Introduction to MBA (I): The True Value of the MBA Experience

The Chinese version of this same article can be found here.

The value of an MBA is a point of serious debate. In some parts of the business world, the MBA has an aura of mystique. MBA Admissions Directors cultivate this mystique by sharing stories of how an MBA helps students transition from average jobs to elite careers. Some alumni will further build on this mystique by sharing personal anecdotes of how particular MBA experiences inspired and transformed their lives.

On the other side of the debate are those who question the value of an MBA. Most notably, the rise of self-made tech entrepreneurs has revitalized the argument that business is learned in the real world, not the classroom. When debate on the value of an MBA reaches a deadlock, the discussion inevitably arrives at the fallback narrative – an MBA is at least valuable for its brand and network.

This article debunks the prevailing narratives by critically analyzing the MBA experience to provide a more nuanced understanding of the true value of MBA programs.

This article is the first part of a two-part Introduction to MBA series:

1.     The True Value of the MBA Experience

2.     Who should get an MBA?

The examples in the article typically refer to traditional two-year programs at top MBA schools but the underlying principles can be extended to non-traditional MBA programs and business education as a whole.

| A |

Prevailing Narratives

A.1 Primary Narratives    

A.1.1 The Value of an MBA is the Brand and Network

This is the most popular narrative and at first glance, there is strong support for this belief. Students from top schools are recruited by companies immediately upon arriving on campus. This reality suggests that companies care more about the fact that the student has the MBA brand and is part of the MBA network than what the student learns over the ensuing year or two. Based on this reality, one could reasonably suggest students should skip the two-year charade. They should simply pay for the brand and network and then immediately recruit for a job. But this does not tell the whole story.

From a student's perspective, recruiting is mostly viewed as a competition between applicants. But from a company’s perspective, companies are also competing for the most talented students[i]. Each company tries to pitch to students, interview students and lock in commitment from the best students before other companies do. This rush for talent creates a vicious cycle whereby each industry and company tries to recruit earlier than their competitors. This vicious cycle has culminated in the current state of recruiting, whereby the recruiting feast begins the moment new students arrive on campus.

A.1.2 Getting an MBA will strengthen your network

A similar argument is that a person who gets an MBA strengthens their network, which generally implies a network for business and career purposes.

A.1.3 Golden Passport

A third narrative is that an MBA is a golden passport to a top career path such as consulting or financial services. While the term “golden passport” is an outdated term that is rarely used now, the legacy of the golden passport persists.

A.2 Other Narratives

Other common arguments that arise when debating the value of an MBA include:

1.     Business is learned in the real world, not in the classroom

2.     Many (or even most) successful business leaders do not have an MBA

3.     There are many other methods of learning business without an MBA

While these arguments have merit, they simply suggest that there are other alternative paths and do not directly discredit the value of an MBA. While we briefly discuss these narratives in this article, we provide a more thorough analysis of MBA and alternative paths for career development in the next article: “Who should get an MBA?”.

| B |

The Components of the MBA Experience

We begin to debunk these narratives by analyzing the elements of an MBA experience, which can largely be segmented into three components:

1)    Academic Curriculum

2)    Extracurricular Opportunities

3)    Classmates and Alumni

B.1 Academic Curriculum

The MBA curriculum is typically the least appreciated of the MBA experience. There are many reasons for this lack of appreciation but this article will focus on how the market for business education has evolved.

B.1.1 Origin of Business Education

“Business education began as management education”

Business education began in the beginning of the 20th century after the industrial revolution led to the rise of massive enterprises[ii]. This created a need for managers to manage much larger organizations. As a result of this need, universities began to research and study the management of large enterprises, leading to theories such as “Scientific Management” by Frederick Taylor[iii]. The research and study of the new field of management eventually gave birth to teaching the discipline of management. In essence, business education began as primarily management education, teaching students how to manage large enterprises. In fact, Harvard’s renowned “Case Study Method” and case analysis in MBA programs in general are designed to teach students how to make decisions as a manager of a large enterprise[iv].

B.1.2 Evolution of the MBA Curriculum

MBA programs have shifted ... to a more flexible personal growth experience, customizable to the needs of each individual

However, since the founding of business education 100 years ago, society has evolved. In the last century, several trends have been particularly impactful to business education and MBA programs:

1. Increase in the quality of life leading to the increase in overall education level of society
2. Increase in disposable income and globalization enabled the average person to venture beyond the borders of their own community and explore a broader global world
3. Information is much more widespread and readily available, particularly with the advent of the internet

As a result of these trends, the average person is much more educated, has generally more exposure to the field of business and a better grasp of fundamental business principles. 100 years ago, prospective factory managers studying in an MBA program might have found it very enlightening when Frederick Taylor suggested that factory employees would be more productive if they were paid based on their productivity as opposed to a flat salary. However, today’s young professionals would find this to be common sense. They would have already learned this principle if they paid for their own undergraduate tuition by serving as a waiter or waitress in their local restaurant, where they were tipped based on performance.

With the changing times, the MBA curriculum has also evolved. Today’s MBA curriculum incorporates entrepreneurship & innovation, business ethics and social impact courses, concepts that address 21st century issues. Furthermore, top business schools now offer a plethora of dual degrees and some business schools stress their collaborations with non-business faculties. Both of these changes are essentially part of a trend whereby MBA programs have shifted from traditional management education to a more flexible personal growth experience, customizable to the needs of each individual.

B.2 Extracurricular Opportunities

Another evolution of the MBA program is a shift towards a more practical education, which includes both applying business theory in simulated practice and developing soft skills through extracurricular opportunities. In the past, MBA schools required students to have taken calculus as a prerequisite to their MBA studies and writing a thesis was also a requirement for graduation for each student[v]. Fast forward to today, instead of calculus and thesis papers, there are grade non-disclosure policies at many top schools (e.g. Wharton, Columbia, and Stanford GSB among others)[vi]. This policy essentially means that students are not allowed to disclose their grades when applying for jobs, which forces recruiters to assess students based on non-academic factors. This can include soft skills during networking and extracurricular leadership activities on the resume. In fact, we believe it is much easier to differentiate a great school from a good school based on its catalogue of extracurricular opportunities as opposed to its course catalogue.

Select Extracurricular Opportunities at Wharton[vii]

The above table is organized based on Aspire Mentors best judgment on categorizing extracurricular opportunities at Wharton. Please visit Wharton’s website to see how Wharton describes each opportunity,

B.3 Classmates and Alumni

The classmate and alumni network are the most quoted aspect of the MBA experience and in many cases, the most misunderstood. We believe the value of the classmate and alumni network stems from three factors.

B.3.1 Admissions Criteria

The more competitive the MBA program, the higher the bar for admission. This rigorous admissions process ensures that schools only accept students of a certain caliber, which supports equal mutual learning among classmates. Furthermore, this standard also ensures the quality of recruits meets a minimum threshold for recruiting companies.

B.3.2 Classroom Diversity

MBA programs invest significant time and energy to build a diverse and balanced class of individuals from different geographies, career backgrounds and industries (e.g. Insead ensures citizens of any particular country does not account for more than 10% of the student population). A diverse class profile further enables mutual learning among classmates by bringing together individuals from different backgrounds.

B.3.3 Culture of Mutual Support and Learning

Compared to the work environment, a student is much more likely to receive unbiased and objective career advice from peers, professors and career advisors in the school environment

MBA programs invests to build a cohesive culture among students to encourage students to provide each other with mutual support for learning and growth. While all schools have an alumni network, only MBA schools invests heavily to cultivate this culture and maintain this network.

In our view, this culture is one of the least appreciated aspects of the MBA education. Unlike the professional business environment which can be full of office politics, a business school is still a school which facilitates learning and encourages mutual support. In the professional workplace, a young professional can seek career development advice from a more experienced colleague but that colleague might only provide advice that is aligned with the colleague’s self-interests. Compared to the work environment, a student is much more likely to receive unbiased and objective career advice from peers, professors and career advisors in the school environment.

| C |

Understanding the True Value of an MBA

C.1 Debunking the Prevailing Narratives

With a more nuanced understanding of the MBA experience, we first return to the following two prevailing narratives:

1. Getting an MBA will strengthen your network
2. Golden Passport

We then revisit the narrative that the value of an MBA is the brand and network.

Firstly, an MBA applicant will only be admitted to a school and meet peers of similar overall caliber as themselves. Given that most schools have some form of admissions criteria that a student must meet, an applicant will only be admitted to schools where his (or her) overall caliber crosses the minimum admissions threshold. If a student’s overall caliber far surpasses the admissions criteria, they will likely attend a more exclusive school or just not apply to MBA programs at all (since they have better options). When a student attends an MBA program, the majority of peers he (or she) will meet are those who not only crossed the minimum threshold but also were not admitted to an even more exclusive school. Hence, an admitted student will generally meet peers who are of equal overall caliber as himself (or herself) in an MBA program. As a result, unless a student was admitted to a school he (or she) was underqualified for, the student will not build a stronger network through an MBA program. Getting an MBA to strengthen one’s business network in one’s current career path is also fruitless. As an example, an MBA student with a background in technology sales will find few potential clients or partners among his (or her) classmates because of the diversity of backgrounds in an MBA class. Hence, getting an MBA diversifies your network; it does not strengthen your network.

The alumni network and brand can be very helpful when it comes to switching careers. MBA alumni do prefer to recruit from their alma-meter given each school’s strong culture. Certain industries and firms do hire (almost exclusively) from a shortlist of MBA schools but most of these jobs are highly competitive and there are far more applicants than openings. Even industries who do not hire exclusively from MBAs will certainly respect a reputable MBA’s stamp of approval. But an MBA is not a guaranteed golden passport. Even alumni who love their school will not hire a less qualified MBA student when a more qualified non-MBA student is available. Hence, once a recruiting door is opened by an alumnus or the renowned brand, it is up to each individual student to successfully walk through the door by demonstrating they are the best candidate for the job. While most students do not have trouble finding a job, plenty of students do not end up in their ideal industry or dream career.

Overall, the brand and network of an MBA is undoubtedly valuable but an MBA is valuable for much more than its brand and network. If a student is highly qualified and only needs someone to open the door before recruiters finally appreciates his (or her) talent, then the value of an MBA might be only the brand and network that opens doors. For all other applicants, the opportunities within the MBA experience and the opportunity to collaborate with classmates from diverse backgrounds helps them learn, grow and prepare to successfully walk through the recruiting door once it is opened.

C.2 The True Value of Today’s MBA Experience

In the business world, practical experience is more valued than classroom theory. This belief is especially strong in today’s hottest industry, the tech industry[viii]. Within the tech industry, tech entrepreneurs are often the strongest proponents of this belief. Successful entrepreneurs will often advise: “if you want to be an entrepreneur, then you should just go be an entrepreneur. You don’t need an MBA.” This advice suggests that prospective entrepreneurs should simply throw themselves into the woods and learn “business” through trial and error in the real world. However, regardless of their entrepreneurial ambition, everyone has a different tolerance for uncertainty. Not every prospective entrepreneur is ready to throw themselves into the woods.

A person can learn to handle uncertainty through guidance from a mentor and reduce uncertainty by improving their chance of entrepreneurial success by having the right resources. For many young professionals who do not have this type of support, MBA programs can provide access to potential mentors and a platform with entrepreneurial resources.

C.3 MBA Pyramid Framework[ix]

The aforementioned three components are the fundamental components of MBA programs. These fundamental components expand the horizons of students and help students grow to become more capable professionals. Each MBA program’s track record in expanding students’ horizons and helping students grow built its brand equity.

By getting an MBA, an individual is firstly paying to leverage the resources in the proven MBA platform. Today, students can leverage this platform to suit their own needs. For example:

1. Student A who was previously employed in brand marketing might want to join a strategy consulting firm. He (or she) can enroll in business strategy courses, practice case analysis, and join pro bono consulting projects to develop his (or her) strategic mindset and analytical skills in preparation for a career transition. By paying for an MBA, this student is essentially paying for the cost of his (or her) own job training, which makes the student more ready for the job and hence more attractive for potential recruiters.
2. Student B, who has a return offer to their consulting firm, might get an MBA to explore non-traditional career paths. Given student B comes from a highly structured system, he (or she) might feel unready to plunge into the unstructured world of entrepreneurship. Student B can forgo the business curriculum as much as possible and instead focus on the extracurricular related to entrepreneurship, join the leadership treks and learn from classmates with entrepreneurial backgrounds in the mutually supportive ecosystem. These experiences might lead to a personal transformation whereby student B becomes more confident in handling uncertainty. By the end of his (or her) MBA experience, student B might be confident enough to embark on a more entrepreneurial endeavor. In this case, an MBA helped propel this student to a career in entrepreneurship even though an MBA is not a prerequisite for entrepreneurial endeavors.

Secondly, by successfully participating in the proven MBA platform (aka graduating), an individual earns a perpetual license of the MBA brand. Once an individual has the MBA brand, the business world assumes the professional meets a certain standard because he (or she) was rigorously selected and experienced a time-tested learning experience. An adventurous individual can theoretically throw themselves into the woods and build their own DIY learning experience outside of the established MBA system but they cannot replicate the brand equity. Hence, for most people, the brand is what makes an MBA valuable at first glance. However, what most people do not recognize is the true value behind the brand. The true value of an MBA program is the time-tested learning experience, which today, has evolved to become a customizable personal growth platform.

Just because an MBA has value does not mean it is right for everyone. To better understand whether an MBA is right for you, read our article “Who should get an MBA?”

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[i] https://www.mergersandinquisitions.com/investment-banking-university-student-high-school-student/

[ii] https://www.mbacentral.org/history-of-the-mba/

[iii] https://en.wikipedia.org/wiki/Master_of_Business_Administration

[iv] https://qz.com/work/1385066/the-problem-with-harvard-business-school-case-studies/

• While case analysis was popularized by HBS and MBA schools, today, case studies are now prevalently used across many disciplines. For example, clinical psychologists frequently use case studies of patients to help students learn about and diagnose different mental illnesses.

[v] https://www.amerasiaconsulting.com/blog/the-evolution-of-the-mba

[vi] https://www.mbacrystalball.com/blog/2018/04/23/grade-nondisclosure-policy/

[vii] https://www.wharton.upenn.edu/

[viii] Will an MBA help you get ahead in tech?

https://medium.com/tradecraft-traction/will-an-mba-help-you-get-ahead-in-tech-8d3f57df1df2

[ix] Notably, career opportunities is not an explicit part of the MBA experience. Each student is not paying tuition to the MBA school so that the school can open doors and help them find jobs. Instead, companies come to schools to recruit because the school has curated and assembled a pipeline of talented individuals who are more prepared for the job and more accessible than professionals who did not pay for the MBA experience. By hiring students that are more prepared for the job, a company can reduce their training and on-boarding costs.