Skip to comments.Actually, 40 Years Of Data Show The MBA Effectively Does Nothing -- It Has No Impact
Posted on 10/19/2010 9:44:20 AM PDT by SeekAndFind
If Josh Kaufman had gone to business school, he probably would have graduated this year with an MBA from Harvard or Stanford.
But Kaufman, a 28-year-old entrepreneur who had worked as an assistant brand manager for Procter & Gamble, thinks business school is pretty much a waste of time and money.
MBA programs, he says firmly, have become so expensive that students must effectively mortgage their lives and take on a crippling burden of debt to get what is mostly a worthless piece of paper. Kaufman believes that MBA programs teach many worthless, outdated, even outright damaging concepts and practices. And if thats not bad enough, he insists that an MBA wont guarantee anyone a high-paying job, let alone turn a person into a skilled manager or leader.
Business schools dont create successful people, insists Kaufman. They simply accept them, then take credit for their success. With heavy debt loads and questionable returns, MBA programs simply arent a good investmenttheyre a trap for the unwary.
Founder of PersonalMBA.com and the author of the forthcoming The Personal MBA, Kaufman is a passionate advocate for what he calls self-education. Instead of paying up to $350,000 in tuition and forgone earnings to go to Harvard, Stanford or Wharton, Kaufman says a better way to learn business is to open the pages of classic business texts and learn on your own.
Through the economic meltdown, of course, MBA bashing reached new heights. Eager to find a scapegoat, critics happily assigned blame to business schools for teaching MBAs the merits of financial manipulation that led to a global financial crisis.
(Excerpt) Read more at businessinsider.com ...
Looking at the comments for the article are interesting. It seems some people are pissed off they wasted a whole bunch of money.
other than packing the ranks of C-level executives in all of our companies with people who cannot see any issue beyond short-term profit and their quarterly bonus
I have been in business for 30 years, for the most part one item matters, results. You can be a third grade drop out or have an MBA, it does not matter, if you succeed you will advance.
I would be more interested in his opinion if he had earned and MBA and then decided it was worthless.
As for taking on debt, most of the MBA’s I know attended nights/weekends and their employers payed the cost.
If professors of the MBA programs were any good at what they did in business they would be far more successful than to rely on teaching for an income.
“40 Years Of Data Show The MBA Effectively Does Nothing “
Not true - it keeps a lot of Business School faculty employed.
(Now I’m not saying that’s a *good* thing . . .)
“If that view were true, why on earth would we continue to get nearly 10 applications for every slot, given that more than half of our MBA graduates do not do one of those three things,
The fact that the emperor’s subject line up to praise his new clothes has no bearing on the existence of said clothes.
“I would be more interested in his opinion if he had earned and MBA and then decided it was worthless.”
I know that jumping out of an airplane at 5,000 without a parachute will most likely result in my death. I don’t need to do so to say that is true.
Proves what I’ve said and thought for years. The “MBA of the Streets” - i.e. experience coupled with a natural curiosity and research ability has served me very well. Now people who all hold MBAs hire me as a consultant. I don’t think an MBA is a waste of time or money, all learning has value. It’s just not a ticket or guarantee of anything. And there are other ways to accomplish the same (or better) results.
I just see this as another example where reward comes from exceptionalism, not as an entitlement from having completed the requirements for an MBA degree.
I have known many engineers that have gone back to school to get an MBA. I have yet to see a single one profit from that move. Most companies don’t seem to place much value on that.
I will also say that the single most dangerous creature within the companies that I have worked for is an MBA with no other relevant experience: they are often vested with WAY too much power and don’t know a damn thing about what the company really does.
30 years ago most good business schools would not accept MBA candidates who had not worked for 5 years in industry.
I think I now understand the reasons for that policy!
Now days you can be a powerful MBA in your company without ever really having done anything except go to school!
Please don’t get me wrong. I’ve also worked with a couple of seasoned MBA’s who were worth their weight in gold.
I have a MBA, and I feel it was a complete waste of time and money for me. I have been unemployed for most of the last two years. My sister has a MBA from UW Madison and she is doing pretty good, but she would have done well without the MBA.
The MBA today is probably not worth much. When I received mine in the 1970’s, it was a different story.
The MBA along with my engineering degree pretty much guaranteed me a job interview when I sent out my resume.
I also could feel a certain respect in the interview because of having one and think it was instrumental in landing me a job or two.
Companies like Verizon (at that time GTE) had a program for hiring and promoting MBAs into management positions.
So at one time it was worth something.
Actually, most all undergraduate degrees at “top” schools are quickly becoming a negative economic decision, let alone a MBA.
The cost of most private universities has climbed to a point where someone graduating with a (eg) Harvard piece of paper is packing around a non-dischargable house-sized note, and it provides neither shelter or transportation, and only limited earning potential.
Right now, any kid going to school is better served by investing in trade skills education, eg, welding, diesel mechanic, nursing, plumbing, etc. As the boomers retire, there is a huge void being left in the trades because we’ve brainwashed kids into thinking that they HAVE to get a four-year degree to succeed in life.
This MBA nonsense is just more of the same. More debt, limited earning potential. We have now reached a point where someone has to start telling kids the awful truth.
Now, as to the societal effects of the MBA: I believe they have been mostly negative. A great deal of common sense in business has been supplanted by MBA idiocy.
At least 30 years ago it occured to me that companies used MBA programs as filters: you could get bright ambitious students by hiring MBAs. Not that their “training” added value, it was just evidence of their ability to survive a certain kind of obstacle course, traits that might prove useful in real life.
In general, people who drop out of 5th grade don’t make good executives or engineers, but there are exceptions. Bill Gates got kicked out of Harvard in his sophmore year, a classmate of his who later graduated and then went on to Cornell has the office next to mine.
The inventor of the microwave oven was a grammar school drop out, but he worked for a company founded by a couple of professors from Tufts. It takes all kinds.
MBA right after getting a Business Degree- Complete waste of Money (exception the accounting field which requires an MBA).
MBA after 5 - 10 years of work experience- can be valuable. However, my experience is that you don't have to go to a big name school, quit your job and go into debt. Employers are impressed with people who work and get an MBA at the same time. Exception is snotty companies that probably won't pay you enough to cover your educational expenses.
MBA on top of an engineering or science degree can be very valuable... don't spend a lot and only get an MBA if you want to go into management.
I think western civilized culture is falling out of love with the expensive college education. It is a requirement for the hard skills (medical, engineering, science, etc.) but many of the things it teaches, such as what goes into an MBA can be taught via a good mentor, experience and, frankly, libraries and the internet.
John Stossel is really good at turning “what you know” on its ear. If he hasn’t already, he should do a show on the benefits and pitfalls of getting a college education. The REAL ones.
BTW, on a related subject, it looks like this is just part of the bursting of the education bubble:
I'm one of the best in .NET and SQL.
I'm thinking about it.
I'd hate to waste the tech skills I gotz.
“The cost of most private universities has climbed to a point where someone graduating with a (eg) Harvard piece of paper is packing around a non-dischargable house-sized note, and it provides neither shelter or transportation, and only limited earning potential.”
You’re right in general, but the most elite schools—including Ivies—still have an ROI that make the investment in them worthwhile even though they also are the priciest.
These ROIs take into account not only direct costs but also the income foregone by going to school; they also account for the fact that many students don’t graduate in 4 years.
KRAMER: “What did you want to see me about, Mr. Leland?”
LELAND: “Kramer, I’ve.. been reviewing your work.. Quite frankly, it stinks.”
KRAMER: “Well, I ah.. been havin’ trouble at home and uh.. I mean, ah, you know, I’ll work harder, nights, weekends, whatever it takes..”
LELAND: “No, no, I don’t think that’s going to, do it, uh. These reports you handed in. It’s almost as if you have no business training at all. I don’t know what this is supposed to be!”
KRAMER: “Well, I’m uh, just—tryin’ to get ahead..”
LELAND: “Well, I’m sorry. There’s just no way that we could keep you on.”
KRAMER: “I don’t even really work here!”
That was one of my favorite scenes of all time.
Or were TAs or GAs...your tuition is paid if you can put in 20 hours per week working for a prof.
In the mean time the pressure on the new guys was to get a PE, then get an MBA or MSF gotta have that punch. Half of these people weren't even stump trained in some cases a lot of paper and no talent.
Exactly what I did. No big name school. With an undergraduate Accounting Degree, the MBA helped me better understand how to manage people and helped me in my critical thinking to make business decisions. Some may say it wasn't worth it, but to me it was worth it both in time and money.
You’re the expert, and my example is very likely the exception, but a nephew who graduated with undergrad accounting only went on to become CFO of an international multi-billion $ company and himself makes a sky-high income. Another academe-oriented relative just couldn’t believe he was so successful without an MBA. It didn’t fit the template.
Sounds like me. I got mine back in 1995. It has made absolutely no difference in my career.
The courses were paid for by the employer though, and many of them were fun. I am glad for the experience. I may have learned a thing or two which would be useful if I ever strike out on my own.
Your sentiments are what we heard from our son. He said it gave him much greater understanding and a broader knowledge base (because they make you “think” outside the box and take classes in disciplines that aren’t your strong suit or related to your major.) Plus it encouraged a lot of networking, and that usually pays off in the end.
That's how I got mine. They paid for tuition and books.
just because a self-taught mechanic succeeds, it doesn’t prove that all mechanics schools is a waste of time.
This is a question I have been asking myself lately. With all of the money the govt sends to education, why is the cost of it going up?
Shouldnt a subsidy reduce the cost to the final purchaser?
Must be an issue with the “throughput” (an absolutely awful word made up by production management professors so people could feel smart about describing an action accurately without having to be precise).
There are several issues with the study’s ROI calculation, starting with the rearward-looking data back to a time of rather significant inflation, which we haven’t seen in the last 10 years.
Then the ROI is being compared to 30-year Treasuries, which is fine, but they exclude the issue that you are free to sell the 30 year T at any time, and you’re not free to discharge your school debt at any time. This non-dischargeable debt started in 2005, and they’re not taking this into proper account, IMO. It is going to take 10+ years to pay down that note, and if you’re out of a job at any point in there, the bills these schools are packing on are set to wreck kids’ lives. They’re also playing a bit fast and loose with the comparison, because the current yields on long-term Treasuries is depressed, and artificially so. If they’re going to take averages of salary increases over that period, then they should compare to an average of 30 year yields over that period as well - which would come out rather higher than 4.8% - more like 6%+
In general, the whole higher education industry is Yet Another Bubble. The best evidence is the same sort of evidence we saw in the housing bubble: new loan products being cooked up to allow people to afford what they cannot on organic earnings.
Interest only loans? Golly, where have we seen this before? Longer payback periods? Sounds sort of like 50 year mortgages I saw in California in the 90’s...
I smell a bubble.
None of my managers have ever had an MBA. Maybe a few VP-level or C-level execs, that's all.
However, I've worked with plenty of people who had them. A Mixed Bag, as to be expected.
I especially like the early 20-somethings who come out of school (particularly the local state college) and expect their capital 'M' capital 'B' capital 'A' to be some sort of a wand that will warp them magically into a land of six figures, 4-hour-days, golf trips, hot blonde secretaries, and corner offices.
Reality is a harsh mistress.
I especially liked my boss (CIO, BSME, no MBA) who spoke to one of the kids a little directly. Kid was getting pretty full of himself at lunch one day, and my CIO popped his ego with the question: "So, what did getting an MBA teach you?" "Uhhh.......stammer stammer stammer"
I mean, I can think of a half-dozen things off the top of my head....budgeting, conflict resolution, negotiating, communications, business ethics, finance ..... but this guy couldn't even spit out one. I guess "Thinking on your feet" wasn't a requirement, either. :-)
My daughter is working on her MBA and should have it in March. Most of her professors were very successful in the business world and retired and now enjoy teaching. She has learned a lot and hopefully her knowledge will translate into a good paying job with a bright future. Of course, if Obama were not president, I would be more optimistic for her.
College’s are one of the greatest scams in America.
Oh, I think that there are plenty of millenials that are rapidly finding that out, at least where I live. The job market stinks.
A large part of my company is a call center. I was talking to the operations manager (no MBA, BTW) just the other day. She said that things for her have never been better, she's been hiring MBAs to work the phones at an hourly wage. Decent bennies, but I can't imagine that they're making more than $12-15 / hr. She said that the poor job market has been a real boon for her dept - 2-3 years ago, she had to scrape the bottom of the barrel to fill the same positions. For now, at least, she's making hay while the sun shines.
Working phones, while a solid job (and at our company, some good prospects if you work your butt off), must be a bit of a comedown, to someone with 10's of thousands in debt, and who was promised a fortune....only if they got those three little letters after their name.
Yes. Has it made me more money? No. But more marketable? I would say yes but the market I am in is small, but if I had to move, it would be a resume enhancer.
Education is just like healthcare, it has been price-inflated, top to bottom, due to the federal government becoming a 3rd party payer (and regulator).
“If professors of the MBA programs were any good at what they did in business they would be far more successful than to rely on teaching for an income.”
My MBA professors were also consultants to private businesses and drove brand new porches, merecedes and bmw’s.
“Colleges are one of the greatest scams in America.”
Tell that to the newly graduated petroleum engineers that my company hired at $80k per annum. Some of those will go on to get their MBA and be put on the fast track to management.
Whatever are you talking about? Most kids who get accepted into Harvard College are much more fulfilled and better off economically by going there than by studying to be a diesel mechanic!
An MBA is very important! It’ll help you get a job with a billion dollar company founded by a high school dropout.
And I am sure EVERY petroleum engineer who graduates is finding an 80k job to start with.
“My MBA professors were also consultants to private businesses and drove brand new porches, merecedes and bmws.”
So do a number of people in mortgage foreclosure.
The fact they drive new expensive cars is proof they have no financial sense. No one needing to teach can afford such vehicles without making very bad financial decisions. The fact that you think such items are instruments of financial success shows you don’t any wisdom with financials. I’ve met loads of people that thought driving a BMW or Mercedes was a status symbol of respect. Those were always the losers of the crowd.
Concur - I got mine after about 10 years under my belt. It filled some holes in accounting, finance, and marketing. I didn’t bother with the ops/product development courses. Didn’t expect it to add to my take immediately, but have seen some definite benefits due to my increase background coverage. Like many I still see it as a screen - hmm no MBA you go into pile #2.
“An MBA is very important! Itll help you get a job with a billion dollar company founded by a high school dropout.”
” Like many I still see it as a screen - hmm no MBA you go into pile #2.”:
My experience has been: “Hmmm, MBA, useless twit with nothing else to offer. Circular file #13. *chunk*”
‘Manager’ is not a career field.