Who should get an MBA?

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

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In the past, top MBA programs were positioned as golden passports to elite careers. Harvard HBS was a ticket to corporate leadership, Wharton was a ticket to financial services, and Insead was a ticket to consulting. Today, while these legacies still exist, admissions directors from almost every business school stress their MBA program is a “generalist” program that welcomes applicants from all backgrounds and prepares them for any career goal.

While MBA has become a platform that welcomes all backgrounds and career goals, alternative career options have risen as well. This includes online learning platforms such as Coursera, entrepreneurship training programs, fellowship opportunities in developing countries and an increasingly wide variety of alternative business degrees offered by business schools themselves. Moreover, an MBA is no longer a requirement for promotion within careers traditionally related to the MBA, such as strategy consulting. Hence, this begs the question of “who should still get an MBA?”. This article attempts to answer this question by:

1. Framing the Question

• Types of Goals
• Tiers of MBA Schools
• Applicant Backgrounds

2. Analyzing How an MBA Benefits Our Goals

• Goals that definitely benefit from an MBA
• Goals that might benefit from an MBA
• Goals that do not benefit from an MBA

3. Thinking Outside the Box

• Alternative Paths
• Crafting a DIY Experience
• Final Food for Thought

This article is the second 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 this 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.

1. Framing the Question

For any question that requires a more nuanced answer, the simple answer is “it depends”. But what does the answer depend on? In our view, the answer to the core question of “Who should get an MBA?” depends on a person’s:

1.     Career Goals

2.     Career Development Options

3.     Background

A. Types of Goals

There are several overarching goals that lead applicants to apply for an MBA. Each of these overarching goals can be further segmented into more specific goals for getting an MBA.

1.     Career Development

• Breaking the Glass Ceiling
• Transition from Current Job

2.     Career Switch

• MBA-Related Careers: PE, IB, Consulting
• Popular Careers: Tech, Top Corporate Jobs, VC, Public Market Investing
• General Business Careers
• Off the Beaten Path Careers: International Careers, Social Impact, Entrepreneurship

3.     Personal Growth

• Explore Multiple Career Interests
• Learn and Grow
• Rest and Reflect

4.     Other

• Bank My Experience
• No clear reason

B. Tiers of MBA Schools

1.     Global Premier MBA Schools: Harvard, Stanford, and Wharton (HSW)

2.     Global Renowned MBA Schools: M7, Insead, and LBS

• M7 comprises of 7 US schools who meet annually to discuss the state of the industry, specifically: HSW, Columbia, Chicago Booth, Kellogg and MIT Sloan
• Outside of the US, Insead and LBS, have comparable reputations to the M7 schools

3.     Top Regional MBA Schools

• Canada, Australia, the East Asia region and each major European country has 1-4 reputable schools that are well known within their respective region or country.
• The US has a long list of MBA schools. Beyond the M7, there are at least other 5 schools that are nationally reputable.

4.     Other MBA Schools

• There is a long list of less well-known MBA schools

C. Prospective Applicant Background

We segment the applicant pool into five career backgrounds.

• Top business backgrounds: private equity, venture capital, investment banking, asset management, hedge fund and strategy consulting
• Other business backgrounds: Financial Analysts, Marketing Managers, Operations Specialists, etc.
• Non-business professionals in a for-profit business: Engineers, Data Scientists, Designers, etc.
• Non-business professionals in other organizations: Academics, Non-Profit Backgrounds, Military Veterans
• Entrepreneurs and others

Analyzing How an MBA Benefits Our Goals

Now that we have framed the question, we can begin to provide a more personalized answer by primarily analyzing how MBA benefits each goal. We first reorganize the end goals based on its relation to MBA programs. We then assess each goal individually to determine whether getting an MBA is appropriate for each goal. During this process, we incorporate notes on different tiers of schools and different applicant backgrounds if they impact the ultimate answer.

Goals that definitely benefit from an MBA

• MBA-Related Careers
• Geographical Career Switch
• Exploring Multiple Career Paths

1.    MBA-Related Careers

The mindset and skills needed for private equity, investment banking and strategy consulting are very similar to the mindset and skills taught in an MBA program. In fact, in the past, an MBA was almost a prerequisite to either enter or get promoted in these careers.

Among these careers, private equity is the most exclusive, often only looking for candidates who already have relevant pre-MBA experience, most notably previous experience in investment banking or consulting. On the other hand, consulting firms and investments banks are open to applicants with any pre-MBA background. For all of these careers, except in rare cases where a young professional has an alternative path to enter these industries, getting the right MBA is sometimes the only choice. The right MBA generally implies:

For consulting and banking:

• North America: ~Top 15 schools
• Europe: ~Top 1-4 schools in each major country
• East Asia: Insead, CEIBs or top global schools

For PE

• North America: HSW + Booth and Columbia
• Europe: Top 1-4 schools in each major country
• East Asia: CEIBs, Insead, or top global schools

The exceptions to this rule include:

• Consulting firms will hire PhD graduates directly
• Investment Bankers can directly apply for private equity positions without an MBA
• Some young professionals can directly join these industries through networking within the undergraduate alumni network

2.    Off the Beaten Path Careers: International Careers

Individuals from many countries can simply pack their bags and move to a different geography to look for work, but the MBA experience and network provides a very beneficial soft landing. The biggest challenge when switching geographies is developing a cultural understanding of the target geography. Cultural understanding essentially refers to developing a mindset and a set of soft skills that is appropriate for the local culture. Developing this mindset and skillset requires immersion in the target culture because cultural understanding is very intangible and gradually absorbed over time. Hence, it is especially beneficial to have a trusted network that provides an individual with support and feedback in the target culture. Good MBA schools cultivate a culture of mutual support among classmates. This network and culture can provide the necessary support and feedback for a new visitor to the culture.

3.    Explore Multiple Career Interests

With regards to exploring different career paths, an MBA is definitely a great option. As mentioned in the first article, today’s MBA is positioned as a customizable personal growth platform. Within a span of two years, a student can participate in a wide variety of opportunities, including real-world projects, internships, exploring different geographies and meeting alumni from a variety of careers. This wide mix of business options is uniquely available to today’s MBA.

Goals that might benefit from an MBA

• Breaking the glass ceiling
• Popular Careers (that are not directly related to MBA programs)
• Off the Beaten Path Careers: Entrepreneurship and Social Impact
• Learn and Grow
• Rest and Reflect
• “Bank My Experience”

4.    Breaking the glass ceiling

Most professionals will at one point or another reach the glass ceiling in their careers

Some students simply want to get an MBA because they hit a glass ceiling in their current job and do not understand why. In these situations, what we need is sincere and objective advice for further personal and professional growth. Through an MBA, we can find mentors and helpful classmates who can provide this support. Alternatively, we can also find the same support through hiring a career coach. Hence, an MBA, while beneficial is not necessarily the only path.

5.    Popular Careers (that are not directly related to MBA programs)

Popular careers where an MBA education is not critical include careers in venture capital, top corporate positions, the tech sector, asset management and hedge funds. The commonality between these careers is that:

1.     They are popular and competitive

2.     They hire MBA students

3.     MBA is not the only (or best) path to enter these careers

A prospective applicant should think clearly before deciding an MBA is the best path for them to join these careers. In fact, some asset management recruiters have directly asked students during the interview:

“Why did you get an MBA to get into asset management when the best analysts do not need one?”

Many prospective applicants enter the asset management industry through getting a CFA, a simpler process than getting an MBA.

6.    Off the Beaten Path Careers: Entrepreneurship and Social Impact

While MBA programs in general are strongly marketing their support for entrepreneurship and social impact careers, the actual level of resources and support really depends on the school. An MBA is definitely not needed for either of these paths and in truth, getting an MBA might deter someone from these paths because of the financial setback. However, some schools focus on preparing students for these careers as part of their differentiated value proposition. If an applicant is admitted to one of these schools, it might be much more worthwhile than simply getting any MBA in general.

Examples of schools with a focus on social impact: Oxford Sa?d, Berkeley Haas

Examples of schools strong in entrepreneurship: Stanford GSB, Babson College

7.    Learn and Grow

An MBA program is definitely a good opportunity to learn and grow as a young professional. However, there are plenty of other options for learning and growing in today’s digital world as well. The difference is that

1)    An MBA offers a wide variety of learning opportunities on one platform

2)    An MBA has a reputable brand because of its established track record

8.    Rest and Reflect

We do not need an MBA to rest and reflect. But the reason an MBA is beneficial to “resting and reflecting” is that:

1)    After a period of resting, many people inevitably revert back to wanting to learn and grow

2)    An MBA is the accepted method of leaving your job. If you simply took time off to stay at home or travel, then when you decide to return to the working world, many recruiters will question your commitment to a new job. Instead, you can take the “politically correct” method of quitting your job by getting an MBA, during which you can explore your options while traveling around the world.

9.    “Bank My Experience”

If you simply want to hedge your current experience by getting a lifelong MBA brand, then it theoretically makes sense. However, a person with this goal in mind should really critically analyze the ROI of banking an MBA brand. If you are only getting the MBA for the brand, is it really worth the investment?

Goals which do not require an MBA

• Transition from Current Job
• Switch to General Business Careers
• No clear reason

10. Transition from Current Job

Transitioning from your current job is different than a career switch because in this case, there is not a clear next step. Many of these individuals simply want to move on from their current job because they dislike their current job, hoping the grass is greener on the other side of the fence. However, if you dislike your current job, you can simply look for another job, you do not need an MBA. An MBA only indirectly helps you get a better job by helping you become a more capable professional, which in turn makes your more appealing to potential recruiters who recruit for better jobs. You should get an MBA to become a more capable professional, not simply because you want a better job.

11. General Business Careers

Similar to the previous case, if your ultimate goal is to find any other job, and not necessarily a better job that is more challenging to apply for, then simply apply for another job. There is no need to apply for an MBA to transition to a business job that is not super competitive. An MBA is not a headhunter that matches you with new jobs. Again, MBA trains you to be a more capable professional which in turn makes you more appealing to recruiters.

12. No clear reason

If you want to get an MBA without a clear reason why, then you should really ask yourself why you want an MBA. An MBA is an expensive investment that warrants significant consideration.

Quick Summary

It is relatively easy to decide whether to get an MBA when an MBA clearly benefits or minimally benefits your goals. But for goals that might benefit from an MBA, the answer is much more nuanced. Some alumni will say that even if your career path does not depend on an MBA, you will still learn something during the MBA experience. However, the fundamental consideration of whether to get an MBA should not depend on whether an individual will learn something or absolutely nothing. Instead, we should ask ourselves:

Is MBA the most optimal path forward?

Hence, the next section of the article focuses on the most difficult scenario, those prospective applicants who are pursuing paths that might benefit from an MBA.

Thinking Outside the Box

Alternative Paths

Firstly, for goals that might benefit from an MBA, there are plenty of alternative paths that can help you can take to achieve the same goals. For example:

• To join a hedge fund or asset management, a CFA designation might be better than an MBA degree
• For many tech company, startup and corporate roles, many people can apply for those jobs directly without an MBA
• To join venture capital, an MBA might be helpful, but so might experience in product management, a fast-growth tech company or just networking in the startup community
• If you want to be an entrepreneur, volunteering at an incubator or applying for an entrepreneurship training program (e.g. Draper University) might be better than most MBA programs
• A degree in public policy or international relations is an alternative option for someone who wants to create a social impact or go abroad
• To break the glass ceiling or to learn and grow as a professional, hiring a capable career coach might be just as beneficial as getting an MBA

While each of the above suggestions provides an alternative path to one particular motivation for applying for an MBA, most people apply to an MBA because of multiple reasons.

Crafting a DIY Experience

If an individual is motivated to get an MBA because of multiple reasons, there is still an alternative option to the MBA experience.

MBA Pyramid Framework[i]

As mentioned in the first article, an MBA program is basically a personal growth platform with a proven track record. To replicate the overall MBA experience, we will craft an alternative learning experience that mimic the three MBA components and provides similar learning outcomes. Each of the three components can be replicated by through designing a DIY MBA experience.

In our personal growth journey, we can sign up for a tour group or travel as a backpacker

Academic Curriculum:

• Take courses through online MOOCs (e.g. Coursera). Coursera has multiple courses from top schools such as Duke, LBS, University of Pennsylvania etc.

Extracurricular Opportunities:

• Take leadership roles in extracurricular opportunities in the local community (e.g. Global Shapers)
• Support business in the developing world by serving as a TechnoServe Fellow

Classmates and Alumni: A critical benefit of classmates and alumni is the supportive culture

• Hire a career coach to provide feedback and advice

The obvious components missing from the above proposal are classmates, alumni and network. However, if you were to craft your own DIY MBA experience through participating in activities such as those listed above, you will likely meet plenty of friends and build a fairly diverse network along the way. Moreover, it is also possible to gather a group of friends to embark on this journey together, which is analogous to taking trips and courses with classmates in an MBA program.

However, one other major component is missing – the MBA brand. No one will certify your own personal DIY experience, although plenty of people might be impressed by your initiative. While the brand cannot be replicated, the DIY experience also has benefits that a traditional MBA does not have. By crafting a DIY experience and then gathering friends to embark on this experience together, a person will develop resourcefulness, a far superior ability to deal with uncertainty and much stronger leadership skills. A personal DIY experience is also flexible in terms of what options you choose and for how long you decide to go for. On the other hand, MBA programs have clear requirements that need to be met before graduation, such as passing a set of courses. Some of these graduation requirements do not benefit all students because some students might already be well-versed in certain areas, such as finance or marketing courses. In these cases, some students’ time might be better spent elsewhere. In a DIY experience, a student can flexibly choose where they spend their time.

For most readers, a DIY experience is probably too unconventional and “off the beaten path”.

In truth, part of the consideration when comparing this DIY proposal with a traditional MBA experience lies in what MBA you can legitimately be admitted into. If you are comparing a DIY experience to HSW, few individuals can replicate the opportunities these schools provide. On the other hand, if you are comparing this option to an MBA program that is only reputable in your local region and your goal is to move abroad, a DIY approach might be the better choice.

Furthermore, most people will only get admitted into a school that is on par with the current level of their career success. If a person worked at MBB (McKinsey, Boston Consulting Group and Bain), his (or her) chances for HSW are pretty good. If a person worked at a top 10 strategy consulting firm, his (or her) chances for M7 are pretty good. Of course, there are exceptions. In the US, if you are a African American female engineer, your chances for admission to a top MBA program is much higher than other engineers. If you are an Asian male engineer, then class diversity is a zero-sum game. Hence, we have to ask ourselves, is my MBA option a promotion in terms of my career development, a lateral move or worse yet, a step downwards.

Final Food for Thought

To summarize this article:

1.     If you want to get an MBA for the following reasons, an MBA is a great option:

• Career Switch to MBA-Related Careers: PE, IB, Consulting
• Off the Beaten Path to an International Career
• Explore Multiple Career Interests

2.     If you want to get an MBA for reasons where an MBA has no clear benefit, then you should really rethink your decision:

• Transition from Current Job
• Career Switch to General Business Careers
• No clear reason

For those who are considering an MBA for reasons where an MBA might be beneficial, you should weigh an MBA against other alternative paths. In particular, if you have a singular reason for getting an MBA, then there are often alternative paths that can lead you to the same goal. If you have multiple motivations for applying, you might find the DIY approach too off the beaten path and unfathomable. If you fall in this group, Aspire Mentors provides the following questions as further food for thought:

1.     What tier of MBA can you get into?

2.     Are you comfortable venturing forward without an established brand to back you up?

3.     Does your long-term career direction and intermittent short-term goals require you to develop resourcefulness and an ability to deal with uncertainty or does it require an MBA’s established brand and alumni connections?

Ideally this article would have helped clarify your plans.

If you are still unclear, come to talk to us. We are happy to help

References

[i] The MBA Pyramid Framework was covered in the first article of this series. The basic premise is that the three fundamental components of an MBA (academic curriculum, extracurricular opportunities, and classmates & alumni) lead to two learning outcomes. The two learning outcomes of expanded horizons and personal growth leads to development of student’s professional capabilities. After developing their capabilities, the aggregate track record of students’ professional success builds an MBA program’s brand equity.