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Is Sunstone's model the future of an MBA?

Rajiv Rao  |  New Delhi 

By most measures, Sunstone's graduate programme is a success. Started in 2011 with 25 students and a fee of Rs 1.5 lakh, the school today is slated to admit 200 students into the 2013 batch; each would pay an annual tab of Rs 2.6 lakh. Revenues have zoomed from Rs 37.5 lakh in 2011 to Rs 5.5 crore.

These statistics alone are impressive enough for a fledging programme trying to grab a share of the growing population of students hungry for education. What makes it unusual, however, is the fact that it has no classrooms filled with desks or chairs, no campus and little physical interaction with students. "I think we can turn the tables on global business education," says Sunstone founder Rajul Garg, an Indian Institute of Technology (IIT)-Delhi alumnus, who grew up in Ghaziabad and is the son of a government servant working for Uttar Pradesh's labour department.

These are bold words. After all, the gold standard for business education in India is one of the Indian Institutes of (IIMs) or the Indian School of Business (ISB) in Hyderabad. Besides, many other schools have also dived into the online fray. For instance, graduate management schools XLRI and Symbiosis offer 'distance learning' MBA degrees through live satellite hook-ups with professors. Sikkim Manipal University, specialising in distance education, lures prospective MBAs with free iPads. Most cost under Rs 1 lakh.

So, what does Sunstone offer that no one else does?

Catering to techies
For starters, Sunstone seems to be attracting mid-career techies who can't afford an IIM or an ISB MBA and don't want to haul their families to a faraway campus but who crave a meaningful career change nonetheless. Tushar Gupta, a civil engineer from IIT-Delhi, who was a senior software tester with Adobe, was a prime candidate. "It was time to move on and I was giving an MBA some serious thought," says Gupta, "But it is not very easy to quit a job of 9-10 years."

A major reason why Gupta chose Sunstone was its faculty. Garg had gone after the best people he could get his hands on to teach at Sunstone. Bennett McClellan, who grades papers from his home in Los Angeles, has a doctorate in management, an MBA degree from Harvard Business School and is a former managing director of PricewaterhouseCoopers' media and entertainment business in the US. Garg's partner, Dinesh Singh, is an IIT-Kanpur graduate with an MBA from Cornell. He has also worked as a consultant for McKinsey. "Rajul is not just running a shop but chasing quality," says Pramath Sinha, founding dean of ISB. Most other programmes flogging online MBA degrees in India tend to have no-name faculty, with little industry experience.

But the big question many ask is, can an online MBA ever be equal to an offline one? "Look at the list of the top 10 online MBAs in the US," bristles an IIM professor. "Do you recognise any of those names?" The core experience of an MBA, he insists, lies in classroom participation and peer engagement, something that just cannot be duplicated in an online format.

Pramath Sinha thinks answering the question is a waste of time. "Look at the challenge in our country. The numbers are so huge that someone has to fill the supply gap in a quality way," he says. "And, this demand is just going to keep growing and growing."

Disrupting education
The possibility of disrupting an industry that has been begging for change was what drew Lokesh Gupta, who oversees investments at Omnia Education (part of Dilip Modi's Spice Mobility Group), to Garg and his partners Dinesh Singh and Pawan Agarwal. It helped that Garg wasn't exactly a newbie, having started and grown software firm Global Logic into what is a $250-million concern today. Garg, Singh and Agarwal also won over Gupta with their bare-bones philosophy. "Despite being successful entrepreneurs, or maybe because of it, they decided to bootstrap the business. This is why we admire and adore these guys," says Gupta.

Accolades are nice, but they dry up pretty quickly if you don't perform-which, for students, generally means one thing: jobs, and good ones at that. According to Sunstone's figures, 21 of the 25 graduates in the first batch witnessed a 50-100 per cent increase in salaries (with the median being Rs 25 lakh) and found themselves in business-centric roles in companies that ranged from Times Group to Expedia to Bharti Softbank. Many of these companies hire from the school because of their prior professional relationships with Sunstone professors.

The school's faculty-all the five instructors, including Garg-use a combination of online discussion forums, online case studies and assignments, video lectures, webinars, role-playing videos and a once-in-three-weeks physical classroom session with students. "We want to produce hard-nosed business folk," Garg says.

The problem-based curriculum, borne out of real life experiences of the professionals involved with the programme, is split into three parts---operations, growth and profit. "Things like marketing, sales and strategy slot into all of these. In real life, all this is applied at once," says Garg. This tends to separate it from other online courses that use the same theory-based materials taught in their campus classes. Plus, at least 15 per cent of Sunstone's class ends up failing, though they can take the course again. "How many MBA programmes do that?" asks Garg.

The big question is whether Garg can keep the bigger fish at bay. What's to stop a corporate with a big brand-like a Mahindra or a Tata-from entering the space, leveraging their networks and elbowing aside Garg's outfit? Or a number of top-drawer Indian and global institutions teaming up to spawn an online product branded separately, one that doesn't compete with their offline ones?

These are things Sunstone would have to watch out for, as it tries to eventually become master of the online MBA universe.

First Published: Wed, April 17 2013. 00:24 IST