Samit Mukherjee, told us that with the support of the NSRCEL, WonderGrass is trying to apply modern industrial design techniques to improve the quality of their bamboo construction and explore new fields of application.

The original mission of the IIMB, and the one that remains visible today, was ostensibly as a project of Western-inspired modernity. The focus, curricula and programs, especially for its prestigious MBA, were Western-inspired and Western-imported. As Dr Vinay Dabholkar, founder of Catalign Innovation Consulting and visiting scholar at the IIMB, told us: “in general the training and all the MBA courses are mainly Western-driven; there is no doubt about it”. In the words of the chief mentor of the NSRCEL, Nagaraja Prakasam, the Institute “merely wants to copy Harvard”. Prof. A. Damodaran, arguing that the IIMs are the fruits of the Western quest for modernity, stated: “The IIMB is a modernity project. It was created to train the techno-managerial elites of the country”. According to Damodaran, the Institute embodies the spirit of and desire for modernization that characterized post-Independence Nehruvian India. Faith in progress, maturated through the long sojourns of Indian elites within British circles and institutions, persuaded the father of the country and its first prime minister to push India towards a fast modernization path that embedded two parallel processes: the secularization of all sectors of the state and the centralization of large-scale, state bureaucracy. This project required the training of a huge class of managers that Nehru imagined would be guided by the principles of scientific positivism. In Damodaran’s words:

“Modernity was introduced by Nehru. He thought that India was a backward country. That is how it is. What happened was… that Nehru thought: we are backward so we will bring industries here. Backwardness is against the notion of modernity”.

According to Prof. Ramnath Narayanswamy, the notion of modernity imported into India was based on four pillars:

“First, markets. The [second] is technology, in all modern societies economy meets technology. It may be small, it may be high. It may be ‘appropriate’ but technology is needed and markets are needed. The third is state regulation. And fourth is public welfare. Now they present themselves in the given society or economy. […] You can’t say this must be 25 per cent and other one must be 25 per cent. In some country, this may be 75 per cent and other one may be 15 per cent. Why? Because all these are determined by external contexts. You may be dealing with the country like, say, India which has a long experience with markets. We had long experience with commodity markets, money markets and Bombay stock exchange is the only exchange in Asia. On the contrary, China doesn’t have that long experience with markets. It started only with the turn of the 20th century. So all societies are different […] but broadly modernity means embracing these [four concepts]. […] Today there is more unanimity in the world about this. We need to be modern”.

The creation of institutions such as the IIMs within the new independent nation-state of India grew from a desire to implement a modern structure of governance over the ruins of the British Empire. This process drew both on preexisting institutions, e.g. the tradition of local–regional commodities markets and on the introduction of new elements. Those elements were constructed around a conception of the state and universal welfare as being central to the economic life of the nation. His second pillar, and maybe the one that is most commonly associated with modernity, is technological progress. This, as Damodaran suggests, took the form of large, centralized projects such as major dams, nuclear programs and heavy industry.

The role of academia was to create, (re)produce and transfer the necessary knowledge needed to fulfill this modernity project, through, for example, the creation of the IIMs, which came to embody the modernization philosophy promulgated, to varying degrees, by the central government since Independence. The introduction of modern educational institutions served to connect the production of knowledge in academia to practitioners operating in the state’s bureaucratic machine and the growing corporate sector. As the director of the NRSCEL Prof. Sabarinathan said, these “make [theory] digestible to people”. The role of the IIMB/NSRCEL, as it emerges from our interviews, has a further important function. In addition to connecting (e.g. managerial) knowledge to the world of practitioners, it also contributes to spreading a business culture and mindset (in this sense, there are similarities with Mother Earth’s educating mission discussed in the previous chapter). As such, the institution is becoming an important location for the development of a corporate discourse that has gained momentum since the season of economic liberalization under the government of P. V. Narasimha Rao and his finance minister Manmohan Singh. According to Prof. DVR Seshadri, the IIMB has adapted towards a neoliberal orientation that has characterized the economic reforms in India over the last two decades. The Institute has become an important source of talented and skilled people for the corporate sector. According to its 2014 placement season report, for example, graduates from the Institute were mainly hired by international banks, global consulting companies, MNCs operating locally and the IT industry.

In this context, innovation is framed as an important activity to be fostered and encouraged through the creation of incubators and the formulation of public policy (i.e. creation of innovation eco-systems). Technological development is a crucial element, filling the gap that exists between the high-tech city of Bangalore and the “backward” rural settings around it. According to Prof. Rishi Krishnan, India is a country of family businesses owned by people who have been traders for generations before becoming industrialists. The Institute seeks to transform those socio-cultural factors that are perceived as hampering the creation of an ecosystem of policies, research centers and firms in which innovation can flourish. The core factor perceived as hampering the creation of functioning innovation systems in India is a culture based mostly on routinized “maintenance”, i.e. small temporary adjustments aimed largely at maintaining the status quo, or at best fostering incremental change, rather than new, disruptive and transformative innovations. Prof. Damodaran describes this in the following way:

“Nehru believed in technology and science. He did not talk about the incremental things. Whereas the entire culture of India’s tradition of resource management was based on innovation in maintenance. It was not based on innovation in terms of new creations. Maintain…. Keep it. […] That is what people now call ‘jugaad’. But management is the art of working the idea of capital asset creation. It was alien to the Indian culture. It was, you know….nature has given you the asset. Use it. But don’t try to transform and disfigure nature.”

The IIMB mission aims to overcome this “maintenance” mode of thinking, which risks encumbering the emergence of productive and functioning innovation systems able to compete on global markets. In this narrative, India is depicted as having a conservative culture (incremental innovation in a maintenance mode) and incubators such as the NSRCEL aim to provide technology, infrastructures and financial aid to those entrepreneurs willing to escape the structural stagnation of India’s non-functioning innovation systems (i.e. a transition from jugaad to systemic innovation). As Prof. Krishnan preaches in the press, innovation together with the development of managerial skills is the holy grail for progress (Krishnan 2012) and, according to Mr Dilip Mehta, a senior mentor of the NSRCEL, the socio-cultural structures that hinder economic development are slowly fading in cosmopolitan environments such as Bangalore.

5.1.2. An “Indian way to modernity”

The academic mission of IIMB as a Western modernity project has however met resistance and created tensions within its faculty. In our interview with Prof. Seshadri, for example, he did not hesitate to critique the introduction of the MBA-based management education as a sign of problematic Westernization of the Indian economy. In his words:

“Frankly if you ask me, there is a lot of confusion right now. Somewhere there is a tremendous embrace towards what can be called Western universalism. What can be called very aggressive materialism and this is seen as modernity... To get ahead in life at any cost. […] In any MBA school… anywhere in the world what are participants doing from day one? Purpose of an organization is to maximize profits and therefore if you are a manager in an organization by extension, while you are working to maximize profits of your company you are also working toward maximizing your personal wealth… And this is a source of greed …So all [our] values have been flushed aside and I see that happening”.

There is growing recognition in some quarters that the processes of development and Western-inspired modernization have not delivered the outcomes they originally promised, in particular for the marginalized sectors of Indian society. The reader will recall in the previous chapters how the activities of Grameen Shakti and Mother Earth rearranged concepts of rural space and time, and in the case of Mother Earth the meaning of rural production. Some IIMB faculty have similarly reflected on the impacts of the Western modernity project on encountering the specificities of Indian culture and social practices. According to Prof. Narayanswamy, for example, the embracing of principles of Western modernity by the corporate elites and academic intelligentsia has resulted in an emerging sense of dual identity which he describes as follows:

“In India, modernity was literally transplanted, principally though not exclusively through British rule. It was ‘fractured’ because this transplantation was not in consonance with either our history, or our native genius or our traditions, all of which were and are very different. […] Accordingly, our sense of modernity is quintessentially derivative, that is to say, we are always insecure in our relation to it… Our emotional life for example is very Indian, while our intellectual life is predominantly Western. If we look at the matter more closely, our identity is indubitably dual. And we are perfectly comfortable with this duality: there is no sense of tension”.

Damodaran (2010) also describes India as a sort of postmodern hybrid, where Western modernity entwines and cohabits with Indian culture:

“[In India] We have one stream on maintenance and one stream of massive construction. Both are going on. They have not been able to eliminate each other. Modernity products have not completely succeeded. […] Today the postmodern has taken over most of the country. Postmodernism is what? Postmodernity is a form of cultural attitude where you are very uncomfortable about extreme stands. You can have innovation Jugaad going on in some places and then large projects going on in other places. That is the postmodern.”

“IT is postmodern. Bangalore is postmodern city. It has got its spaces which are very traditional. It has got its spaces which are very modern. All the IT professionals, unlike the modernity engineers of 1960s and 1970s, are greatly religious. They go to the temple. They pray every day and come back and then make business. […] early morning between 6:30 and 8:30 they will pray for our nation. This is a postmodern condition... nothing is crystalized […] Say my students… they are software engineers. They are all very religious. […] they use the C language to create new religious icons with graphics and all that. In my generation, everything either you talked about learning or you talk about religion… If you are with learning you cannot go to the temple. Today it’s perfectly accepted”.

Hence, while there are those who maintain that the IIMB should continue to follow its original mission as a promoter and facilitator of a Western model of modernity, others recognize that this model has been only partially successful in terms of its outcomes for wider Indian society. Others feel that the academic mission may need to be reframed in order to accommodate different interpretations of modernity present in contemporary India. Overall, the narrative that emerges from IIMB suggests an institution in a state of flux between its original mandate and a more reflective outlook prompted by the encounter the original mandate is having with the specifics of the Indian context. An emergent, coexisting and countervailing narrative that questions, with different nuances, the basic assumptions of Western theories of modernity, business organization and management has created a constituency who advocate for innovation oriented towards a more “Indian way to modernity”.

5.1.3. Inclusive business models and inclusive innovation

Perhaps in part as a result of this more reflective outlook, there is a growing emphasis on the notion of “inclusive business” and “inclusive innovation”, connecting the Indian managerial elite and corporate sector to the problems of the poor. This emerges, according to some of our interviewees, from a necessity to reframe activities and the production and valorization of knowledge in a more inclusive way towards more socially acceptable goals. Mediated through the principle of inclusion, innovation and social enterprise become domesticated within the umbrella of inclusive business, particularly in the NSRCEL, e.g. by supporting entrepreneurs who can formulate financially sustainable, market-driven solutions to alleviate poverty. A neoliberal but “Indianized” market-oriented ideology is promoted whereby the private sector can address the issues of poverty and development, which are framed as a delivery problem, i.e. one which must address the mismatch between the demands of the poor and the market offer (see Chapter 3 where a similar theme emerged). This market-based approach, they argue, differs from the approach that has characterized many social responsibility actions to date by focusing on the organizational and managerial skills needed to foster inclusive innovation in order to promote development and achieve financial sustainability. This framing emphasizes the normative assumption that it is possible to find a technical fix to solve poverty, with a technocratic orientation and innovative knowledge economy being seen as important for development (Fejerskov 2017; Sarewitz and Nelson 2008).

The notion of inclusive business models (and inclusive innovation) for development is one that is gaining wider momentum. The idea first appeared in the United Nation Development Programme (UNDP) 2008 report entitled “Creating Value for All: Strategies for Doing Business with the Poor”. The report defines the notion as follows:

“Inclusive business models include the poor on the demand side as clients and customers, and on the supply side as employees, producers and business owners at various points in the value chain. They build bridges between business and the poor for mutual benefit. The benefits from inclusive business models go beyond immediate profits and higher incomes. For business, they include driving innovations, building markets and strengthening supply chains. And for the poor, they include higher productivity, sustainable earnings and greater empowerment” (UNDP 2008, p. 14).

“[…] Inclusive business models can lead to innovations that contribute to a company’s competitiveness. For example, to meet the poor’s preferences and needs, firms must offer new combinations of price and performance” (ibid., p. 16).

With a particular emphasis on both “human development impact” (meant as an increase in income and access to basic goods such as health, housing, water and sanitation) and “financial feasibility, sustainability and scalability”, the notion of inclusive business models closely intersects with both BOP narratives described earlier in the book.

IIMB offers a specific module called inclusive business models taught by Prof. Sourav Mukherji. He told us that, while his course is in fact something of an exception in the Indian schools of management, it is a topic that is slowly becoming more popular in the business community at large. A key motivation to set up the module was the aspiration to connect present and future managers attending the IIMB programs to the realities facing the Indian poor. This motivation has been re-enforced over the years by the enthusiasm of those students attending the module. Furthermore, he is finding that the corporate sector is becoming very interested in the idea of inclusive business. This is driven in part because of the opportunities to open up new markets at the BOP and a desire to expand a strategy of social commitment beyond the impasse of corporate social responsibility (CSR). Unlike traditional CSR initiatives, the idea of inclusive business models potentially offers a more proactive image of the private sector that distances it from the paternalistic approach that characterizes many social responsibility actions within the sector to date.

In his course, Prof. Mukherji explains to students that in India, the state’s financial resources are largely insufficient to guarantee universal welfare and that this situation is not going to change in the next 20 years. If the government is not able to provide basic services, perhaps private business can be a more efficient answer. In this respect, the narrative draws on similar ideas of working institutional voids that were encountered in the Grameen Shakti and Mother Earth cases in Chapters 3 and 4. The Inclusive Business Module is based on a number of inspiring case studies that show how inclusive business models have been created, made financially viable and the impact that these have had on the lives of the poor. One of the cases is Selco³, a company founded in 1995 to provide clean energy to the poor (Mukherji and Jose 2011). The founder, Harish Hande, with a PhD from the University of Massachusetts, won the Ramon Magsaysay Award in 2011 – often regarded as Asia’s Nobel Prize – for his efforts to deliver affordable and clean energy to the poorest in the Indian state of Karnataka. Like Grameen Shakti, its business model is based on strong relationships between its field workers and users. The company offers a number of Solar Home System packages and is now slowly moving into urban areas, selling lighting solutions in the slums of Bangalore. Similar to Grameen Shakti, it also draws on a financing model of microcredit: however, the financing in this case is not provided by the company but by a network of rural banks that over the years have been trained for this purpose by Selco’s employees. The company has also received financial support from European NGOs and USAID. Surabhi Rajagopal, principal analyst at the Selco Foundation⁴ (which is dedicated to the development of new technological solutions and policy formulation), told us that the highest aspiration of Selco today is to create a rural ecosystem of entrepreneurs. In line with the IIMB philosophy to connect brilliant people to the problems of the poor, Selco’s office in Bangalore is populated by talented engineers and interns from MIT, Harvard and Yale Universities.

One of the key objectives of Prof. Mukherji’s course is to explore and demonstrate those conditions under which social enterprises can be financially viable and sustainable. By comparing cases drawn from healthcare, education, energy provision and BPO, Prof. Mukherji has reached the conclusion that doing business with the poor can be viable only if there is an immediate increase in income for the beneficiaries. The evidence, he argues, is that if a business model either directly produces or indirectly facilitates a tangible source of income for the poor – e.g. electric light to extend their working hours – it is more likely to succeed, unlike less tangible things such as education, where the relationship with an increase in income is less certain or too distant in time. In this respect, there are echoes with the Mother Earth case study, where the promise of short-term financial gain through regular Mother Earth orders was perceived by Mother Earth staff as a significant incentive to the engagement of rural villagers.