Newsflash: applications to top MBAs are down by 9%, the fourth straight year of declines. This has led to much hand-wringing and analysis of whether an MBA is still worth it. The way that question is phrased implies that it is common knowledge that an MBA was once worth the investment. I think that's worth a discussion.
I am no educational historian so I will limit my comments to the 20 or so years since I first took the GMAT. Back then, at least for junior officers trained in nuclear engineering, MBAs were considered the fastest route to a career change; in exchange for $80,000 (or so), you could expect a 50%+ increase in salary and a massive recruiting advantage in specific fields, particularly consulting and investment banking.
I hit my first hurdle on my first round of application (full disclosure- I had to apply to Kellogg twice). The feedback was, "The purpose of Kellogg is not to serve as career guidance and career placement for former military officers." This was in response to my application which stated far too clearly that I didn't know how I was going to use my degree. I knew little or nothing about the business world. Other than doing a little bit of personal investing, I knew nothing about markets. I grew up in a family of pastors, so the only education and career path I understood was that of theological training. I thought that the purpose of an MBA was exactly what Kellogg said it wasn't: vocational retraining and recruiting support.
My second awakening was mid-MBA. More often than not, the classes resembled "common sense". Few exceeded what I felt could have been gleaned by reading a series of good articles or a book. When I brought this up to my friends who already had degrees, they sort of smiled, like this was some inside joke. "Then why do an MBA?", I asked. "It's a union card", said one friend in the consulting industry. "You need it to be considered."
It was then that it occurred to me that even by the late 90's, MBA programs were just doing the hard work of screening and vetting candidates for specific industries. Because of the churn in entry-level positions in consulting and investment banking, they needed to replenish their ranks. They had 2 entry-level tracks; undergrad and grad. In many cases, these employees did the same job, but one was paid more than the other and was, therefore, more willing to put up with the lifestyle challenges associated with the job. The MBA programs represented a pool of people who were ideal for this second round: motivated, rested and in debt.
My third surprise was once I got into consulting. I was quite taken aback that the case-work, creativity and teamwork highlighted in business school were entirely missing in real-world consulting. No one was interested in my opinion; they just wanted the results of my analysis. Furthermore, the "messiness" (or what David Epstein calls "wicked" learning environments in his excellent book, Range) of real world problems bore little resemblance to the challenges we were trying to solve. I had never imagined a data file that would exceed Excel's 64,000 rows (yes, that was the limit back then). I just figured clients would hand us clean balance sheets and we would pontificate on how they could do better.
Which brings me to my fourth surprise: people who ran businesses were pretty smart, and few of them had the academic pedigree I had been trained to expect. This especially came home in my 2 stints as an employee in Fortune 500 companies. I worked for really good people, most of whom had achieved far more professionally than I had and didn't come from top MBAs (or even "top undergrads"). True, I could do a few things they couldn't and could write better decks; but, their grasp of the industry, of management, of teams and of what made their business go was tremendous. It made me wonder what I had really accomplished with my education.
Perhaps this reflection is also conditioned on when I finished my MBA. The opportunity for the MBA classes of 2001 and 2002 was highly affected by the collapse of the dot-com era and 9/11. Many struggled to make up for those lost years; many of us have careers that look like random walks across the economic landscape. But I don't think that's the answer. I think that current MBA programs would be better split as continuing education for managers and executives; brief, intense seminars to increase knowledge in specific domains and on specific issues. It would allow managers to apply learnings directly to issues they are facing, a far more practical approach than attempting to apply case studies 20 years after the fact.
But the greater thought is this- we all need to be lifelong learners. Some institutions are introducing the "60-year curriculum" in recognition of the potential length of careers, the broad number of challenges faced over a career, the burden of expense and the likelihood that what I'm doing today is not what I'll be doing in 5 years. This better reflects the needs of people and companies; instead of asking, "Should I go back to school?", many of us will be asking, "What do I want to learn next?"
Perhaps, instead of churning through undergrads and replacing them with MBA grads, consulting firms and investment banks should invest in training and retention. Perhaps the notoriously painful rights of passage of 100 hour weeks and miserable pay could be replaced with less work, more training and a more sustainable career trajectory. Wouldn't that be cheaper and more effective than having to replace and retrain your workforce with higher cost resources? It might undermine many long-held beliefs; it might also be the right thing to do.
So, has an MBA ever been worth it? Many would say, "Yes, it set the course for my career." But wouldn't those same energetic, curious, creative people have developed new paths and new solutions wherever they were planted. I think yes- MBA or not.
Update: some friends from University of the Potomac have some resources to help understand the benefits and costs of an MBA. Check out their thoughts here.
Jim is the CEO of i2g Consulting