What Your QAM Professors Do Not Tell You in IIML

By

Kaushik Bhattacharya1*

Every business school has in its curriculum a series of courses typically called
Quantitative Applications for Managers (QAM). These courses initiate students to
basics of mathematical and statistical techniques. A typical course outline of QAM
lists topics like linear and integer programming, probability and probability
distributions, and, correlation and regression. In most business schools, QAM
courses start in the first term itself and depending upon the school, may continue
throughout the first year.2

Cutting across business schools, the failure rate of students in QAM is generally one
of the highest among all courses. Many business school students, especially those
from non-scientific background, cannot cope with these courses despite having good
inter-personal and communication skill. If bad performance persists (and sometimes
it may persist despite efforts!), then frustration sets in. If the student is in denial
mood, such frustration may later manifest in the form of contempt for anything that
requires meticulous scientific rigor. In that mental state, the question that occurs to
those students is whether they need QAM at all in their later career.

Those frustrated business school students should draw some consolation from the
fact that they are not the only ones asking these questions. In fact, they are in good
company. In the past, fascination with QAM and all those so called theoretical
subjects by business school academics had often led to many bitter and acrimonious
debates with practitioners. A typical view articulated by the later is: business school
academics teach students things that are only theoretical and have no relevance to
reality. Often, these views are aired by successful businessmen who were never
formally trained in quantitative techniques.3 Many business school students worship
these businessmen as their role models and are strongly influenced by what they
say. In some cases, off-the-cuff derogatory comments by senior and influential
alumni also shape the thought process of current students. 4 Further, every academic
has witnessed and taken part in heated debates on relevance of certain subjects

1* The author is an academic in Indian Institute of Management Lucknow (IIML). He would like to
dedicate the article to students of IIML. The views articulated in this paper are personal and not of the
IIML. The author alone bears full responsibility of the views and also of any error in the article.
2 The generic name of these courses and their contents could vary across business schools.
3 Among those classified as the World’s ten-richest people in 2007 by Forbes magazine, at least five
either dropped out of college or never went to one. Kaushik Basu, citing this fact, advises “For those
looking for tips to join these ranks, I should mention that one good first step is not to get much
education.” (Beyond Invisible Hand, pp. 158–159)
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with colleagues. In rare occasions, due to hegemonic nature of academic politics,
similar views could be subtly (and sometimes not so subtly) conveyed to students by
some business school academics in non-quantitative disciplines.

As a result of all these brainwashing, many business school students become

convinced about the irrelevance of anything that requires substantial mathematical
training by the time they reach their second year. Naturally, the thought-process with
which they leave business school stays with them and shapes the dominant
philosophical paradigm in the business world for years to come.

If one believes in the stereotyped view of a manager, there is strong logic in these
views. After all, a manager should be more interested in the “bottom-line”. If a
particular activity needs technical input, such work could be delegated to technical
staff. At worst, brains could be hired if needed, albeit at a cost. After all, what are
consultants for? The observations of C. Wright Mills, the famous American
sociologist, are consistent with the stereotype for executives:

“It is not characteristic of American executives to read books, except books on

‘management’ and mysteries… Among them are those who resent reading a
report or a letter longer than one page, such avoidance of words being rather
general. They seem somehow suspicious of long-winded speeches, except
when they are the speakers, and they do not, of course, have the time. They
are very much of the age of ‘briefing’, of the digest, of the two paragraph
memo. Such readings as they do, they often delegate to others, who clip and
summarize for them”

The Power Elite by C. Wright Mills (p. 130)

One may note that stereotyping may not always be right, but the origin of stereotype
is often rooted to truth. Of course, like the proverbial tale of blind men and elephants,
the truth itself may vary, depending upon the perspective from which one examines
it. More importantly, any student of science should know that scientific truth is not
eternal and may also change over time. Before drawing any firm conclusion, we
should, therefore, analyze the relevance of QAM from several perspectives. We
should also attempt to assess whether and if so, to what extent, these perspectives
would be immutable in a fast-changing world. From now on in our discussion, QAM
would play a symbolic role and one may as well replace it with the words “academic
rigor”.

One may not agree with the observations of Mills on executives, but can still share
similar sentiments about their progenies. Attending a business school is almost like a
religious ritual for kids of super-rich families. It is expected that like princes in earlier
days, they will have to run empires when they grow up. It is well understood that
4 The alumni play a much more important role in business schools than universities
and often visit their alma mater to deliver expert talks.
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running an empire is not an easy job. One needs to prepare oneself for many years
to face the challenges that would invariably come. And in the modern world, who can
guide these neo-princes better than the business school faculty?

In any elite business school, the dividing lines between the neo-princes and the poor
and middle class students are generally sharper than in traditional universities.
Arguably and provocatively, QAM is not relevant for kids coming from super-rich
families. The logic extended here is pretty simple. Above a particular threshold,
money begets money. All the rich heir has to do in life is to avoid doing something
which is downright stupid. They should not spend too much on fast women and slow
horses. They should not be arrogant and should not make enemies, especially in
wrong places. And in a civilized country, they should not end up at the wrong side of
the laws of the land.

The most important lesson that kids of super-rich need to know in life is who to trust.
Once they become good judges of human character, they can then create their own
teams and hire the best brains to run the affairs for them. They also need to know
how to manage these brains (e.g., whom to reward and to what extent and whom to
punish and to what extent). This they can do with ease, provided they assimilate the
lessons of Panchatantra and Aesop’s Fables well. Many QAM professors may
disagree, but such kids can afford to enjoy life without knowing linear programming.
So far as QAM is concerned, all they need to know is how to count because
otherwise how will they count their money? Normal distribution, anybody? “The
distributions of our products throughout the supply chain had never been abnormal,
for your information”.

The first question that naturally comes to our mind is: do students of this class form a
significant chunk in a business school? If education is business and the student (or
their family) is the customer, then the business school should indeed supply what the
customer demands. Therefore, if neo-princes are the majority in a business school,
then arguably QAM should not play an important role in a business school
curriculum. However, if they are not, then there is a possibility that relevance of QAM
is seriously and systematically underappreciated.

In the absence of reliable data, one cannot come to a firm conclusion. My hypothesis
is that if one looks across the world, one would then see that the proportions of
super-rich among students would vary significantly across business schools and the
variations in the proportions could be much sharper than across traditional
universities.

The proportion would depend on many factors. If the business school functions more
like a “business”, students who can pay more will have priority in admission.
Naturally, incumbent elites would like to create a few such schools for their kids,
where the “cost” of education would be so high that only they would be able to pay
and where the right kind of “family background” would be an important tacit criterion
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in admission. In an “elite” business school, therefore, the proportion of neo-princes
would tend to be the highest. In such schools, the focus on teaching would almost
invariably be on comparatively softer subjects and too much of quantitative
arguments in classes would be frowned upon. 5 The rules of academic hegemony
dictate that the “plebeian” business schools throughout the world would then willingly
look upon these elite schools as their role models and would like to incorporate
everything that they do as “best practices”.

If, however, students are admitted through open and transparent examination, the
proportion of neo-princes in such schools would tend to be less. Amazingly, the
super-rich in India can “buy” their way-in the elite business schools of the developed
countries, but not in the IIMs in India. The IIMs attach no importance on family
background and students are admitted through an open and competitive process in
them. Interestingly, despite widespread allegations of corruption in almost all walks
of life in India, no questions (other than a few that involves technicalities) have ever
been asked regarding the sanctity of the admission process in IIMs in India. As a
result of these, IIMs may be full of students from upper middle class to rich
background, but the super-rich are conspicuously missing in these institutes.

Let us now examine the implications of these observations. Can the business school
student from a middle-class background in India afford the luxury of ignoring QAM?
Suppose a kid from a relatively modest background gets admitted in an IIM. The kid
wants to do well and would like to work hard, but gets easily influenced by the
dominant philosophical paradigm of being interested only in the “bottom-line”. How
far will such a kid go in life? To answer this, let us first look at the other extreme first.
Suppose the kid views the business school as a school and not just as business and
maintains his academic appetite. The kid does not fall asleep in his QAM classes
and makes him familiar with all the technicalities that his job demands. Let us ask
instead how far will such a kid go in life?

The typical kids in an Indian business school should know that it is they who would
be the “brains” that super-rich kids will hire to run the affairs for them. The freshly
recruited MBAs from the IIMs, as junior executives, will often report to the rich heir or
heiress who would typically be in the board of the company. In their day-to-day jobs,
these junior executives would need to take many technical decisions. To arrive at the
logically correct decision, executives would need to be good in quantitative
techniques. They often would work on tight budgets and, therefore, unlike the super-
rich kid, would not be in a position to buy the brains they need. More importantly,
they will often find a creeping loneliness in the sense that they would discover that
they will not have the luxury to choose their own teams. Rather, the team would be
thrust upon them.

5 Note that a soft environment in teaching is fully consistent with academic rigor in research. Elite schools, in
general, would hire the best minds who could be rigorous to their peers and simple to their students
simultaneously. Vishnu Sharma, after all, was a reputed scholar who succeeded where others failed.
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What happens when an Indian kid from a relatively modest background spends one
or two decades in the business? In business, one needs to make hundreds of deals.
These deals are often made at the top level -- in five star hotels, in clubs or in golf
courses. The typical brilliant boy or girl from a poor or middle class background
would not have access to such hallowed circle, but a kid with a super-rich daddy
would. As a result, the super-rich brat would be in a far more advantageous position
to cut deals than a poor or a middle class boy or a girl. Top management of
companies know this fact too well. As a result, the brilliant junior manager from poor
or middle class background would be offered quick promotions up to a certain level.
However, the same poor or middle-class manager, who has risen in the hierarchy
through sheer brilliance and hard work, would often find that the coveted promotion
to the post of the CEO or to the board would elude him simply because of the
limitations in his access to other elites outside his/her own company.

“The typical executives, today as in the past, were born with a big advantage:
they managed to have fathers on at least upper middle-class levels of
occupation and income”

The Power Elite by C. Wright Mills (p. 129)

It is as if an invisible glass ceiling exists that keeps the purity of the super-rich intact.
The coveted promotion would come in exceptional cases and only if the lack of
network of the candidate is compensated by other qualities like deep knowledge and
technical abilities. In case of the United States, Mills observed that only 2.5 per cent
of the top executives who were under 50 years of age in 1952 came from the ranks
of wage-worker families. One can hypothesize that the 2.5 per cent who butted their
way-in were outstanding in some technical areas.

Economic theory tells us that when there is customer discrimination, markets get
segmented. Since the dividing-line between super-rich and the rest are sharp and
process of entry to the first class could be discriminatory, the logic of the market
dictates that the market of business schools would also be segmented. While the
elite and costly business schools would serve to the global super-rich, the remaining
business schools must cater to the rest. While the first set of schools could afford to
focus on softer subjects, the later cannot. In the academic market, there is lock-in.
Once a particular business school gains reputation as an elite business school, it is
terribly difficult to replace it.

The plebeian business schools, therefore, has no other option but to accept this as
reality. It must then strive to perform well within the market segment it is thrust upon.
If the students of the plebeian business schools cannot prove themselves as
technically qualified, it will be extinct. Logic of the market, therefore, dictates that
academic rigor in classes should be their selling point. IIMs may be considered as
elite business schools within India. However, beyond the Indian border, none of them
are considered by the global elites as their favourites and it is unlikely that they will
5
do so in near future. If IIMs have to make a mark at the global level, what other
options then do IIM students have but to sharpen their quantitative skills?

It is somewhat assuring to know that the IIMs have so far been relatively successful
in this endeavour. Among business schools of the world, students of IIM enjoy very
good reputations for their quantitative skill. In case IIMs loosen the standards of
QAM, it is anybody’s guess what would happen to the IIM brand in the global market
place. So far as the global market place is concerned, IIMs have succeeded in
convincing global elites that they can supply the right brains to run the operations for
them and some of the super brains may, in fact, have the skill and the expertise to
strategise on their behalf.

How do companies headed by incumbent elites know who has the requisite skill and
expertise? When the QAM faculty creates dreadful barriers for the students, besides
supposedly sharpening the analytical skills of the students, they also serve important
economic functions. One should note that there exists information asymmetry
between newly passed MBAs and their prospective employers -- MBAs know much
more about themselves. For example, they know their own level of seriousness, their
own career goals, their own preferences for particular type of jobs to meet that goal
much better than those taking their job interviews. Of course, intelligent employers
can dig out the relevant information they need about the candidates, but then that
requires time. And time being money, they rely on a few signals about candidates
that could be interpreted quickly and with relative ease.

So far as the job market is concerned, economists like Spence have argued that not
only business education, education in general is just a filtering process. Education
per se may or may not make one productive. However, given the information
asymmetry among executives and their potential recruiters, productive people would
signal about their quality by getting educated. This view, in one way, provides some
justification in favour of theoretical abstraction in not just QAM but in all subjects,
and, interestingly, even in a business school. For the sake of argument, suppose that
complex mathematical and statistical problems are not directly relevant in business.
One may still argue that only highly intelligent people would be able to solve such
problems. As per the job-signalling theory in economics, when somebody scores well
in courses like QAM, he / she provides a signal to prospective employers about
his /her intelligence – at least, his/her intelligence in solving problems that require
hard logic. In a way, by being abstract and being too logical in classes, QAM
professors – if not anything else -- simplify the jobs of the rich heir who could then
pick up the right brains with relative ease.

Should one necessarily be so negative and cynical? Clearly, there are all types of
entrepreneurs and managers. Some, from relatively modest background, become
super-rich through sheer spunk and hard work. And many super rich kids could be
highly talented and have within them the desire to learn quantitative techniques.

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However, more importantly, times have changed, and changed for the better to those
having any specific skill. Globalization has opened the possibility of selling this skill
to the best buyer who could be in a distant land.

In the globalized era, while the role of managers in brick-and-mortar type

manufacturing firms has remained largely traditional, the role in many other firms has
changed substantially. These are firms at the cutting edge of technology. The
products of these firms often create positive externalities. It is a winners-take-all
market. Once sales of these products cross a specific threshold, it can then lock in
the market. For example, the more the sales of windows operating system, the more
would be availability of software based on windows platform. Consumers of such
products are locked in because switching to other products would involve huge
amount of cost.

In such markets, even senior executives have to be intimately associated with

product development. Technology waves come and go and the CEOs job is to ride
the wave before others. Rather than a steep bureaucratic structure, CEOs in such
markets should create small commando-type teams, should assign them specific
tasks and should have constant interaction with the team. Survival of firms in such
markets crucially depends on how successfully the CEO can manage all these.
Without deep domain knowledge and a sound logical and analytical brain, it is
unlikely to be successful leaders in such industries. More importantly, knowledge
and analytical brain enables the senior manager in these markets to spot the right
talents quickly and use them effectively. Obviously, QAM is not synonymous to deep
knowledge but is an integral part of it.

It is often not articulated, but good knowledge of QAM helps one in team building.
One may not be good in QAM himself, but if one knows what it takes in being good,
one should at least appreciate those who are good at it. There is a popular saying
that the battle of Trafalgar was won on the playgrounds of Eton. In the more modern
context, one could argue that the Second World War was won on the blackboards of
a physics seminar room. Similarly, results of price war in many industries could be
decided in the laboratories of companies and not always because of the sagacity of
the executives in the marketing department.

Although it is unlikely, sometimes even CEOs of firms at the forefront of innovations

could be irreverent towards the theoretical cocoons within which academics love to
live comfortably. One should note that the irreverence of the CEO could be only one
truth among many. The CEO who today is articulating against theoretical abstraction
could have been a good student of science in his/her younger days. Quantitative
techniques that shape theory are like scaffolding in an intellectual edifice. When the
edifice is built, one can then remove it. Many CEOs, especially those of the business
school variety, had gone through the process of building that edifice. Sometimes,
unknown to them, the quantitative training that they had earlier could enable them to

7
simplify a complex situation and articulate it to their subordinates in a jargon-free
language. It is, therefore, important that business school students spend a part of
their time in learning rigorous quantitative techniques. As they become senior and
rise in the hierarchy of their organization, they can afford to remove the scaffolding in
the form of such subjects gradually. Typically, senior positions in an organization
would demand more networking skill compared to quantitative ones. However, it
would be wrong to assume that this extends to all levels of hierarchies of an
organization, especially at the junior level.

At the end of the day, however, quantitative technique to a manager is what athletics
or weight training is to a footballer. The speediest runner in town or the 200 kilo
weightlifting champion of the district could both be poor footballers. However, given
the same passing, receiving and positional skill, it is anybody’s guess who would be
a better footballer: a poor athlete weighing 60 kilogram or a great athlete weighing 80
kilogram. Like a successful footballer needs many more skills other than running, a
successful manager also needs many other qualities.

So, let us now face the ultimate question: how good a manager should be in QAM?
Is there an absolute cut-off level? Michael Tal, the maverick chess world champion,
was sharply criticized by many for his so called imperfect sacrifices. Tal’s famous
quip was that he did not need to play perfect chess. He only needed to play better
than his rival. One of the most important lessons in business is: managers need
QAM in a relative sense. In a protected market where industrial leaders manipulate
government policies to their advantage, one can afford to enjoy life without QAM (Is
it a surprise that many in India still refuse to accept that managers need good
knowledge of quantitative techniques?). However, in a competitive economy, where
there is a level playing field and policies by the government are relatively transparent
and easily understood, deep knowledge in QAM could give the executive an edge
over his rivals, at least at the beginning of their career.

And if we strongly believe in rat race, THE RIVAL IS EVERYBODY ELSE!