In defence of B-Schools & MBA programs
Saurabh Mukherjea, Ambit Holdings (profile link here) recently wrote an article on VCCircle (VCCircle’s pitch: the leading source of independent news, information and data for the investment ecosystem) tarring MBA programs and those who decide to pursue them. What could have been an excellent opportunity on a widely read platform to address valid concerns with MBA programs and provide constructive arguments to improve the status quo, Mr. Mukherjea decided to go gangbusters and trash the system (easy) without proposing anything better (the hard part; no, everyone can’t sing like Pritam).
I had written a short reply to Mr. Mukherjea’s observations and was very glad to find out that this initial contribution led to a fairly rich discussion on the VCCircle site. Moroever, with the number of congratulatory emails I’ve received, I hope that my terse contribution enables someone to understand and appreciate what an MBA can really do (in addition to (often) being a job-guaranteeing stamp)
My reply is reproduced below with a few chosen comments from other contributors.
Your article unfortunately tars all MBAs with broad brush strokes and fails to bring forth that all MBA colleges and all MBAs are not created equal. As with elite undergraduate institutes, tier 3 and tier 4 MBA colleges are vastly different from say an ISB, IIM or an Ivy League institute. Had you made this distinction and exercised a little restraint in formulating your hypotheses, your conjecture would have been a lot easier to digest.
Do you have any factual data to back your claim that an MBA is a bad investment for the majority of those who do it? Is this statement based on a statistically insignificant personal inference or is their more to your claim?
Also, If I were to take the liberty of extending your argument further, wouldn’t whizkids be better placed to join the workforce right after school? Heck, or even earlier?
While glossing over what the MBA means, you have failed to account for the other benefits that an MBA provides. I list a non-comprehensive subset below:
1. Imparting functional skills in a variety of skills/tools including marketing, operations, legal, finance, and team work: Today’s businesses require a manager to be well versed with not just siloed skills (finance, yay) but have an understanding of multiple levers to run firms. To my best understanding, a majority of undergraduate courses, even from the best colleges, would be found wanting in this regard.
2. Networking opportunities with peers from different walks of life: Learning from experiences of your peers helps one analyze career paths and industries going forward; since the MBA is such a versatile degree, it helps you make informed decisions in changing career paths, should you choose to do so.
3. A strong alumni network provides great support in terms of finding and connecting with the right people and opportunities-whether its finding a job or getting business/funding for your venture.
4. Meeting with a diverse set of peers broadens one’s thinking about his/ her role in the world and how to tackle challenging situations, be it in a corporate environment or in other walks of life.
5. A lot of MBA learning is focused on un-structured methods-discussions, cases, workshops, dinners- than on structured ones. Such methods enable the sharpening of one’s understanding of how the world operates and engenders the development of a rich, leadership-oriented-toolkit to make an impact. This would be largely absent in classroom-based, structured learning that one typically experiences in an undergraduate environment.
I have an MBA from a premier US-based institution and can vouch for the fact that the two years spent in B-School were more transforming and personally enriching than any other experience, whether educational or otherwise, that I’ve experienced till date.
Comments from other contributors
TUE, 2012-11-20 11:07
Dear Saurabh, People in India do an MBA with the same intention as those who get undergraduate degrees in economics from prestigious universities only to get into mundane consulting and financial services jobs. My thoughts on your observations: 1) For every Pritam, there are a thousand others who would have been better doing an MBA since they find it hard to earn a living while struggling to get a break in Bollywood. Forget the IIMs, an MBA even from a tier 3 school helps people get decent jobs, which is important if you want to ensure that the demographic dividend doesn’t turn into a demographic bomb. A large part of India’s population is still at the ‘food and shelter’ step on Maslow’s Hierarchy (see, I leant something at B-school!) and they need jobs which require them to be certified. An MBA does just that. It’s just the way the environment has developed. Grads need to have an MBA before they are looked at for decent jobs. I’ll be glad if you can change the system! 2) Agree that MBA programs could be more focused in their approach, but the wide range of disciplines that people come in from necessitates that the boring economics and finance 101 classes are put in the curriculum. As for business platitudes at B-schools, a lot of businesses in a service economy run on platitudes – I’m sure you know what I’m talking about. 3) As for the bright vs the not-so-bright, I think you’ve got it majorly wrong. By your argument, a guy who’s intelligent makes it to the top anyhow. Extending your reasoning further, let’s do away with all of education and let the ‘bright ones’ shine anyhow. I believe the MBA is a great leveller. It gives a second chance to people to work hard and have another shot at what they want to do. I’ve witnessed innumberable cases of friends and batchmates acing their way through B-schools and getting into chosen careers over and above the ‘preferred’ candidates who have undergrad backgrounds from IITs or foreign univs. Trust me, they’re still doing very well, as opposed to the notion that they’re the weak ones who won’t endure. I agree in spirit with your argument that the mad rush for an MBA is irrational. However, what I find taking the argument too far is trashing all MBAs altogether.
FRI, 2012-11-30 11:58
Going by this logic, in fact every formal education beyond primary school leads to misallocation of talent. Most of the CEOs of the past century were school drop-outs. So, does that mean we should encourage school drop out numbers if we want to encourage entrepreneurship. Not logical, not cool. What a good MBA teaches you is patience, respect for diversity and adaptation. You can’t succeed in a team-work environment if you don’t learn these things. So, a good MBA provides you the basic building blocks and a holistic view of business. It does help make one a better person.
MON, 2012-11-26 15:48
A highly irresponsible article – one sided too. The attempt to paint all MBAs with a single brush smacks of prejudice.Are you saying all MBAs do not possess qualities such as patience, resilience and level headedness. I worked for 3 years prior to my MBA and believe the 2 years I invested in my MBA was well worth it.
FRI, 2012-11-23 19:38
How is this article even relevant in the context of your designation. Your article speaks of no relationship with the economy or the equities market (atleast that’s what I thought your job was). Seems more like a case of sour grapes, maybe you could not get through CAT and get into an IIM. Oh, by the way did you know how many applicants does the Harvard MBA program me get in a year. 8,963 applications in 2012. Of which 900 odd get admitted. Does that mean, the popularity of a harvard MBA is only 4.5% of an IIM. No. The drop in no. of CAT applications only shows that the less serious are not wasting time and money on attempting the CAT – which is a sign of people becoming more selective in their career decisions rather than spray around entrance test examinations.
THU, 2012-11-22 20:09
I just wonder what would have triggered such a non-contextual article. Saurabh you may not be an MBA neither am I, but I am not sure if you know what’s the situation beyond top 8 cities in the country. The only “job worthy” in the country qualification beyond premier engineering is MBA. MBA diploma from a tier III school fetches a far better job than a degree from tier II university. Actually a Bcom/ BSc cant even secure a job beyond 7-8 cities. Forget premier diploma schools, those tier III schools provide better packaging and thought provoking skill than “mugging” degree colleges provide with no faculty at all. Unfortunately those business schools in India being independent provide Diplomas than Degrees since there are no universities interested in providing good education. There is no education in university even if someone can pay. These schools charge money and give better “diplomas” than university “degrees”. I am not sure if you thought it through!
Jojo Mukherjee · Duke University
There’s a couple of parallel arguments being made here; a) Is the MBA beneficial for society?, b) Is it beneficial for the individuals that get the degree?
Let’s tackle them one at a time.
Society: In my opinion this is not a valid question, or at least not one that we should be asking. An MBA is not a societal endeavor, it is a very individual one. Your example of mis-allocation of talent is not a problem of the MBA degree per say but a problem with what our society considers “worthwhile achievements”. You can replace the MBA in your example with a B.tech, an M.Tech, an MD or any other degree that is not related to music composition and it would still hold. Therefore, by extension, you should consider all those degrees “damaging to society”. I sincerely hope that you don’t The problem isn’t that Pritam was advised to pursue an MBA, its is that he WASN’T advised to pursue Music Composition.
Individuals: Your entire argument on this segment is based on the assumption that we live in system with a perfect “talent to opportunity” correlation, i.e. people with the most talent will always have access to the most opportunities/right kind of opportunities. As someone that grew up in rural Bengal and spent most of his life being forced to do Science and Math, let me assure you that that is not always the case. An MBA (and I am only going to consider the top MBA programs here, Adi below gave a great justification for that) is not JUST a “skills acquisition” pursuit. It is an access to opportunities that most people won’t otherwise have. The “winners” in your example may have had the “aptitude” for M&A, but coming from most parts of the country that isn’t the metros, would probably never have had the opportunity to prove that to anyone. Just like you would use P/E or P/Book or numerous other initial “screens” to cut down potential investments, employers use a top MBA to get the sheer number of qualified applicants down to a manageable number. And just like a company with a high P/E might “miss the cut” for a value investor (even though it may well be a worthwhile investment), so can a qualified applicant miss having access to opportunities because they don’t have the right “paper” credentials. Also, just like it is not possible for an investor to do due-diligence on every company in their investment universe, it’s simply too expensive for employers to screen/interview EVERY applicant that submits a resume. The two year “opportunity cost” that you mentioned is a lot less than a lifetime of “no-opportunity” or “less-opportunity”. Is it fair? No! But from my limited life experience, not much is!
Varun Vummidi · Gurgaon, Haryana
Saurabh, I think I agree with Adi on a lot of what he mentions. As someone who decided to pursue an MBA, even though I progressed very quickly at my workplace, it was a rewarding experience. I would like to specifically point out that there is a glass ceiling present in a lot of companies. Be it internal movement or applying for horizontal movement or senior positions, an MBA is increasingly necessary by recruiters.
Given the quality of education in our UG programs an MBA/PG prog is also becoming the place where like minded people meet, exchange ideas, compete and make friends for life.
An MBA maybe irrelevant from an investor point of view and probably requires many years of understanding what makes a good investment but it would be unfair to put all MBA programs under the bus. You can drag all the MBAs offered by mass education institutions that offer the program just to give someone a certificate but you shouldn’t dismiss the reasoning behind doing the program. Just my 2 cents.