Editor’s Note: Dinesh Moorjani is the Founder and CEO of Hatch Labs, a mobile startup incubator creating new platforms and applications to improve mobility for the wireless generation.
By Dinesh Moorjani – Special to CNN
It’s often perceived in the business world that pursuing an MBA degree is analogous to buying career insurance, especially if you attend a top program.
What many aspiring entrepreneurs have found, however is that earning an MBA can actually momentarily slow down an upward career trajectory, considering the degree typically requires a two-year job hiatus at a full-time program.
The real benefit of this advanced degree may be the parachute it serves in times of economic distress. But for those assessing the risk vs. reward opportunity, the need to consider the likelihood of that parachute opening properly remains paramount. And perhaps the best indicator of that is how well the parachute is packed, or without the laborious analogy, how talented the individual is and how those talents are channeled toward meaningful professional endeavors.
To be clear, an MBA is not for everyone. While it can also serve as rocket fuel to accelerate career development, one overlooked fact is that this rocket fuel doesn’t typically ignite until a few years post-graduation. Furthermore, it requires some level of personal or professional accomplishments to combust.
To illustrate this point, let’s revisit the graph above. Why sketch an illustrative chart to make the point instead of comparing hard statistics? Because the decision is not purely a scientific one.
First, let’s understand the illustration. When the post-MBA career fuel ignites and a new career path curves upward, it surpasses the expected outcome of the career path without the MBA. Of course, we cannot actually compare both trajectories concurrently so we’re forecasting a critical eclipse point where the MBA begins to yield dividends. But will the MBA lead to the expected outcome?
The most important inputs to answer this question are a self-assessment of your risk profile and an evaluation if that profile is in alignment with your professional goals.
The irony is despite the fact that MBA programs ask applicants to reveal these goals, the MBA degree may be most helpful for those whose professional goals remain unclear.
Career plans are rarely mapped with a straight line from points A to B. Rather, success is built on our ability to identify the right trajectory and to track how every dotted line we trace is leading us in the right (or wrong) direction. If you’re lucky, these dots will not only align, but they will build upon each other.
If you possess a clear understanding of your professional goal(s), you understand the dependencies to achieve them, and most importantly, you are willing to act on these dependencies, your path is no longer a straight line. It would be like folding the paper to adjoin points A and B – you discover the shortest distance between two points is virtually zero, and is a result of "bending space."
This is precisely what entrepreneurs do. They achieve their goals despite insufficient resources – in effect, they “bend space.” Of course, we’re reminded that many successful entrepreneurs never finished school nor did they apply at all. In these instances, an MBA would have likely impeded their progress, or hindered their ability to take calculated risks in order to accelerate their career.
On the other hand, an MBA from a top program provides a deep practical education and opens doors, allowing you to grow your personal and professional networks. This has the desirable effect of creating opportunity, either through coincidence or providence – or what I chalk up to the residue of hard work. So, whether by choice or by circumstance, opening the right doors or exploring the right options statistically increases with the completion of an advanced degree.
According to a 2010 Graduate and Admission Council (GMAC) survey of 6,800 MBA graduates, even in a tight economy, 93% were employed and more than 70% felt that their salary met or exceeded their expectations. It should be noted that the median salary of all those surveyed was $94,542, with their additional median bonus compensation averaging $17,565.
If you rely on stats and illustrative diagrams to guide your professional decisions, earning an MBA may be the right path. But if you’re an entrepreneur whose appetite for risk is commensurate with the confidence in your capabilities, only you can decide whether idling in neutral for two years is worth the anticipated career acceleration.
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Education, knowledge, wisdom, intelligence and expertise can have significant value. And often more when actually applied.
If only today's MBA programs actually imparted intelligence and wisdom...
Another genius.
I bet you would score LOW on the GMAT.
That MBA can be noticed real early in a company no doubt so you best perform, team up right and notice well. You will be 2 to 3 years behind the ones you will be peered with from a "perception" group or level in a large company or the ones who are fresh hires in others. Of course you are cream material for that small and mid cap stuff either as a practical career, venture or that dream stuff, accounting or consulting that's not the hire pot it once was. The curves they draw here are just not real. You have experience level, the type of degree, number of degrees, certifications, patents, credentials and then there is that deal about masters, doctors, phd, Jd, officer.....well there are a lot of things that go into educational credentials, certifications, expertise, ability, invention and things like that VS getting an MBA if really haven't ever worked in your life or have some big experience. An engineer with some big patents and a Series 7,8,66,3.....she might be worth some really big bucks and make Director pretty fast, possibly less than 3 years.
Maybe by your name you meant Senior Exec, but I in no way believe that based on your ability to form sentences
With the state of unemployment there are a lot of people to tell you what the books have told so far- including all kinds of engineers and managers and statistic analyst...not to forget the globally independent auditing corps
Being an entrepreneur takes more than an A-Grade. You must have the inspiration, dogmatic belief in your aim, a kind of courage to smile down all oppositions and a kind of state that I will explain as going against what the society tells you to be right. You know, you should get in a good job, get a good man/women and settle down etc..
Only un-inspired people go to masters degree to make a living. The youngesters who already know what to do do not wait it out.
Many of those who think they "have the inspiration, dogmatic belief in your aim, a kind of courage to smile down all oppositions and a kind of state that I will explain as going against what the society tells you to be right" are still living alone in their parents basement ten years later.
says the life long middle management suit who hates his job.
as jay z said..."far from a harvard student, just had the ball$ to do it..."
Totally agree. While an MBA may get attention on a blindly submitted resume it is not a measure of someone's ability to succeed. There are far too many young people going back for advanced degrees (at least an MBA actually applies to making money and is not totally 'abstract') because they 'can't find a job'. I tend to think that if one falls in the top, narrow margin of people earning over 100K then they also must have internal, personal resources that got them to that place that doesn't include having an MBA. Experience and knowledge earned on the job would seem to be a much better bet for any employer wanting to get the biggest bang for their buck. Proven success. It could be argued that going back to school in lieu of working in this economy might be seen as a bad decision, sticking your head in the sand and defraying the inevitable.
@PAM, that personal network of people you know to get ahead is forged best in business school where other talented students are (assuming you go to a good b-school)
Would you rather network with entry level people or people who already have management experience?
@Pam again. If you aren't on a career track that will pay you $100K w/o going to grad school you should switch careers in the first place. It's easy to go from $90-$140 after an MBA but going from $60-$100 is much harder
Over the entire career of entrepreneurs, does the income level out? In other words, the income for those w/MBAs rises at a point but over time, what's the difference for the earnings for both groups over a span of say 20, 30, 40 years? I am wondering the extent to which time in the work force sans an MBA achieves comparable results over the life time of a career.
Anecdotally speaking, there is a backlash in many tech companies right now against the "MBA mentality". This is the idea that you can learn general business principles and then apply it to any environment, treating the output as just widget X rather than widget Y. For example, take control of a motorcycle company and run it without knowing how to ride a motorcycle. Carly Fiorina was the poster child for this. Add that in to the glut of MBAs being churned out right now, I think you're better off coming in strictly from the technical side.
I can see this. I was actually at a B-school event tonight and referenced the graph in this article. The sentiment was that in the case of a Bill Gates, the MBA is not necessary but for most others and MBA has advantages that can't be gotten in the workplace alone. Also, that since MBA students come in after a few years in the market, they come out well prepared to assume advanced roles and earn higher income than those who do not . So, basically, what the graph indicates.
MBAs are a confident group. I can see how they'd have the idea to apply business models to everything, turning the world into widgets. Your motorcycle example is a good one. I don't know if I'd turn to technology as the alternate though. I'm thinking coming from a more humanistic perspective is preferable because you retain a focus on human beings in the process of designing models. To the point of technology, engineers do this when designing buildings, cars, prostheses, etc. Hmmm... at its core, technology is artistic, inherently creative. Is this what you mean?
It is stupid to talk about a "MBA" as one thing, just as it is stupid to talk about a "JD."
The fact of the matter is over a thousand schools grant MBA's. Do you think going to University of Phoenix of your crappy local college for a MBA is any comparison to going to Harvard, Duke, Darden, or Stanford?
Of course it doesn't get you a job automatically–it gets you a network of other businessmen and women from that school, as well as access to career services for firms targeting that school for recruiting.
This is probably the single most important comment that could be made. Quite frankly, an MBA that is NOT from one of the top ten (or 25, if you're feeling generous) programs will probably not open that many doors. Sure, the networking may be worthwhile, but for that, there are plenty of professional networks and boards for the working professional that offer similar opportunities.
For those that claim that going to a top 10 (or 25) school would make a difference if an MBA is worth its price, the recruiting requirments for the top 25 schools are such that one would already be making significantly more than the average college educated work force so the opportunity cost of not working cost more in addition to the school costing more. The only clear advantage for people not working in finance is that you meet and have the opportunity to build a network within this community that may give you an advantage in raising capital if needed. But this can be done other ways at a lower cost....
I have an MBA from a decent schools but not a great school. It was a lot of work and a great education.
It has not opened any doors for me at all – but the education has been valuable. I learned a great deal. As far as my ability to think critically, the advanced education makes a huge difference.
If you are looking to go to graduate school for the purpose of getting a great education, go for it. If you are looking for "doors to open" and big dollars stick to a top 20 school, or you will be very jaded with the degree.
It is a slow grind with a second tier MBA. The same can be true with a JD.
Yes. Having an MBA from a top school opens top doors. Recruiters target certain schools. This is really a bad situation bc it means the overwhelming majority of people who seek an MBA must do so purely for the benefit of gaining new skills in an educational environment. Otherwise, it's not such a good investment.
This is a really bad message for all the students who are told they ned college educations to do Job X when all they really need is skills training that can be had for a much lower cost and a less substantial investment of time.
An excellent point.
I attended a "top program" and can tell you that many HR managers could care less when they speak to you. They themselves are just looking to narrow a field for salary that they most likely have already determined, and it's usually a very low end for a new hire. Most of the secondary interviews with the person who would have been my "boss" results in me realizing that the person is threatened by my credentials and won't hire me since they know I would surpass and replace them. That's the real state of the job market. If you aren't working already, you're settling eventually no matter what degree you have or where you earned it.
There is a difference in the JD though.
The JD offers a unique skill set, because once you graduate, you can sit for the Bar Exam, and then you can practice law. The education in law is also quite unique, many top firms like BCG and McKinsey, recruit JD's as well (from good schools) because it is a different skill set and analytics.
For those in niche fields like patent law, the education along with a background in IT, bio, chem, or sets of law like import/export, patent, transportation, etc – merely having the JD, can be worth it. For accountants with a CPA, the ability to do taxes and then represent a client in an audit, can also be incredibly valuable.
I got my MBA at a small Catholic University in the evenings while still working. My employer paid about 2/5 of the cost and gave me a promotion and bonus upon completion. The degree paid off financially in less than 2 years after completion and is on my resume forever.
I am therefore biased toward this approach over a full-time MBA strategy, but if you are young and don't have a family to support (can afford not to work) then the full-time strategy works too.
Completely agree. Earning mine in the evenings now, will graduate within one year. Second-tier school, consistently ranks in the 60s by numerical rankings. It was funded by Post 9/11 GI Bill and employer reimbursement. My outlay was less than $10K. I received a promotion recently with 30% increase, and my first potential for a bonus. It was clearly to my professional advantage to go this route. My only advice is to make sure your significant other is on board- its a big time commitment away from that special someone.
A MBA diploma is a good auxilliary to have!
You are certainly right. A Turkish chidhood friend of mine was the worst student of the highest ranked Turkish University in Mechanical Engineering. He spent his time (with his pocket money from his pa) to collect and put together car parts, play around diffirential gear systems and filing away engine cylindirs rather than attending his advance math courses. Years later I heard that he came up with something called 4×4 or four wheel drive.
Entrreprenuer to me means private sector business and mostly small to medium size types of businesses. In large Icorporate environments (IBM, Exxon, etc) an MBA probably helps. But in a 100 employee firm where the successful business owner wears many hats and may not have an MBA or even any college education and still runs the business. Going up the Corporate or government ladder, an MBA may opens doors but those employees or future corporate executives are not entreprenuers. I have known out of work MBA holders to strike it from their resumes because they are overqualified as an MBA. The undergrad has a better chance to land a job in this market. MBA not worth it.
With 53% of recent graduates underemployed or unemployed, the whole notion of the value of any degree is getting more discussion than ever. I suspect everyone is going to start thinking twice (or three times) before they "invest" 10s or 100s of thousands of dollars in a 50/50 proposition.
For entrepreneurs, I agree an MBA may or may not be worth it. Because you're either an entrepreneur or you're not. I don't think that is something that can be learned. I for one am switching careers and have found my MBA degree to be quite fruitful on a personal and professional level.
For my sister-in-law, the MBA meant going from earning significantly less than her husband to earning significantly more. Win-win all around.
Appearing on the chart – "MBA paying dividents"
Perhaps CNN might try hiring editors who have successfully completed their high school English requirements.
I'll go for my MBA, but wait a minute. Does this mean I'm stuck working the 9-5?. NO THANKS, I'll stick with my own small business and work the hours I set, 11-9, sometimes I open, sometimes I don't and hit the beach. Being an entrepreneur has it's perks.
Most small business owners work substantially more hours. Working 9-5 would be a luxury for most of them. People who work a 9-5 can go to the beach too. It's called paid vacation and if you work for a good company, it is amazing.
I earned my MBA in 2008...the jury is still out for me...
I earned mine in 2009 and have been trying to change my career to no avail. It would seem an MBA without experience(if you're not an entrepreneur) isn't worth all that much. Of course it doesn't help that my preferred industry is Finance which just happened to be the root cause of our recession.....I'm thinking of going the accounting route and getting my industry experience there. It would still be a hell of a lot more satisfying(and better paying) than my current insurance gig
I am an entrpreneur and the only reason I am getting an MBA is to expand my education. Getting more educated has never hurt anybody AND will never hurt anybody.
I'm confused – I worked and earned my MBA in just over 2 years. What is this nonsense about not working to achieve an MBA? – I'm on to the next article.
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Individually it may pay [sic] 'dividents' but MBAs are HIGHLY overrated and overcompensated for what they contribute to a company or start-up compared to engineers, designers, and marketing folks with masters in their profression.
Hear, hear. And they often create a "cool kids" clique which dismisses the skills of the others to the detriment of the overall team. It also creates an "MBA ceiling" which anyone else, no matter what their skills, can't elevate beyond.
"Dividents" and another 'scholar' above mentioned he/she got "A MBA". Soo....A MBA pays dividends. Hmmm.
Sorry, my own correct spelling got in the way..."A MBA pays dividends" is what I meant to write above. And I don't even have one.
Just figured out my computer keeps correcting this. It refuses to spell it incorrectly. It is a Mac. Oh, yeah, Steve Jobs dropped out of school. So did Bill Gates...perhaps entrepreneurs don't need "A MBA".
I really enjoyed the article. Another aspect not covered in the article is obtaining your MBA right after your undergraduate degree. I teach graduate courses and don't see the benefit for recent grad's to enter the MBA program right away. There is not a sufficient level of real world work experience to apply to the program at that time resulting in their not getting as much from the program.
hows come the NBA you guyz are talkkin abut isn't on TNT? I be lookin for it on my local channels on de TV.
If you get your MBA while working, then you would remain on the black line until shortly after completing your MBA and then begin to see a steeper slope for when the MBA begins to pay off. Been there no regrets and no one can take my MBA away from me.
Getting an MBA directly after an undergrad or from an on-line college and expecting the same ROI as someone with experience who goes back to an actual school at a top-50 program is absurd. I can tell you as someone who is involved with hiring professionals, a MBA graduate date of 2 years after a Bachelors is looked better upon than an online MBA, but a MBA after 5-10 years of Post- Bachelors experience carries a lot more weight than either of them
A MBA is what you make of it, you can either utilize it as a tool to further your knowledge, experiences, and networking tools and it can be worth it; or it can be just another piece of paper that means you paid for a piece of paper.
Personally, after 9 years post BS in Engineering (and 15 doing Product Development), I'm going back for an Executive MBA from a top 25 school starting this fall. For me the ROI appears to be extremely positive.
Good luck, and an EMBA from a top 25 school is indeed a great route. You're right about expected ROI – folks who have a degree from a top school do earn more, and controlling for school, having work experience contributes to a higher post-MBA salary, at least in the first few years.
The data are pretty clear – going to a top school like Duke, NYU, Vanderbilt, or Stanford (or the like) conveys a huge career advantage. The next level (e.g., many state schools) also pays quickly for the majority of students. Avoid the for-profit online scams (Phoenix etc.) like the plague.
Sarah Palin has no edumakation at all. And looky how smart she is !
I wanted to get into NBA. But I am only 5ft 5".
An MBA might be a ticket to help get a job, but it definitely won't help you keep the job or get promoted. Performance is key. Today, Master degrees are the norm rather than the exception. When I sit on position hiring review boards, 90% of the applicants have Master degrees. The degree and school might matter for an entry level opening, but it definitely doesn't matter for mid to senior level jobs. It's performance.
Spot on Dave – I wrote the same thing.
I will agree that a college education is the insurance policy against economic downturn. If you in your late 20's or early 30's its worth it but if your close to or past 40 your better putting that money in deferred savings because you are not going to get hired to some hot shot job unless you uncle or dad runs the company. after i earned my computer science degree I looked into Wake Forests' program were you can get you JD and MBA on the same track back in 2007 but decided the 60k it would cost would be better invested in rental property and five years later 15 houses paying rent i think i made a wise choice.
Why spend two years and $100,000 when you can just download The Bond Villain MBA?
The Bond Villain MBA Vol. 1: Casino Royale, Goldfinger, Moonraker, A View To A Kill and More: Kevin Patrick Leech: Amazon.com: Books
Speaking strictly for myself, I can most assuredly say that my MBA from Yakult University has been the single most important ingredient to my success. It would have been impossible for me to achieve the high levels of fame and financial success that I have without my advanced degree. My prowess in the business world is legendary. That you so much, Yakult! Go Swallows!
Speaking strictly for myself, I can most assuredly say that my MBA from Yakult University has been the single most important ingredient to my success. It would have been impossible for me to achieve the high levels of fame and financial success that I have without my advanced degree. My prowess in the business world is legendary. Thank you so much, Yakult! Go Swallows!
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Having paper is important and I encourage people to pursue education but accomplishments, communication skills and emotional intelligence is what defines successful people – so the paper enhances a resume. Lots of poor perfomers with degrees and lots of successful performers without degrees.
I am a MBA Student at Webster Univ in SE Asia and I write an MBA Blog at http://www.MBABlog.net – I thought this was GREAT Advice and will link it for my next post. Thank you
College just teaches you how to learn and where to look. Whether or not you apply it is up to the individual.
- 3 time college dropout making six figures.
Amen, brother
..."considering the degree typically requires a two-year job hiatus at a full-time program" – since when?! I went for my MBA in two years while working, I'm sure the vast majority of Americans do, as well.
I really found this article quite interesting as well. Funny, I was taking a break from writing a paper for one of my EMBA classes. I was actually thinking this evening if all the work I am putting in will be worth it.
Couple points:
1. I work in corporate America, as well as I am an Entrepreneur. I have found that after 3 months the training I am receiving in my EMBA classes is both beneficial in my professional and Entrepreneurial careers.
2. Many people are downing a degree from University of Phoenix. I can tell you first hand that you truly earn a degree from UofP especially if you attend one of the local campuses. I cannot speak to online. I attended a state college for 2 years then UofP to finish my degree. I learned way more at UofP then I ever did at the state school.
This being said I can only hope the next 13-18 Months are as fun and beneficial as the first three.
that graph looks real scientific...
MBA = Mediocre, But Ambitious
I have said for some you should never hire an MBA to run your company. It's the surest way of driving it into the ground.
MBAs all sound alike when you listen to them talk. Sure, they talk about free markets, but then the next words out of their mouths are how to get the taxpayers to foot the bill for their incompetence (ala Goldman Sachs, Wells Fargo, Bank America, AIG and the host of other incompetents).
I have a cartoon which shows two guys talking at a bar with the caption reading:
"I'm incompetent and I have an MBA to prove it."
That about sums it up.
You're right. Professional endeavour is different ball game. Mitt Romney made tons of money cuz he had real talent. He probably would've made that much money without JD/MBA.
Mitt Romney made a lot of money because he was also born into moneyl...being born rich with lots of connections helps more than a degree.
Hey Dinesh – Playing "Survivor" during our first year in "Club B" made it worth every penny....
Seriously, an MBA from a top school (and there are 10 schools in the "top 5"), is absolutely worth it in terms of the enrichment, experience, friends, network, and yes, income security and career options. Getting a top MBA was a major inflection point in my career, and opened many doors (e.g. top consulting firms, private equity, etc...)
Looking back on my 35 year finance career I feel stronger than ever that an MBA would not have served any purpose over and above the BA I earned in combination with professional certifications and licensing I obtained after graduation while working in fortune 200 corporations. It has always occurred to me that the value of the MBA is the professional network and resources you can pick up while at school all of which can be obtained through work experience(unless you have your sights set on being a "hedge fund manager"). Thanks to those professional certifications and licensing I earned I left the corporate world over twenty years ago, started my own business servicing nothing but small businesses and get a chuckle every time one of my high school educated clients hits it big and sells out for a fortune to, you guessed it, investment companies run by MBA's. More times than not the buyers have over paid for the profits they're getting and the operation promptly begins to get mangled as management furiously tries to duplicate the results (using classic group corporate think) the founder was able to achieve. They are never able to duplicate the bottom line % but they are sometimes able to achieve sales growth through additional investments and mergers, that is until they sell it off to the next round of MBA's.
An MBA by itself means nothing, just like a JD by itself means nothing. One has to be willing to do what it takes to succeed. MBAs should be a goal for those that have a speciality or technical mastery. If the goal is focused on a particular industry/ vocation one has experience in an MBA can help. If the goal is to get the MBA and see what happens, then thats bad news.
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With the economy being what it is today, this really is a conundrum for me. I have thought about going back and finishing my masters, but I am not sure it would be worth it in terms of the debt I would take on. If I knew my company would increase my salary when I was done, then I would certainly do it, but fewer and fewer companies are doing that now-a-days. I posted an article earlier in the month about this very topic, http://www.mbaalliance.com/is-an-mba-worth-it/
Feel free to give it a read as well. Thanks for the article and I will check back to see some of the quality comments that are coming in as well.
I'm a business owner with a PhD and wondered whether earning an MBA would help as well. Its a great look on your bio and useful when raising capital, but investors are only interested in whether you're capable of making money. As for applying for jobs, people with graduate degrees definitely have to appear less educated (less threatening) in this economy.
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As a current entrepreneur and an MBA student, I can answer from my perspective NO. An MBA is not worth it for an entrepreneur unless the program is specifically tailored for entrepreneurs. The program I am enrolled in is general, focused on management strategies. Right now, I hear a lot of theories but no applicable information. Possibly a waste of my time and resources.
-Leonard Wilson, Jr., author of My Flexibility Manifesto available on Amazon
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