Why an MBA? The True Value of an MBA Education

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Why an MBA?

Not very long ago, an MBA used to be considered a quintessential part of one’s education (especially in India and even the larger South Asian region). A bachelor’s degree was a mere formality – an MBA was the education that really decided what you became, how well you did in life, and even what others thought about you.

At GyanOne, our perspective on MBA programs goes well beyond just admissions. We care about applicants’ motivations for pursuing an MBA, and are committed to bring to them perspectives through our collective experience (100+ man years of professional experience) that could help them make more informed choices.

This post attempts to explain why an MBA is an excellent program well worth pursuing for the skills it bestows. Towards the end, we also discuss some things than an MBA is not.

Unfortunately, the reputation of the MBA has taken a beating in recent times, even if enrollments at top MBA programs has not. A large number of specialized programs have instead sprung up as substitutes to the MBA.

These include specialized Master’s degrees in Banking, Finance, Accounting, Marketing, and Brand Management, to name just a few. They aim to make a student not a jack-of-all-trades (like an MBA does), but a master of one.

Within the corporate world too, business managers who hail from a specialized or functional background (like CAs or CPAs or banking professionals), together with managers with more experience than education (read: only Bachelor’s degrees) deride the value of the MBA.

They feel that an MBA provides one with skills that are too generic to be useful – that the education on various aspects of business management is spread out too thinly in an MBA to really make an impact.

They also feel that MBAs are essentially jargon-spewing superficial people, who replace functional ability with jargon and pretension, and get away with it only because their decision making abilities are (wrongly) overrated by senior management, who are also MBAs.

This is wrong, but this perception nevertheless exists among some, and is the chief reason why an MBA is looked at as not worth the hype surrounding it.

Perhaps this is true for specific people, and we are in no position to comment on that. However, we do feel that the MBA carries a lot of value, and MBAs are as well positioned, if not better, to contribute in a corporate environment.

In doing so, we make no attempt to belittle the value that other professional qualifications or even Bachelor’s degrees add to those who pursue them.

They are important qualifications in their own right, and deserve all the respect they get and more. However, an MBA too is great value addition for the effort that one makes in earning it.

We present below some reasons for why an MBA is a great program on the basis of the skills and other benefits that it offers to those who pursue it:

A comprehensive course in functional skills: B-school curricula are divided into two parts: the first, called the core part, which is compulsory for all students and covers the basics of business management – finance, marketing, operations, human relations, and even entrepreneurship.

The second part of the curriculum allows the student to specialize in a given field of his or her choice by taking advanced courses in that field.

For instance, if it is finance that captures one’s fancy, then one is free to take advanced courses in Corporate Finance, Financial Derivatives, M&A, Microeconomics, Private Equity, Capital Raising, and Valuations.

These courses will provide not just a superficial understanding, but a strong basis on which to pursue a career in Finance. The notion that an MBA is not specific or deep enough to make a student a functional expert within his or her chosen area of specialization is therefore incorrect.

The inculcation of a structured thinking process: Business schools use pedagogical tools that are very different from those used by other educational departments.

Real world case studies are discussed in class to elucidate how different business situations were handled, and could have been handled better. Class discussions and presentations discuss difficult business problems from different industries.

The key learning here is not how one would solve a given problem, but how one would approach it. Students work in teams to analyze the problems from different angles, and then provide solutions which they think would be optimum.

This process of discussion, debate, and recommendation inculcates the ability to approach the solutions to business problems in a structured and organized way.

Business problems themselves may be different and varied, but a structured thinking process gives one a key tool to begin thinking about a solution. This in turn increases the probability that the problem will in fact be solved.

A key criticism that is often levelled against this point is that structured thinking towards a class of problems can only be built by experience – by tackling these problems, and not just by thinking about them.

I agree – however, a simulation is the next best thing to reality. It builds some ability in solving problems, even if it does not make one a master in comprehensively resolving them.

An awareness of the prevailing business environment: An MBA also makes one much more aware about the general business environment. We think this is a key skill that goes a long way in making one a successful business manager.

Unlike a functional specialist, you are not just restricted to thinking about a narrow set of skills, but gain enough skills to understand and evaluate most business operations you will come across in your career.

You may choose to specialize in finance, but you will know enough about marketing and human relations to make intelligent decisions about them, as you will need to when you assume more senior roles in the organization.

This is where the MBA differentiates itself from other professional qualifications. Not only does it make you a jack of all trades, but it also makes you a master of one (through specialization in the elective courses).

An awareness of the general business environment – how business works, and how to make it work is also very important, especially if one is not a business student beforehand.

Even if you are a doctor, an engineer, a lawyer, or a teacher – knowing how to monetize the skills and knowledge that you have is very important. It is only a business education that provides you with this knowledge.

This is an important point made by Professor Dipak C. Jain, the former Dean of the Kellogg School of Management, in a fantastic speech made recently. The speech is available below:

Professor Dipak C Jain on the Mission of Management Schools–Johns Hopkins University, March 2010.

The development of people management skills: An MBA is not just about learning in class. It is also about meeting and networking with a distinguished set of smart individuals who will be your classmates, teachers, students, and maybe even later your colleagues.

The typical MBA class of today consists of people drawn from highly diverse backgrounds – engineering, law, science, and literature, to name just a few.

You will learn from your classmates’ experience across industries, professions, and jobs. You will also learn to work in a group with individuals who are from different background, and think differently from you.

As a result, you will learn to manage, and be a part of a team which strives towards and achieves common goals. No other educational program that I know of, except an MBA, provides for both collaborative and individual development at the same time.

Quick access to the latest research in management science: Typically, research from within universities takes a long time to make it to curricula. Management research does not have to be approved by regulatory bodies before it can be applied, making the time to application lesser.

However, in B-school, you can benefit fairly quickly from research on management issues being carried out by the faculty. Benefitting from new ideas in management research can be a great advantage – giving you new tools and processes to solve problems faster than your contemporaries.

Access to an active, accomplished alumni base: B-schools cultivate their alumni base much more actively than other departments within universities.

This is in part because MBA programs also compete for admitting the best and brightest students, who are most likely to be successful and therefore enhance the brand value of the school.

Therefore having close connections with a successful alumni base ensures a better image for the school itself. It also ensures greater recognition for your education when you apply for jobs, as most companies already (hopefully) equate the alumni of your school with a high level of performance.

A window to further opportunities: An MBA may not be an end in itself. While most MBA graduates choose to pursue corporate careers after an MBA, there is also a class of people who use the MBA for getting an introduction into the world of business.

Thereafter, they may pursue entrepreneurship, or even further education in the field of business.

An MBA, therefore is much more than another master’s degree. It builds specific functional and interpersonal skills, and prepares its graduates well for taking up positions in business management.

That said, let us also elucidate what an MBA is not:

Not a quick path to higher salaries, senior positions: Professionals are frequently attracted by the allure of the MBA because they feel that it will offer them a quick path to senior positions and higher salaries.

This is true only in a few cases, and the effect drops off the greater the experience the person has before the MBA. Similarly, too little work experience before the MBA may also prevent you from realizing a career jump.

The optimum time to get maximum career benefit from the MBA is when one is at a junior to middle level position.

Not a stamp of brilliance or capability: Graduates from some of the top MBA programs tend to feel that an MBA from a premier university or institute is enough to certify them as exceptionally competent and/or brilliant.

If the MBA is from a top program, then this effect does exist. However, it drops off quickly, and is almost completely gone within an year. Thereafter the only parameter for capability is your performance.

In fact, being from a top school can have its drawbacks as people expect you to be more hardworking, resourceful, and innovative than other employees.

Not a substitute for experience: As noted above, an MBA will not make you jump more than one level in your current job. Considering that most MBA programs require two years to complete, you could make that leap if you instead opt to stay on in your job too.

Further, although an MBA will give you critical skills to succeed in your job, it will not give you the experience that may be needed to be successful in senior positions. Therefore get the MBA when you are at a lower to middle level position, and count on your performance and experience to take you further.


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