Strategies for a discontinuous future.

Saturday, March 04, 2006

When you can't earn an MBA

A friend forwarded me this interesting e-book on the potential (lack of) value of an MBA, written by an Indian entrepreneur.

Disclaimer: as a matter of fact, I do have an MBA from a good school that I am quite happy to have earned. I'd like to think that I have, in fact, learnt something at b-school and my MBA has also opened up many doors for me that otherwise would have remined closed. Funny enough, I am making less money post-MBA than I made pre-MBA, but I absolutely love my post-MBA job. However, this book presents an interesting counterargument, one that I have seen many potential b-school applicants think about in some form.

My personal take on the MBA
: if you are passionate about business, economics, strategy and leadership (as I am), you can't go wrong with a top MBA. However, if you see the MBA just as an escape hatch that takes you from being a code monkey at tech shop and land you a spreadsheet monkey job at an I-bank or become a consultant droid, you would most likely miss out on what could potentially be the most rewarding and enriching educational experience of your life. I *loved* each and every moment I spent at b-school. Just pick a school that in non-parochial and attracts smart people from around the world.

Bottomline: As Steve Jobs says, you gotta find what you love. Some of us find it at b-school. Others don't. How much your MBA means to you would most likely depend upon which of these two categories you fall under.

-- Mahashunyam // 2:24 AM //


I bet the book is right.

I too have an MBA from a name brand school, and I couldn't agree more with your post. I also wonder when the bottom is going to fall out of the current value of an MBA. It has opened doors for me too that would otherwise remain closes, but I don't really know why. It's creativity and ability to make structure in ambiguous environments through critical thinking that's helped me most in my jobs. It's my History undergrad that helps me tell a story from data, more than my MBA where I learned T accounts and NPV.

I too loved the experience and feel I got much out of it because I love what I do and I really love the academic experience. I think an MBA can accelerate you in whatever direction you're heading anyway, which is some cases isn't so good.
// Lloyd Fassett // 6:04 AM

I have a master�s (not an MBA) from one of the best schools in the US.

I try not to think about this too often, but it its sort of relevant: If I had taken the money I had spent on my masters (it was pretty much all my money, no student loans), kept my job, and bought a house I would have roughly $350,000 more today than I do now (tuition, books, lost income, property appreciation in the area I would have bought). And this isn't just a pie-in-the-sky "if," it was an option I seriously weighed.

Now as the housing market levels, if I would take my profits and just simply drop them into some conservative bonds for the next 10 years I should come out with roughly $500k.

Include some moderate savings from working the daily grind and consistent 401k matched contributions and we are now talking about $750k--and I would be thinking about retiring long before my 45th birthday.

Will my master�s degree give me $750k return? Not bloody likely. And every year I learn more, and every year the world changes a bit more, that degree becomes even less relevant.

I know this is all anecdotal, but please think long and hard before signing up for graduate education (especially at a high-priced private school) because it may in fact not payoff at all.
// niblettes // 6:49 PM

Couldn't agree more about the degree becoming less relevant, although I'd imagine that this is more of a problem with technical disciplines than liberal arts or business. One of the best quotes I heard from a prof was "the half life of your graduate degree used to be 15 years in my generation, but it's down to 5 years in yours".

I still think that the MBA is unique in the sense that the true test of whether you've learnt it well will be to see if you can translate it into creating your own business or play a significant role in building an organization. If you can manage to achieve that, then the ultiamte reward of an MBA is not just financial but *creative* freedom. We all know how powerful that can be : there's nothing more exhilirating than applying your brain, working with smart people to achieve worthwhile goals and realizing your true potential.

I also found that since I went into the MBA with the attitude of "how's this relevant if I were running my company", I got a lot more out of it than those who merely went through the course work without that kind of actively analytical participation. I forced myself to wear a CEO hat in every class and engaged in discussions and activites from that perspective. Of course, far too many MBAs waste their talent by remaining corporate droids and chasing ever-larger pay-packets. That's a pity, I know that the tools I learnt in my MBA are powerful enough to let me effect radical changes, or create/build/sustain some very impactful organizations.
// Mahashunyam // 8:09 PM

I believe the MBA is becoming more of a certification as much as i hate to say it. Companies look and qualify an mba on a resume as an equivalent of X points on the hire-ability scale. I don't have an MBA yet, but know quite a few people who do, and for the most part they seem to think it was worth it. The MBA is what a college degree was 35 years ago in terms of keeping you ahead of the pack. 35 years ago, a college degree was seen as special, today, its almost expected.
// Brian // 1:30 AM

Relevance diminishes not just as things obsolete. It also diminishes as those without the graduate degree learn from the school of hard knock, so that a fresh MBA may be better qualified that an some one with a BA and 2 years work experience, but after 10 years there probably isn't so much difference.

Of course I have absolutely no proof of this what-so-ever.
// niblettes // 4:08 AM

I think 95% of MBAs are a waste of time. Basically, you're paying tuition to get into a school with a reputation good enough to get you 'that job'.

How innovative do you need to be in teaching NPV? A MBA seems to be nothing more than a price tag to enter a group of supposedly special people. The problem is, opposed to a MBA, you could work and learn the same material, with possibly more real world relevance, and still get paid. This is not possible with say a medical or law degree.

When isn't a MBA a waste? Possibly if you have a technical degree and want to get a job as a consultant, glorified bean counter, etc. It should also be kept in mind that people have a tendancy to lie to themselves when the stakes are high. Of the people one asks "was your MBA worth it" the question "how much debt are you left with because of it" should also be asked and compared as a relevant metric.
// Anonymous // 6:21 PM
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