I read in today’s WSJ, Dale Stephen’s article, “A Smart Investor Would Skip the MBA.” For the most part, I think Stephens makes a strong case. The value proposition of the MBA, as with other professional non-science degrees (e.g., law), is coming under increasing pressure. While I agree with the general thrust of Stephen’s argument, there are some places I would disagree. Here’s my take.
The MBA is a two-year investment of both time and significant money. What I think most MBA grads who have found this investment a positive, valuable return describe 3 core elements as to what they received. First, they built a network of classmates who were smart, ambitious, diligent, etc. Second, they get a good job coming out of B-school. And third, they got some academic knowledge–some accounting, finance, stats, marketing–though most MBAs I talk to don’t really cite this knowledge acquisition as detailed or really as valuable as the network and the job.
I do think the element of the network is a relatively strong value proposition for many who attend b-school. More mature than high school students, more single-minded on a business career than undergrads, B-school students tend to bond pretty cohesively. Mutual professional interests keeps these network bonds relatively tight.
The job out of B-school is also an important element of value, though to me, the marker is how does the B-school grad do over the first 5-10 years of her career, as that’s where earning power leverage is really going to get established. The academic knowledge gained, while useful, is I think increasingly exposed as differentiated–you can teach yourself accounting, finance or stats a variety of ways, for vastly cheaper.
So if that’s the core value of the business school education, is it worth the cost? Though Stephens says no and encourages us to go to Developer Boot Camp (a great idea), I think the answer is more nuanced… It depends, really on just a few key factors.
One, is the school one of the top 5 or 6 schools: Wharton, Harvard, Stanford, Kellogg, Chicago, Tuck? Those schools have the most accomplished alumni networks and attract the strongest candidates. When you assess the long-term earning power of alums from these programs (on a NPV basis), the costly investment still adds up. The flip side to this is that once you’re out of these top 5 or 6 programs, the ROI on the investment starts dropping fast.
Two, do you have a specific idea of what you want to get an MBA degree for? If you want to be an entrepreneur or a film producer, then even a top business school may not really provide a competitive investment. If, on the other hand, you got a CPA in undergrad, and you now want to leverage deeper grad level finance and accounting to extend or expand your career platform, then you are likely going to make the MBA cost / benefit pencil out. If you know what you want to do after you get the MBA, then really dive deep into what the MBA offers from a benefit standpoint, before sinking the cost in.
Finally, if you only have a general view of what you want the MBA for, then two thoughts. First, stick to point one above–only go if you can gain access to a top 6 school. Second, while you can explore a little bit during B-School what you want to do when you grow up, work to figure out a plan and a path. This will help you drill in on building the strongest and broadest network possible, it will help you figure out which job would give you the best start post MBA, and it will help you get the most from the investment costs.