Why Not Get an MBA

The MBA is not for everybody. Make sure you learn about the negative aspects.

The MBA is losing its magic

What is the staying power of an MBA education? Why year after year do students sign up for the countless MBA programmes across the world? Are they after new skills? Maybe. Eager to learn about the latest academic research output? Unlikely. Keen to go through a learning experience? Possibly. In search of a networking opportunity? Most certainly. But perhaps a principle motive is to boost their career prospects. The notion that the harder you work, the higher you will climb the corporate — and therefore social — ladder is rooted in our DNA. Very often, this also translates into the higher you are in the corporate echelons, the more successful you are. For many, an MBA degree promises to deliver this; for anyone wishing to progress in their career, just get an MBA and its magic will do the rest. Except that this magic stopped working quite a long time ago. On the one hand the financial crisis of 2008 caused many businesses to cut hiring, leading to a shortage of those jobs that MBA graduates covet. For others there has been a dawning realisation that cost-cutting employers are unlikely to offer financial sponsorship for those wishing to study for an MBA. As a result students have resorted to taking out large loans to finance their business education…Read full story: Financial...

All The Time, All The Expense? Is An MBA Necessary?...

Are MBA degree holders a dime a dozen? According to Marina Murray, associate director of research at the Graduate Management Admission Council, there are at least 250,000 students enrolled in MBA programs annually, and a whopping 100,000 MBA degrees are awarded annually. This represents at least 66 percent of all graduate business degrees conferred in the US, reports the Graduate Management Admission Council. There are so many MBAs floating around, Venture capitalist Peter Boyce in an interview with OneWire CEO Skiddy von Stade, says the advanced degree might now be unnecessary. Boyce himself doesn’t have one and has founded businesses. And it was way back in high school, that he created his first company fixing computers. During college, he co-founded two organizations to help unite young entrepreneurs. Now, he’s an early stage investor in student startups through Rough Draft Ventures, a company he co-founded, reports Business Insider. For Boyce, his MBA is his actual experience. “I almost feel like I’m getting my MBA on the go right now in a lot of ways,” he says. A lot of the programs are fantastically powerful, especially for helping folks understand “how do you take a company from 50 to 100 people internationally? So that management skill is not easy to necessarily do if you’ve never run a company that size before. So I think it’s an interesting compliment or supplement for someone that operates a company. I think for myself, being in venture [capital], you get to see early stage entrepreneurs go through those different phases and go through those different steps, and so I almost feel like I’ve gotten kind of a taste of it.” Also some studies have found an MBA today might not be worth it financially. According...

Questioning the Value of an MBA

Bloomberg Businessweek is days away from releasing its best business school MBA rankings on Nov. 11. Twitter is abuzz with #WhyMBA as students and grads tweet about why their schools should top the list. But in today’s talent-based economy, how far can an MBA take you? For those who’ve spent months sweating over standardized tests and arduously preparing their applications, fair warning: Don’t expect too much from the degree, unless you have the talent to back it up. “MBA programs use the same insufficient metrics that colleges do, and that doesn’t get at whether folks have talent for managing or for entrepreneurship,” says Brandon Busteed, executive director of Gallup Education. Gallup finds that about one in 10 people possess the inherent talent to manage, and an additional two in 10 people have enough basic managerial talent to function at a high level with the right support. These findings suggest that the remaining seven in 10 people might not be MBA material. When it comes to entrepreneurship, the figures are more dramatic: Early Gallup research on the subject shows that about five in 1,000 working-age adults in the U.S. possess the rare talents of successful entrepreneurs. Says Busteed, “Business schools don’t look at talent — they look at things like grades and tests scores. So lots of students pay big money for these programs looking for talent as an outcome and don’t get it.” Most business schools probably don’t know what managerial and entrepreneurial talent look like because typical admission to their MBA program fails to consider it. But students — whether aware of their talents or not — seem undeterred. According to the U.S. Department of Education, the MBA has become the most popular master’s degree in America. “MBA...

Does an MBA Matter to Shareholders?

Most of the top business leaders in the world do not have MBAs, according to a report released Tuesday, Oct. 14, by the Harvard Business Review. The magazine ranked chief executives on how much return their company’s shareholders earned on their investment and how much the CEOs increased their companies’ market values during their tenure. Just 29 of the 100 best performers had MBAs, and fewer than half of the executives with MBAs got their degree from the most elite business schools. Thirteen of the 29 have MBAs from the 10 programs ranked highest by Bloomberg Businessweek. Harvard Business School produced seven of the highest-performing CEOs on the list, the most of any MBA program. The findings suggest that becoming the most valuable CEO, from the perspective of shareholders, might have less to do with whether or not you have an MBA and more to do with having the smarts and skills to lead a company. Almost a quarter of CEOs on the list—24 of 100—had engineering degrees. (Eight had both MBAs and engineering degrees.) Why did engineers do so well, even when they led such nontech companies as brewing giant Anheuser-Busch InBev (ABI:BB) or insurance company Sampo (SAMAS:FH)? “Studying engineering gives someone a practical, pragmatic orientation,” Nitin Nohria, dean of Harvard Business School, said in the report. “It makes you think about costs vs. performance. These are principles that can be deeply important when you think about organizations.” To Nohria’s point, the executive who topped the list, Amazon.com (AMZN) CEO Jeff Bezos, has an engineering degree and no MBA. The full ranking is on the Harvard Business Review’s website. Below is a list of the executives with business degrees, along with their overall rank. 2. John Martin, Gilead...

Forget the MBA

When Luis Ochoa wanted to make the leap from investment banking analyst to corporate strategist, he didn’t follow the usual path of getting a master’s of business administration degree. Instead, the Stanford University graduate took a few free strategy and financial accounting classes on Coursera, one of the major providers of so-called MOOCs (Massive Open Online Courses), which have grown in popularity globally over the past few years. “I gained a foundation with those courses that helped me transition into corporate strategy” at Oppenheimer Funds, the 29-year-old New Yorker said. “Now, I’m not interested in an MBA because I’m where I want to be.” Like Ochoa, a growing number of people are hoping MOOCs will be a ticket to a new job or promotion —without the cost and time required to secure a traditional university degree. The challenge is to increase employers’ awareness and appreciation of the value of online courses. “We still get questions from companies about how good MOOCs are, but we’re finding that businesses are more and more willing to consider them to help fill skill gaps,” said Sebastian Thrun, chief executive of the MOOC platform Udacity, based in Mountain View, California. “For some jobs, companies are looking for specific credentials that MOOCs can provide, and not necessarily a degree.” For some jobs, companies are looking for specific credentials that MOOCs can provide, and not necessarily a degree. — Sebastian Thrun A Bainbridge Strategy Consulting study of US human-resource professionals found that only about a third were aware of MOOCs, while about half of the managers and directors in a global survey by CarringtonCrisp said they are “uncertain of what a MOOC offers.” “There’s a generation gap between those doing recruiting and the younger people taking...

The value of an MBA: Chicago entrepreneurs weigh in...

you ask yourself: Is an MBA worth it? To answer that question, you must ask yourself what kind of work you plan to do or continue doing. Do you plan to work in banking, consulting, marketing, finance or insurance? MBA new hires in 2014 are expected to earn a $45,000 salary premium over new bachelor’s degree recipients in the U.S., according to the 2014 corporate recruiters survey conducted by the Graduate Management Admission Council. The anticipated median starting salary for Class of 2014 MBA new hires stood at $95,000 in the U.S., the survey showed. “With every level of education, people increase their lifetime earnings and increase their career stability,” said John Challenger, CEO of Chicago-based outplacement firm Challenger, Gray & Christmas. “It’s easier to move positions, and (MBA holders) tend to see fewer periods of long-term unemployment. MBAs, in particular, come away with skills and a stamp of approval and credentials that businesses and employers value.” But what if you plan to start your own business? In either case, you must be willing to pay handsomely. Tuition at many programs costs about $40,000 per year — and much more at elite programs. “It’s never been proven to me that having an MBA leads directly to success in a startup,” Jill Salzman, founder of The Founding Moms, wrote in an email response to questions to leaders of Chicago’s startup community. “Success’ greatest predictors are in the personality, temperament and patience of the people who are running it.” Here is a look at how Chicago-based entrepreneurs have done with and without an MBA. Joseph Sheahan, co-founder and CEO of Savvo Digital Sommelier Solutions, which matches shoppers with wine at the point of purchase. Sheahan earned an MBA in 2012 from...

MBAs Don’t Merit the Cost

Amid the financial crisis and recession, placement rates and salaries for MBAs have taken hits, making the degree less valuable. Pro or con? PRO: EXPOSURE AND EXPERIENCE MATTER MORE by Christopher Frank and Paul Magnone, Drinking from the Fire Hose What situation screams for an MBA? Many scenarios cry out explicitly for a doctor, engineer, firefighter, or lawyer. When exactly do you need an MBA? In our current economic climate, the MBA degree in and of itself is not valuable. Why? It often constricts imagination, producing clinical but narrow thinking and falling short of teaching intellectual flexibility. B-schools position innovation as formulaic, resulting in rigid but acceptable ideas. Experience teaches that to drive value for yourself and your company, you need to be a rebel and constantly question what’s right in front of you. We both have advanced degrees, but formal education did not fully prepare us for careers in line management and consulting, working with venture capitalists and on the front lines of startups as well as Microsoft (MSFT), IBM (IBM), and American Express (AXP). Over the years, one truth became evident: Questions (not education) are the most powerful tool in your arsenal. Not theories or frameworks, not business plans or spreadsheets but rather, insightful questions. According to Clayton Christensen, author of The Innovator’s DNA, a passion for inquiry counts as one of the five main drivers of success. The person who asks the best questions is often the smartest person in the room. The challenge today is not the mastery of information available but the judgment to use it. And while education trains you to dive into relevant topics, there’s no guarantee it will help you read situations, think under pressure, and ask the right questions. In...

B-School Prof: MBA Programs Helped Trash the Economy...

Business schools educate armies of bankers, investors and corporate finance executives. How come they don’t feel responsible for the financial havoc that has ensued? After the dotcom bubble burst in 2000, and then again, following 2008’s financial crisis, there was a brief flurry of soul-searching among business schools. Then poof, gone. Business schools still don’t seem to be grappling with what it is they’re teaching that could have contributed to the biggest economic failure since the Great Depression. As someone who teaches at business schools in the U.S. and the U.K., I find this deeply troubling. How can B-schools teach about organizational change and then fail to be examples of it? How can professors advocate for rigor and then not demonstrate it themselves? I fully appreciate that some schools are more advanced, creative and thoughtful than others but I remain puzzled by how little core curriculum and ethos have changed across the board. So here are the top questions I think every business school needs to address in order to help create top flight business leaders: 1.- Does business education need to be so expensive? Harvard estimates that its 2013 MBA students will need to find $84,000 for 9 months of education. Others argue you can get by on $60,000 per year. But if you take into account two years of lost earnings, you’re looking at a cost of anywhere between $240,000 and $400,000 for your MBA. If you are carrying this as debt, you’ll find that your MBA, far from enhancing your career prospects, has shrunk them – because there will be plenty of jobs you cannot afford to accept. Wall Street or large corporations are the only places you’ll find the salaries you need to eliminate your...

Top 5 Reasons an MBA is a Bad Investment

The once-golden MBA is quickly losing its luster For years, an MBA degree has been seen as a first-class ticket to the management fast track. People spend $100,000 (or more!) to earn the degree, confident that it will propel their career into overdrive. Even so, the once-golden MBA is quickly losing its luster. Let’s face it: the degree has been WAY over-hyped, MBA curricula are out of touch with real-world demands, and many programs have a culture that fosters some awful management habits. With that in mind, here are the top five reasons your MBA may not be worth the money you’ll pay for it. REASON #1: THE ROI SUCKS When it comes to goosing up your lifetime income, the MBA just ain’t what it used to be. Writing in a research piece for “The Academy of Management Learning and Education” several years ago, two business school professors, Jeffrey Pfeffer of Stanford and Christina Fong of the University of Washington, dropped this bomb on academia: “What data there are suggest that business schools are not very effective. Neither possessing an MBA degree nor grades earned in courses correlate with career success.” The report debunked many of the traditional claims of B-school recruiters. Pfeffer and Fong cited multiple studies that, for instance, compared the salaries earned by MBAs with their non-degreed peers. All research concluded that although MBA grads earned higher starting salaries than college grads, mid-career MBAs saw no salary boost after earning the degree. Some studies even found that those who pursued an MBA full time suffered from the disruption in their employment…Read full...

Meet the enemy of the MBA

Josh Kaufman, 28, is a self-proclaimed “independent business educator.” If Josh Kaufman had gone to business school, he probably would have graduated this year with an MBA from Harvard or Stanford. But Kaufman, a 28-year-old entrepreneur and former assistant brand manager for Procter & Gamble, thinks business school is pretty much a waste of time and money. MBA programs, he says firmly, have become so expensive that students “must effectively mortgage their lives” and take on “a crippling burden of debt” to get what is “mostly a worthless piece of paper.” Kaufman believes that MBA programs “teach many worthless, outdated, even outright damaging concepts and practices.” And if that’s not bad enough, he insists that an MBA won’t guarantee anyone a high-paying job, let alone turn a person into a skilled manager or leader. In an era when MBA bashing has become almost fashionable, Kaufman is emerging as business school’s most unforgiving critic. Founder of PersonalMBA.com and the author of the forthcoming book “The Personal MBA,” he’s a passionate advocate for what he calls self-education. Instead of paying up to $350,000 in tuition and forgone earnings to go to Harvard, Stanford or Wharton, Kaufman says a better way to learn business is to open the pages of classic business texts and learn on your own. His epiphany occurred five years ago, when he was working at P&G (PG, Fortune 500) headquarters in Cincinnati as an assistant brand manager for the company’s Home Care division. He had joined P&G straight from the University of Cincinnati by virtue of the school’s cooperative education program. Almost all of his peers and managers boasted elite MBA degrees. To overcome his feelings of intimidation and to prepare for the job, he began reading, and...