Devangshu Datta: The Chaudhuri Effect

IIPM possesses the resources to make positive changes to its business model. Instead, by trying to suppress criticism, it is making a cardinal strategic error

The resistible rise of Arindam Chaudhuri, Dean of the Indian Institute of Planning and Management (IIPM), is an unusual liberalisation success story. Recently Mr Chaudhuri claimed on TV that IIPM has processed over 40,000 students. He has been at the helm for over 15 years. The annual intake is now roughly 5,000 students across multiple campuses. He also said each student was worth Rs 15 lakh.

Arithmetic suggests IIPM’s standalone revenues are upwards of Rs 350 crore per annum. Mr Chaudhuri also controls Planman Group, which includes multiple companies with varied interests clubbed under an umbrella “Planman” brand. Planman Media publishes periodicals. Planman Consulting provides management consultancy services. Planman Technologies is an IT outfit. Planman Motion Pictures produces movies.

Mr Chaudhuri has also written best-selling books and bears partial responsibility for turning the ponytail into a fashion accessory for North Indian males. By any standards, he is a wealthy man and has no hesitation flaunting it. He wears expensive suits. He drives expensive cars and he is the Delhi franchisee of the i1 Super Series Motorsports league.

His key insight was noticing a demand-supply gap in higher education. By the mid-90s, the demand for management qualifications, any management qualifications, far exceeded the seats available at management institutes. His father had established IIPM, a small institute where Arindam Chaudhuri himself studied, and then scaled it up hundred-fold.

He did not waste much time seeking accreditation from the All India Council for Technical Education (AICTE) or recognition from the University Grants Commission (UGC). Both bodies, he says, “are full of bribe-seeking corrupt people. IIPM is proud to have no affiliation with them.”

Instead he built the brand using market forces. IIPM is one of the ten biggest advertisers in India. Mahesh Murthy of Pinstorm, a digital advertising and marketing outfit, has examined the statutory annual returns filed by Planman Group companies and estimated Mr Chaudhuri spends between 24-67 per cent of total revenues on marketing.

Unquestionably, he deserves kudos for finding a hole in the market and exploiting it shrewdly. Others have followed in his wake. Some of them, including the Indian School of Business, don’t have UGC certification either. The lack of recognition isn’t really a problem. It is the gap between promise and delivery. IIPM’s advertisements make tall claims about global affiliates and placements. Multitudes of bloggers, education-focussed magazines and mainstream media publications have investigated those claims in detail and alleged that they were at variance with reality.

IIPM has neither toned down the ads, nor does it appear to have rectified the lacuna that people see in its service standards. Instead, its channel partners (that is, recruiters) have filed defamation suits in obscure places to prevent damaging information becoming public. In theory, truth is a defence against defamation charges. In practice, Himalayan glaciers move faster than cases mired in the Indian justice system.

However, IIPM has run into the (Barbara) Streisand Effect: attempts to suppress information on the Web leads to more widespread dissemination. The latest gambit, a defamation suit in Gwalior blocking a laundry list of 70-odd URLs including a UGC notice, has of course, brought IIPM into confrontation with both an enraged HRD Ministry and an embarrassed IT Ministry.

This is not just a free speech issue. It is about the right of consumers to complain about quality of service. Management theory places great emphasis on businesses taking positive action on consumer feedback. IIPM possesses the resources to make positive changes to its business model. If it had attempted to address the points raised by its critics, it would have been hailed as an educational pioneer. Instead by trying to suppress criticism, it is making a cardinal strategic error.

Disclosure: The list of blocked web pages includes some on my wife’s blog, and I have friendships or professional links with several other entities on that list.