Sept 1996
Asia Inc

MANAGEMENT: Asia's best MBA programs

By Salil Tripathi

sept 1996

Who Needs Stanford?

Under the shadow of the snow-capped Komagata mountains in Japan's Niigata prefecture, a truck laden with Taiwan-made parts enters the factory of Saitama Bohen Kogyo, a small company that makes automated vehicles and camera parts. Within 24 hours, those parts will have been converted into newly built components and returned to the central warehouse in Tokyo for forwarding to top camera manufacturers. This is the fabled kan-ban, or just-in-time inventory management, in action.

Under normal circumstances, shop-floor engineers would keep the wheels moving. Running the show in this case, though, are four master of business administration students. They attend the International University of Japan (IUJ), which is ranked No. 4 on Asia, Inc.'s list of the Top 25 Asia- Pacific Business Schools (see page 32). Tashiro Kenichi, Ueda Takeo, Hiraiwa Masanori and Kuwajima Hachiro are using a computer simulation to anticipate glitches that can stall the parts flow.

The students devised the model from data collected during routine visits to the factory. For the students it is real-world experience. For the company, which can access the simulation on the Internet, it is a lesson in the value of an MBA. Fujiwara Katsuhiro has seen how things work at IUJ. "This is just great," says the beaming chief of Keidanren, the powerful umbrella organization of large Japanese corporations. "If I were young again, I'd go and get an MBA."

Coming from Fujiwara, this is a surprise. Japanese have never accorded MBAs the respect Americans do. But due in part to hard lessons learned during the recession, business degrees are becoming respectable in Japan. While anti-MBA sentiment lingers in traditional circles elsewhere in Asia, in more progressive quarters the degree is considered a ticket to the corner office, especially if earned at a Western school -- the more prestigious the better.

Increasingly, however, would-be CEOs are signing up for Asia's 60-plus premium business schools. Not always because they want to -- the likes of Harvard and Wharton offer cachet and contacts -- but because Western schools are expensive and places hard to come by. In addition, many MBA candidates consider the "Asianized" curricula of some Asian business schools more appropriate to business in the region.

Asian business schools are becoming state-of-the-art. Libraries smell of fresh paint and varnish, not old books. Computer rooms are filled with the latest hardware and the best schools are entrenched in cyberspace. At Singapore's Nanyang Business School (No. 10), Swiss Bank and Dow Jones Telerate are creating a mock currency-trading room. Well-funded schools are recruiting "ethnically correct" professors from overseas. Melbourne Business School (No. 1) has launched a scholarship program to lure Asian students. Later this year Manila-based AIM, the Asian Institute of Management (No. 3), will open a Kuala Lumpur campus. The Chinese University of Hong Kong (No. 6) and Melbourne are doubling their class sizes.

Meanwhile, an increasing number of part-time and correspondence courses are becoming a popular alternative for MBA candidates who can't afford a return to school just as their careers take off. "The smart ones do the numbers," says Wee Chow Hou, dean of the Faculty of Business Administration at the National University of Singapore (NUS) (No. 9). "They know salaries are rising, the economy is booming. There is a shortage of labor and there is a premium on training. They don't want to take two years off in such an environment."

Further, some progressive companies, especially in Japan, are developing in-house MBA-style programs (see box, page 31) and sending promising staff to traditional programs overseas. More and more Asians are inquiring about cyber-MBA programs, such as the one offered by Phoenix University in the U.S. Students and professors meet once: at graduation.

Asian recruiters will woo the Class of '98, largely because there is so much demand region-wide for educated managers. If each of the estimated 80,000 joint ventures in China needed three managers, that would add up to a quarter-million for this one sector of the Chinese economy alone. China produces only 300 MBAs of indifferent quality each year.

The traditional MBA program is not for the underachiever. It is an academic boot camp that runs 80 hours a week (including homework) and lasts 21 months. In the first few weeks, the candidate faces an Everest of reading material. Early morning lectures are interrupted only for group discussions. Class is followed by nights of number-crunching. Sleep is a luxury. And then there's the lousy cafeteria food.

The drop-out rate, while less than 5 percent at most schools, still gives students a healthy dose of fear. Many rely heavily on home support. Nanyang Business School Dean Tan Teck Meng went so far as to introduce a program that prepares students' spouses for the two-year grind. They're encouraged to dig in the library and attend lectures.

Academic overload notwithstanding, this year a record 40,000 people applied for a chance to earn the 5,000 degrees Asian schools will award in 1998. Why are they giving up social lives, risking marriages and putting careers on hold? For younger candidates, the motive is money and a career jump start. Freshly minted MBAs step into senior posts at annual salaries that can start as high as $68,000.

Others believe the degree is the great equalizer that erases "disadvantages" of gender, blood, ethnicity or the wrong undergraduate university or high school. When Kai Makato concluded that her employer, Nippon Steel Corp., wouldn't nominate her for a company-sponsored MBA, she joined the two-year program at NUS. Allows IUJ Chairman Sugihara Yasuma: "We don't get many women sponsored by companies because there is still a glass ceiling, which is most unfortunate."

Not all MBA students are fresh-faced college kids; some are business veterans. Patrick Tan, who runs a $3.6 million trading business from Singapore, wanted to kick his nightclub habit and felt academic life would do it. "I put in a lot of effort," he says, "but when things clash, business comes first. I miss lectures if there's an important client in town." Another Singapore businessman makes a regal entry at school, ferried in a Mercedes by his chauffeur, who carries his books and shades him with an umbrella as he strides to class. (Presumably, he does his own homework.)

For some candidates the MBA is a shot of adrenaline -- it boosts their confidence, affirms their stride, sanctifies their resume. Tago Tadashi, an anthropology major who is a manager at Nippon Credit Bank Ltd. in Tokyo, says: "We're a small bank, so with my MBA the possibility of becoming a CEO is perhaps higher."

Such talk raises eyebrows in boardrooms where seniority is valued over a framed diploma. Some CEOs consider MBAs jargon-spouting, opinionated twerps who believe number-crunching is a substitute for real-world business acumen. They wonder if fresh-faced college kids have their gaze more firmly fixed on a corner office with a downtown view than on the bottom line. Who are these greenhorns, they ask, with the presumption to tell a chairman how to run his company?

Alfonso Zulueta, himself an MBA from Darden School in Virginia in the U.S., is the general manager at Eli Lilly (Philippines) Inc., the pharmaceutical company. He rose through the ranks and is bemused by fresh-faced MBAs hoping to change the world. "MBAs?" he splutters. "They want to be GM on day one, right? I like to show them the mirror and then the door. Whew!"

At NUS one evening Jayaram Muthuswamy is conducting a class on options and dynamic hedging. A student shyly inquires: "May I offer my view on the question, sir?" In another class, Margaret Tan tries to draw her students into a discussion of a company's information-technology strategy by weaving in principles from Harvard guru Michael Porter's theory of competitiveness. Only a tired Western student offers views. The rest take notes.

"If you don't raise your hand and talk," AIM Associate Dean Ricardo Lim warns his students, "you won't get graded." For Asian students taught to honor deference over debate, MBA programs can be a trial. Students are perplexed in a classroom where the professor challenges them to argue. Stuart Black, an American professor who taught in Japan, gave up trying to get his charges to disagree.

MBA programs emphasize class participation. Good ones are structured to help students overcome their diffidence and improve interpersonal skills. The time-tested case method is tailor-made to achieve those ends. A skilled professor uses a real-life situation that the class has read about the previous night, initiates discussion, stimulates diverging viewpoints, challenges his students' logic and steers the class toward the best solution.

At AIM recently, Asia, Inc. witnessed the ideal scenario: four Indian and two Filipino students debating whether Singapore should build a polystyrene plant -- and the professor uttering barely a word. At IUJ, students are becoming less reticent. Arimitsu Narito, 32, admits his shyness created an impression that he wasn't pulling enough weight. "My Western classmates felt we weren't contributing," he says, "so we began expressing opinions."

Some Asian students carry this fundamental problem with them to job interviews. One Singapore-based financial firm turned down local MBAs after it concluded that their knowledge and technical skills were impressive, but they couldn't take a stand on macro issues.

Even as professors at Asian MBA programs push their students to adapt to the Western-style classroom debate, they are "Asianizing" the curricula. Two years ago, NUS started a Mandarin program. Both Singapore schools have chosen the publishing route to enhance their Asianness. NUS Associate Marketing Professor Tan Chin Tiong has Asianized Philip Kotler's text on marketing. Prentice-Hall has a contract to publish Nanyang professors.

Asianizing, however, isn't as simple as adding soy sauce to the wok. Finding good case studies about Asian companies is arduous. Few Asian concerns will share a successful recipe. Failure is a matter of shame. NUS couldn't persuade Yeo Hiap Seng Ltd. to provide a case about the family feud that led the Yeo clan to lose control of the Singapore food company. On the other hand, local computer maker IPC Corp. agreed to open a recent U.S. debacle to academic scrutiny.

Altogether, Harvard professors write perhaps 600 cases a year; in effect a quarter of the school's instructional material changes each year. But case writing is expensive. America's top 20 schools spend nearly $250 million on research, with Harvard and Wharton alone accounting for perhaps $100 million of that. To offset the costs, Melbourne, perhaps the region's richest school, is seeking partnerships with other schools to develop Asian cases.

Perhaps most problematic for the region's MBA schools as they strive to Asianize is how -- or indeed whether -- to teach business ethics. Nothing divides Western and Asian business more than differing interpretations of right and wrong. Business schools in the West endured fierce debates about divestment from South Africa in the mid-1980s. They now have classes that sensitize future managers to the position of women and minorities in business as well as ethical and environmental issues. American schools have either made ethics a core subject or at least infused individual courses with a dose of business morals.

Such a catharsis is not demonstrably under way on Asian campuses. Take a recent Nanyang field trip to Burma. Escorted by police outriders, the students and professors traveled by motorcade and met members of the ruling junta. The school is publishing a report on doing business with Burma -- but don't expect input from the country's elected leader, Aung San Suu Kyi. At AIM a class debated a case in which a mainland company reneged on the contract with its U.S. partner. Outraged Western students wanted to sue, as stipulated in a contract. Asian students wanted to know why the Chinese had reneged and whether there were extenuating circumstances.

"An MBA doesn't teach you what's right and wrong," says Rajiv Shukla, a recent AIM graduate. "It exposes you to issues you are going to face as a manager. It teaches you to do things; it doesn't tell you what you should do." Small wonder then that there were few takers when NUS Dean Wee introduced an ethics course. "I'm not defending Asian practices," he says. "But you must know that in Bangkok you can't play by Olympic boxing rules; you must follow Thai boxing rules. I'm not saying that you should kick below the belt, but you better watch out."

AIM instructor Emmanuel Soriano has thought long and hard about the ethics dilemma. "I'm not saying business schools should take a stand," says Corazon Aquino's former national security adviser. "But they should hone the training such that the manager is not ignorant of ethics. Know-how is important, know-who is important, but the most important is know-why." Adds Lydia Echauz, dean of the Graduate School of Business and Economics at Manila's De La Salle University: "Intelligence alone is not enough. We had a very intelligent and competent person in the Philippines -- President Marcos."

Though ethics are not being emphasized in MBA programs, professors are putting a premium on turning out well-rounded grads, who see a world beyond corporate mergers and balance sheets. As Stanford University's Professor Emeritus Harold Leavitt once wrote: "Business schools transform well-proportioned young men and women . . . into critters with lopsided brains, icy hearts and shrunken souls." To help pre-empt the creation of such monsters, Echauz added a "personal enrichment" elective: Property tycoon Jaime Zobel Ayala might spend an evening discussing photography. Japhet Low, director of the MBA program at the Chinese University of Hong Kong, hopes to involve his class in activities of the International Red Cross and Oxfam.

There will be continuing doubts about the quality of Asian MBA programs. Though they are winning the grudging respect of the region's CEOs, Asianbusiness schools can't hope to match the resources and snob appeal of America's Ivy League schools -- at least not in the short term. Just staying relevant is a challenge in this accelerated world of borderless business. The best Western schools have themselves been accused of being static, of emphasizing theory over practice, of documenting rather than pioneering new business stratagems.

The region's schools must also determine how far Asianization should go. There is the danger the curricula will become parochial. While ethics and other thorny issues may not seem immediately relevant in today's Asia, arguably they will become so as the region's economies mature. For Asia's business schools to achieve a world-class standard they must develop globally competitive courses that prepare graduates for careers anywhere on the planet.

The deans, perhaps with an eye to enrollment, say it's already happening. "The top 10 schools in the world are still in the West," says NUS's Wee. "But if you don't get into those, what we're providing in Asia is not any worse. We lack brand-name and tradition. But we have a good product; it's time to get brand equity." And why not? Harvard, after all, began with one teacher in a wooden building.


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Inc. University

"You don't do any work at a Japanese university. You just have to get in -- that's the tough part. Your learning starts on your job." So says a middle manager at a major Japanese corporation -- and he's serious.

Japanese business takes employee education to heart. Larger concerns train staff at in-house "universities." Staff from smaller companies attend larger firms' programs. Promising employees are packed off to spend two years in the U.S. pursuing an MBA. Even then Japanese bosses send staff not so much for the degree but to master Business in America.

Progressive Japanese companies have linked up with American schools. Sanyo Corp. provides space for Boston University to run its three-month international management program in Kobe each year. Students complete six of the required 16 courses in Kobe before going to Boston to finish an MBA.

With help from Harvard, Nomura Group formed its School of Advanced Management about a decade ago. Nomura mostly trains its own staff, 80 promising employees at a time, but also takes overseas students. Malaysian bureaucrats, for example, have attended the program.

Fujitsu Corp. spends $3.5 million annually on its Japan-American Institute of Management Studies in Hawaii. Fujitsu doesn't hire all the grads -- usually just the smartest ones. Companies such as Hitachi, Nikon, Fuji Electric and Asahi Life have sent employees to Fujitsu's three programs.

In Asia, corporate education is largely confined to Japan. But Philippine food-and-beverage giant San Miguel Corp. has also got in on the act, with its own management training center. Its affable director, Jojo Fresnedi, runs an eclectic program that includes kayaking, mountain climbing, campfires and sessions on creativity with an English poet. Poetry? What would corporate Japan think about that?