We saw an article on Financial Times about the MBA “bubble” and we just sighed. “Here we go again,” we thought.
This comes up regularly. Like, every three to five years. There are prognostications of the inevitable demise of the MBA. The value of the MBA is going down, these nay-sayers say. There’s too much supply, the MBA isn’t valuable.
Let’s quote the one reasonable voice in all this – from the article:
“[T]he value of a [MBA] degree is linked to the prestige of an institution rather than what it teaches…”
That’s from Professor Jeffrey Pfeffer who teaches organizational behavior at Stanford.
And we do agree with that.
It’s not that what you learn from a lower-ranked school is worthless; it’s that the ROI might not be there – at least, the ROI is definitely not the same as you get from picking up a comparable knowledgeset at a higher-ranked school. Because the MBA is about much more than the knowledgeset you gain. By going to a top-top school, you’re gaining more than a skillset of how to calculate NPV*.
While EssaySnark gets rumpled about rankings, we absolutely agree with the standard wisdom that you should go to the best school that you can get into (see “What’s the difference between Top 5 and Top 20?” for rationale).
And there’s yet another book about it – this time even named The MBA Bubble. We cannot recommend this book, because we haven’t read it, except for the first few pages offered in the free preview on Amazon – but the author seems to be arguing IN FAVOR of the MBA based on some of the points being made. She basically lists out all the reasons that people have told us why they want to go to bschool! If she’d titled the book, “Why getting an MBA might be a bad idea for some people” then we’d be much more inclined to give it a go.
We have seem these claims of an “MBA bubble” surface again and again in our time in this field. Three years ago we did a whole series of posts on the costs of the MBA – the clamor at the time was that the MBA is too expensive (agreed) and that some type of market forces would cause the house of cards that is today’s bschool education to collapse (haven’t seen it yet). If you don’t have the time or patience to wade through all those posts, you can go to this one that’s got the gist of it: “Is there an MBA bubble?” (the cost of education part 6)
We’re certain that there are people for whom the MBA is a mistake. The author of that book readily admits that it was for her. But her accusations in that FT article and, presumably, her book are pretty unfounded. She claims that the school didn’t do much to help her land a job, and that her employer didn’t care about anything except what she’d done before the MBA. Well, first point is that she went to bschool over 10 years ago, and even if maybe that was true then, things have changed quite a bit in that time, in terms of career services at the top schools. After the 2008 crisis, they had to get a lot more creative, and they totally upped their game, in helping their grads land jobs. But the grads have to do the work, and be qualified – ‘cuz she’s right, the MBA itself is never going to be enough. The employers want to see a habit of success, just like the MBA admissions teams do. They’re not hiring you solely for the MBA credential; they’re hiring you for the whole package. That author seems to be missing the big picture.
That being said, of course. The MBA is not for everybody. We’re not trying to insist that it is. But an MBA from a top school can be totally transformative. And not just in terms of salary. You will exit the program a much different person than who you were when you went in.
Be an educated consumer. Understand why you’re doing this. You need to KNOW YOURSELF, first and foremost, and know what the MBA can deliver. Sure, there’s other avenues to the same destination; there always is. And yes, the MBA is expensive – though there’s a ceiling on it, too. Tuition can only rise so high. Even so, the top schools have yet to see those regular tuition increases changing their market demand.
ROI can be calculated in many ways. Make sure you know the variables that are important to you, and make the determination for yourself. You don’t need an MBA. Be clear on why you want one and you’ll be way ahead of the pack.
*That’s net present value in case you are unfamiliar with some basic financial lingo.