by Rajat Gupta
On our return, many of us who’d been involved felt inspired to make this a more permanent fixture, and thus the American India Foundation (AIF) was born. Victor and I became co-chairs, and our goal was to raise money in America to fund development projects in India. The earthquake reconstruction work in Gujarat was our initial focus but over the course of time we broadened the scope to include more areas of the country and focus on themes like primary education, livelihoods, and health. Over the next few years, the organization grew quite rapidly.
Another initiative of this era was the Pan IIT Alumni association. I’d always stayed closely connected with my own classmates and, as we each built careers in global business, it struck me what a powerful network the IIT alumni were. Interestingly, more than a third of them were working in the US. One day, a group of alumni assembled in my Stamford office, and the Pan IIT Alumni association was launched. We decided to put on a conference in Silicon Valley, and Bill Gates agreed to be the keynote speaker. Around 5000 alumni attended, and a 60 Minutes special was aired before the conference, bringing the IITs to the attention of the American public in a new way. Today IITs are the most respected and well-represented schools in the leading technology companies, and IITs’ growing alumni body stays connected through the association we launched.
As these initiatives took off, I was traveling more and more, and building my global network. I rarely spoke to the press or worried too much about my public profile, but I took great care to cultivate my connections with leaders in business, government, education, and the nonprofit sector. I teamed up with Jeffrey Sachs and Ray Chambers on the Millennium Villages Project to improve lives and livelihoods in rural Africa. Chambers and I also worked on the Malaria No More initiative, founded in 2006, with Peter Chernin. I accepted an invitation to join and eventually chair the advisory board of my alma mater, HBS, soon becoming a personal advisor to Harvard president Larry Summers. I instinctively knew that my network would matter, in ways I might not yet be able to predict. I quickly began to see a virtuous circle developing—my nonprofit work would bring me into contact with other business leaders, who would then become clients for McKinsey, and my client work would connect me to businesses I could then call on to support worthy causes.
I was fifty-four when my third term came to an end. Ian Davis had been elected to succeed me. We had our final board meeting in Stamford, Connecticut, close to my home, followed by a farewell party for all the board members I’d served with during my tenure, including many who’d already retired. It was a wonderful event, made more special by my German colleagues who had decided to surprise me with an elephant, of all things. It was delivered by truck to my daughter’s school, just down the road, since that was the only place with space for the truck to park. The schoolchildren looked on in amazement as the enormous creature was unloaded and slowly paraded down the road to my house, where my guests took rides all evening. It was a memorable occasion, even though the elephant completely destroyed my lawn.
11
Let My Country Awake
Education has its only meaning and object in freedom—
freedom from ignorance about the laws of the universe,
and freedom from passion and prejudice in our communication
with the human world.
—Rabindranath Tagore, Ideals of Education
In 1971, when I decided to go to business school, there was only one way for an ambitious young Indian to get a world-class education: travel halfway around the world. I often thought back with gratitude to the exceptional educational opportunity I’d been given at Harvard, but I also knew how lucky I’d been to get it, and how hard it had been to leave my family behind. I wished something comparable was available to more young people in my homeland. Around the time I took over as managing director at McKinsey, a vision was beginning to take hold in my mind: a business school for India. What if I could rally India’s most successful business leaders and educators and inspire them to give back to the next generation?
Although I’d now been living in America for more than two decades, my ties to India were strong. I returned every year, sometimes more than once, visiting my siblings, their families, and my extended family. I donated my time and money to various nonprofits during my visits. Early on, I’d thought that I might eventually do more work in India, but as I became more deeply committed to the firm and more involved in its governance, this idea faded. However, I visited the Delhi office regularly, and I also chaired the US India Business Council. Like my father, I felt it was my calling to serve the land of my birth—and to do so with impact and at scale. In the mid-1990s, it became clear to me that one way I could make a unique contribution was to help give ambitious young Indians a world-class business education. Thus, the idea of the Indian School of Business was born.
“You’re crazy!” Anita said, when I told her my idea. “You’ll never get something like that off the ground in India. There’s just too much red tape, too much corruption.” Besides, she added, wasn’t the McKinsey managing director job enough for me to take on? I’d been in the role only a couple of years at that point.
She was talking sense, of course, but that didn’t mean I would listen. One of my favorite quotes is from Gandhi: “If the cause is right the means will come.” It’s always been my belief that any project that needs to be done can be done. The school was clearly needed. I just had to figure out how to make it happen. Overconfident I may have been, but it was not entirely unfounded. McKinsey was the biggest recruiter from American business schools, and I sat on the boards of several, including HBS, Kellogg, and MIT. I knew how they operated and what it took to create a successful institution. I hoped I would be able to connect the school I was envisioning with these well-established educational centers. Could it be done? I didn’t know, but I was determined to give it a shot. Before long, I’d inspired my McKinsey colleague Anil Kumar to help out, along with my good friend P.C. Chatterjee, founding chairman of the Chatterjee Group. Anil reached out to his Wharton classmate Anil Ambani, son of the legendary Indian businessman and Reliance founder Dhirubhai Ambani, who enthusiastically joined our fledgling team.
Our initial idea was to collaborate with the IIT network, my alma mater, and create a school within IIT Delhi. It made sense to partner with an established institution for numerous reasons, allowing us to take advantage of a reputable brand, infrastructure, and more. The director of IIT Delhi was keen to collaborate. Some IITs had already been experimenting with some business school models, offering a master’s in business and creating a department of management, but none of them offered a world-class MBA program. The University of Delhi had an MBA program, established in 1954, and the popular Indian Institutes of Management (IIMs) had been founded in the 1960s. However, none of these institutions were at scale enough to meet the needs of India’s new generation of aspiring managers, nor were they truly research-based academic institutions. If Indian businesses were to compete on a global stage, they needed large numbers of highly educated managers and leaders.
However, when we sat down at a meeting to hammer out the details, it soon became clear that the partnership wasn’t going to work. Although personally disappointed, the director told us, “Don’t do it.” The IITs were just too constrained by politics and bureaucracy, he explained. The ministry of education supervised (and often interfered with) their policies regarding recruitment, fees, and more. We were sure we could improve the business education offerings at the IITs, but we were not sure we would have the freedom to create the truly world-class institution we envisioned. I was gravely disappointed. Was this dream going to die before it had even gotten off the ground?
We were walking despondently away from the campus when Anil Ambani spoke up. “Why don’t we just do it independently?”
I stopped in my tracks. “Why not?”
The idea was as compelling as it was challenging. Starting from scratch would allow us to do everything exactly the way we wanted it, unconstrained by tradition, pol
itics, or competing agendas. It would also be a tremendous amount of work. But by this point, we were fully invested in the cause. Yes, we were idealistic and more than a little naive. But perhaps, in this instance, that served us well.
Upon returning to the US, I requested a meeting with Don Jacobs, dean of Kellogg. He listened intently to my proposal and then said, “Rajat, if you want to try to do something, I would like to help.” His prior experience in supporting schools around the world usually involved already established universities, but he said that if I wanted to put all my energies and capabilities behind a stand-alone school, he would do everything he could to support me. I was honored and encouraged by his words. We were then joined by Dipak Jain, deputy dean and professor of marketing at Kellogg, whom I’d known and advised for a couple of years. He also expressed great enthusiasm for the project and pledged his support. Having helped Kellogg set up a business school with a university in Thailand, he had invaluable on-the-ground experience.
There were three conditions we came to believe were critical for the success of our school. First, it must have a world-class faculty, which would require collaborations with leading global business schools. Second, it would need the support of the local business community, so that they would be prepared to hire our graduates. Third, it must have a self-supporting financial model, in order to remain free from government interference. We knew each of these would be challenging to put in place. The one thing we were not concerned about was attracting outstanding students—India was bursting with bright, educated, ambitious young men and women, and the existing institutions were only meeting a fraction of the demand.
To meet a couple of our objectives at once—getting seed money and building support among the business community—we established an “executive board” and invited a group of India’s most respected businessmen, both at home and abroad, to join, with a condition being that they would make an initial donation of at least $1 million. Soon, we had acquired both credibility and cash. In early 1996, we convened our first board meeting at the IIT Delhi campus.
Recruiting faculty turned out to be more of a challenge. It was understandably hard to convince expats who’d built careers abroad to return to their homeland and take a chance on a school that was not even built. After much discussion, we decided to fall back on a visiting faculty model. Professors from other schools could come for six weeks at a time to teach intensive courses. This met with a more favorable response, and we soon had a distinguished lineup. Over time, we hoped to build a local faculty too.
Next, we formed a governing board, and invited members of the global business community to join. We decided that this board would meet only once a year, in either New York or London, so hopefully this would not be too much of a commitment for busy CEOs. I used my connections with companies like Goldman Sachs and Novartis to assemble a very impressive board that lent the school prestige and also opened the door for their companies to recruit at the school.
Our next step was to approach established business schools in addition to Kellogg, looking for collaboration and support. Wharton was enthusiastic, which made sense given that several of their illustrious alumni were on our board. Soon after this, Sumantra Ghoshal, professor at the London School of Business (LSB), asked to join the team and brought LSB on board as a partner. Many Indian-born faculty members at our partner schools agreed to get involved as academic advisors and visiting faculty and to help us develop a curriculum.
My official title was chairman, but I took a very hands-on approach to the role. Every Sunday morning, no matter where I was in the world, I’d dial in to a meeting with the ISB team. McKinsey was extremely supportive of the endeavor, not only allowing me to spend significant time on it, but providing significant pro bono resources, without which ISB would never have gotten off the ground. Particularly critical, in this regard, was McKinsey partner Pramath Sinha, who eventually took on the title of CEO of the ISB initiative, even while continuing to consult at McKinsey.
By early 1998, the pieces were falling into place: we had seed money, reputable partners, and a distinguished faculty. There was just one major element missing: a campus.
In Search of a Home
We knew we wanted the home of our school to have room to expand and the architecture to be iconic. After all, I’d spent two years in Harvard’s hallowed halls and cobbled courtyards, and I felt keenly that the physical environment needed to reflect the quality of the education we intended to deliver. I envisioned it lasting hundreds of years, becoming a historic institution like the great universities of the world. Another lesson I’d learned from Harvard was the importance of space. The city-based university has literally no room to expand—a problem I didn’t want our school to ever face. Some of our board members thought a hundred acres would be enough, but I wanted several hundred.
Initially, our idea was to build a campus near Mumbai, the commercial capital of India, and we identified a perfect hundred-acre site. Everything looked positive and the sale was all set to be completed, when we got a call from a prominent politician’s office asking us to come in for a meeting. Knowing the workings of Indian politics, I was immediately concerned. What could they want? Some of the board members who were familiar with Indian politics shared my misgivings. We were determined that the school would be a meritocracy, with everything completely above board and free from the cronyism that plagued Indian politics. We didn’t want to start paying bribes to local officials before we’d even opened our doors. My partners and I knew we could not set a bad precedent. If they proposed anything improper, we decided, we would simply walk out and walk away from the site.
Sure enough, after pleasantries were exchanged at the meeting, they made thinly veiled requests for money, and they also wanted us to reserve a quota of places for students and teachers from the state. Neither of these was in alignment with our principles or the image we wanted to project, and so we thanked them for their time, told them that we would not be locating our school in their state after all, and walked out. They later called and rescinded their demands, but we stood firm. We didn’t want to get deeply invested in a state that operated this way. Instead, we created a competition between states to bid for the campus, and that was how we found ourselves, one humid summer day in 1998, standing on a beautiful hilltop outside the city of Hyderabad, strewn with large boulders. There was no infrastructure out there, not even a road, but the local government was promising to build one and to ensure that utilities were in place.
In the end, the decision was not difficult: the Hyderabad proposal stood head and shoulders above those we’d received from other states. It turned out that the recently elected chief minister of Andhra Pradesh, Chandrababu Naidu, was on a mission to modernize his state and turn Hyderabad into a high-tech powerhouse to rival Bengaluru. He saw the school as a great asset in that regard and pulled out all the stops to be the winning bid.
The only hesitations were related to the fact that while Hyderabad was an up-and-coming city, it was not Delhi or Mumbai, or even Kolkata or Chennai. But we decided to take a chance on it, and it was a decision we never regretted.
When it came to fundraising for the building of the campus, the generosity continued. Adi Godrej continued to be a champion of the project, and he and his wife, Parmeshwar, opened their home in Mumbai as a hub for fundraising events. And I continued to tap my network. I remember the day I asked Daniel Vasella, CEO of Novartis and one of our early board members, for his support.
“How much money do you need?” he inquired.
I wasn’t quite prepared for that question, but I told him I thought $1 million would be good. He said he would think about it. A couple of weeks later, I received a check for $2 million. Dan’s accompanying note said, “You’ll need more money than you think!” Hank Paulson from Goldman Sachs was another very generous donor, along with several Silicon Valley and Indian business leaders.
Unfortunately, before we’d collected on much of our promised funding, the tech bu
bble burst. Some of our Silicon Valley supporters were unable to make good on their pledges, and our construction project was on shaky ground for a while. Eventually, we had to take a bank loan to complete the work. I worried that the confidence we’d built in our initiative would take a hit, and we’d have trouble attracting faculty and students if we appeared financially unstable. The press didn’t help, giving us low odds of success.
Meanwhile, we faced another hurdle: the All India Council for Technical Education (AICTE), which was part of the ministry of education, made it clear they disapproved of our independence. When we requested for forms to apply for our accreditation as a university, they refused to even send them. We already had reservations about being under their regulatory regime and their attitude only confirmed my misgivings. The board debated the issue at length. We had our hearts set on granting MBAs, which we could not do without accreditation. On the other hand, there was nothing to stop us issuing diplomas with the signatures of the deans of Kellogg and Wharton alongside that of our own dean. Perhaps this would be enough to get our students hired while retaining our independence?
In March of 2001, we received a formal notice from AICTE declaring that we had no authorization to start a school and announcing their intention to shut us down. This was the first of many such letters over the years.
To shore ourselves up against such attacks, we took a proactive approach to getting political support at the highest levels. Our reasoning was that if we had powerful champions and a high public profile, there would be a backlash against any attempts to shut us down. We already had a supporter in Chandrababu Naidu, and to solidify that relationship we invited him to do the groundbreaking, as well as to speak at our inauguration. Other politicians who were invited to the school over the years included prime ministers Atal Bihari Vajpayee and Manmohan Singh, and education minister Kapil Sibal, who came despite strong objections from the bureaucrats. Later, President George W. Bush chose ISB as the only private institution he visited on his trip to India in 2006. His roundtable discussion with students was nationally televised. All of this visibility protected ISB, although to this day its legal status remains tenuous.