I’m an entrepreneur. The last time I was an employee was in 1983. So what did I get from my MBA studies?
It wasn’t about earning power. I quit the fancy high-paying MBA job I’d recruited into just a few weeks after graduation. I went back to the consulting firm I’d worked with while I was at business school, before I graduated. And I was self employed less than two years later, and I’ve never worked for anybody else since then. I was an employee of the company I founded and owned.
So was it worth it? Yes, many times over. Because of business school, as I developed my own business, I had a general idea of all the parts and how they came together. I knew enough about finance, accounting, marketing, sales, and administration to do it all myself in the beginning. Later on, as the company grew, I had experience and some knowledge about each of the key functions in the business.
Nobody taught me entrepreneurship. I didn’t learn that in school. What I did learn, though, was enough about business to make starting, running, and growing a business conceivable. Maybe I would have made it anyhow, but I doubt it. Knowledge is power. And it gives you the confidence to take risks and move forward.
Is the value of an MBA degree the income with the degree less what it would have been without the degree, less the cost of the degree, and the earnings sacrificed while studying? What’s education worth? Do you measure it in salary? The value of studying literature is the earning power gained? Fine arts? Philosophy? What about business or engineering?
I don’t think so.
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The networking connections are one of the most valuable benefits of an MBA. Five to ten years down the road these people will either be running their own businesses or have high-level positions in large companies.
What a great blog. Mr. Berry hits the nail squarely on the head. No one can be “taught” entrepreneurship…it is either in your blood, or not. Like Mr. Berry, pursuant earning my MBA, I started my first company and soon found “fighting for daily sales” was never captured in my AACSB curriculum.
My hat is off to you sir.
I completely agree. I faced the same questions when I decided to get my MBA (recently completed), in parallel with continuing to run my business. I haven’t worked in a job in ages, and don’t plan on starting, but I still see the MBA as having been very valuable to me, in terms of rounding out my knowledge base, and also giving me access to a great support network in the form of my classmates, the faculty, and the school alumni. Not to mention the learning that you get from the experience of others in the program (students and faculty) – I think that’s the real value of the degree.
Danny, your words: “rounding out my knowledge base” is the key. Well spoken.
Thanks, Neil! I really believe that. 🙂
I’ve been thinking about this recently. My MBA is just 6 years old, but already it’s outdated compared to what students are learning now. What did I get out of it? I didn’t go to a highly connected school like Harvard, so it wasn’t connections.
But you’re right; I learned how to put it all together. My studies revealed to me that I had the ability and drive to be an entrepreneur; didn’t know that before. And while social media wasn’t yet born when I studied marketing, I got a solid foundation that helps me to this day.
Statistics and finance? I still don’t use ’em!
Their is zero correlation between getting an MBA and being successful. None. Nada. People who want to start a business would be much better off paying $70k to the business owner they respect the most to work for them for two years and learn everything they know from them.
The majority of successful people have degrees. I have been self employed for over twenty years without a degree and made decent money around 55k. However, I went back to school after the recession killed my business. I finish my finance degree this spring at an unknown school but I what I learned found it very valuable. If I had only known what I know now I would have been much more successful. My grades are good enough to get into Harvard and they offer a Masters in entrepreneurship. I am considering going there if I get accepted. BYU is my second choice. There is so much to business that I never understood and yes you do use algebra and calculus everyday whether you think you do or not.
The majority of successful people also have shoes, but shoes did not make them successful, either. Correlation is not causation. As explained in other places, people who are highly motivated, who are told school is essential, will go to school. But if they hadn’t, could they still be successful? 25% of millionaires/billionaires never finished college or didn’t even go. If school were essential, that couldn’t happen.
Your statement, “I If I had only known what I know now I would have been much more successful” doesn’t demonstrate that people should go to school. It demonstrates that you, and everyone else, should be life-long learners and make sure you know what you need in order to be successful. You could have learned everything you needed about finance, etc., while running your business.
Having failed without good information/training, you are now motivated. That doesn’t make school the answer. If you would have simply read “Financial Intelligence for Entrepreneurs” – Loehr, Schwartz, while you were running your business, taken a few workshops on things like this, gotten a mentor, and most importantly, joined a business advisory group full of other owners, you would have learned everything in less time then it took you at school. And at school, you learned things that are no longer being applied or are theoretical – in a business advisory group you would learn things that actually matter every day.
Read this as to why school doesn’t do it for you or anyone else. http://bit.ly/1vc0v9b
FYI – the only business degree I think makes sense would be from Harvard and a couple other schools. And it’s not the degree or the education that you should pay attention to – it’s the network you can connect with there. You’re paying big bucks to become part of an elite network – worth it if you can do it. But you’d get better “schooling” in a business advisory group and by finding a business mentor you admire.
Wow, Chuck, I’m impressed with your high degree of certainty. You’re really sure. Others might have taken this issue as a matter of opinion, various shades of gray. Life must be a lot easier when the truth is that clear. You’re welcome to disagree with everything I wrote in the post, but hey, I might know a bit about what my MBA was worth to me, right? Or is that also a “None. Nada?” Tim
I’m not relying on my research, nor am I saying that you don’t feel it had intrinsic and intangible worth to you. All I said is that there is zero correlation between getting an MBA and being successful, whether financially or in any other way. That doesn’t say you don’t personally and anecdotally feel it helped you – that’s great.
There is no way I can or should argue with your personal experience. But you didn’t ask “Do I believe MY MBA was worth it?” You asked it as a global question for all entrepreneurs, then proceeded to use your anecdotal personal experience to prove it.
But globally/statistically there simply isn’t a shred of evidence that says an MBA is a key to success. You might have found it personally valuable, but the next guy might have found going out and getting a job under the right mentor the key for them. Or starting their own business, etc.
The most stinging criticisms of the value of an MBA are actually coming from within the establishment itself, including the Association to Advance Collegiate Schools of Business – they don’t see the value.
And we should take a look at successful entrepreneurs from the local multiple car store owner I know who never finished high school, to giant corp. moguls (Ray Kroc didn’t finish HS, Steve Jobs dropped out after one college semester, Bill Gates had no plan of study and dropped out his soph. yr, my father’s best friend made millions and never finished high school, etc.)
These are all anecdotal, too, but those who have tried their best to draw any correlation of any sort between an MBA and success have failed to do so and find it to be simply an unnecessary expense. And again, the most stones are being thrown from inside. As Ronald Burt, Univ. of Chicago business professor says: “I have never found benefits for the MBA degree. Usually it just makes you a couple years older than non-MBA peers.” And I would add $70-$100k poorer.
The education industry is the next bubble that is about to burst – way over-priced and over-valued, with almost none of the promised impact. Just Google “What’s an MBA really worth?” – that particular article in Business 2.0 is very good. So my certainty doesn’t come from anecdotal personal experience, but from overwhelming global data from those w/ no dog in the hunt.
Here’s other empirical data showing there is zero correlation between an MBA and success of any kind. It’s about the person, not the process. One of these shows that lifelong earnings of a HS grad who went to work right away while his best friend went to college. The HS grad had $1.3 million in the bank at 65 while his college friend had 1/3.
It’s never the process that makes us successful, or a great idea. It’s the individual’s personal commitment to being successful that is the singular key. And that commitment will cause them to do anything to learn and do whatever they have to in order to be successful, with or without college.
Hi Tim, I’m going to weigh in on this, and I have to side with Chuck.
I have an MBA, and see the experience as having been valuable, in rounding out my knowledge and expanding my network (as stated above), but the truth is that I think the MBA ultimately contributed very little to my success or abilities.
There is a huge body of research agreeing with Chuck’s assertions, ranging from Pfeffer’s research showing that there is little or no correlation between having an MBA and any other measure of success, and other indicators that any possible correlation is probably more to do with a selection bias (the people that business schools, especially top business schools, will admit are the people that would be successful with or without the business school, and the business school is really just taking credit for the abilities of their students).
You know how it is – ultimately if we do well, we end up on the school’s brochure, but if we don’t, there won’t be any acknowledgement – that’s what psychologists call a confirmation bias. 😉
I’m not saying that my MBA was a waste of time – it was certainly valuable, and a good fit for where I was in my life. But I can’t honestly attribute any meaningful proportion of my success to having attended business school or to holding the degree.
I don’t think you can judge the value of the MBA based on global stats because the value varies according to the individual/situation. I think, the value of the MBA to the individual depends on a number of factors, among others, the career path that they want to go down, the skills they need to develop and their preferred learning style. In my case, the MBA was very worthwhile. I am a management consultant with a big firm and I believe that my MBA was pivotal in my career success. First of all, as a consultant, the credentials especially from a good b-school contribute to branding. I also appreciated the learning experience because it provided the opportunities to experiment with leadership styles and working effectively in teams. I build a good network and it was a confidence builder that expanded my comfort zone. I also happen to like and do well in the academic setting.
The names that Chuck is citing are, in my opinion, exceptional people who don’t necessarily need the credentials or the learning experience. It seems plausible to me that for exceptionally successful people, formal education’s role might be limited. But for the rest of us who are not exceptional, I think education helps us reach our potential. A number of studies that demonstrate correlation between that higher education and higher salary (and likely greater career success).
Interesting discussion … Chuck, Danny, I don’t know if this pushes the discussion further or not, but I wonder, do you see value in any education? I think my BA in Literature and my MA in Journalism were both as valuable to me as my MBA degree. I wonder what you’re defining as success, and how you’re measuring it.
Knowledge, understanding, exploration … opening up the mind … even just the satisfaction of knowing what the issues are …
Or do we measure it all in terms of lifetime salary, or net worth?
I still like BP’s summary, and the idea that this is an issue that you have to take on a case by case basis, depending a lot on who, where, when, and what you want from it.
But if you’re measuring education by money, then I drop out of the discussion. I don’t accept that premise.
Tim – I’m with you re: measuring education’s worth by money, but all the common defenses of it are in monetary terms. BP believes it, too, yet any study he can quote will have left out all the actual factors (delayed entry into the workforce, cost of educ., interest, etc.). The studies that factor those in show a negligible to negative impact of spending money on an MBA. But the myth continues, so this straw man does have to be addressed.
But my argument is that education is simply ONE possible process for obtaining the list of benefits that you and BP say you got from your MBA – personal branding, a learning experience, experimenting with leadership styles, learning to work in teams; a general idea of all the parts and how they came together.
Everything that you both listed could be learned through many processes. If someone wanted to pay me $75-$100k to sit under my tutelage for 2 years (or simply come to work for me and make money while doing it), I guarantee you they would learn all these things and much more, and come out much more well-connected than from Harvard.
So a formal education process is ONE POSSIBLE WAY you get what you need to be successful in life and make some money. But the rub is this – education institutions claim it is THE WAY – if you don’t get a college education or an MBA, you won’t make as much money, a correlation that no one has been able to make empirically.
So I’m not anti-education, I’m anti “education-is-necessary”. If someone wants to use the formal education process to obtain the list that you and BP described – great. But I believe that same list is available by many other means.
As a not so far aside, I personally do believe that MBA in particular now lags behind many other paths to success. When the concept was first developed it was 100% real biz people telling students what the real world looks like. Now it’s at best 10-20% biz people and overwhelmingly academics spouting theories. The best evidence it’s not working? The fastest growing discipline in colleges is the 1 yr “Entrepreneurial Masters”, which is bringing back real biz folks and cannibalizing their own 2 yr MBA programs. It’s a tacet admission that the MBA no longer equips people to enter the real world.
BP – my examples of famous people were only for recognition purposes – I can give you hundreds of people who succeeded with zero formal education. It’s never the process, it’s always the person. To use your analogy, I would say those few exceptional people could succeed without tutelage, whereas most of us would need to sit under the mentorship of someone else (or go to college, etc.)
Bottom line for me – life-long learning is absolutely essential to success, formal education isn’t. Being committed to making an impact in the world around us is essential, getting letters behind our names is not.
It’s ALWAYS about the person, NEVER about the process. If the person wants success and significance, they will get there by one of many roads. Formal education is just one road, but by no means necessary.
Tim, I absolutely believe in the value of education. I’m a little more on the fence about the value of *formal* education. In other words, learning constantly is important, and if a degree is a way to do that, then great. So I’m very pro-education, and I think education is very necessary, but getting a degree doesn’t make you educated, it just makes you more credentialed.
For a lot of people, they’re not really there to learn so much as to get a degree and specific trainings that they think they need, and I see really minimal value in that. At the same time, people who are there to really learn would be learning regardless of what they’re doing – so while I have a very high opinion of the value of education, I’m not sure how much of that comes from an MBA that isn’t incidental. A lot more people study literature because it just interests them (not many people will study literature because they’re expecting it to make them lots of money, so that keeps the pursuit a little more “pure”).
I don’t measure results by money, but I do think that there should be some correlation with money or career advancement with a degree that purports to teach subject matter relating to business; and I feel that this just isn’t the case.
Another great article I had forgotten about in Forbes – 20% of billionaires never stepped foot into a college.
And Chuck, what percent of the people who never stepped foot into college do you think would be happier, and better off, if they had.
Tim, forgot about this and thought I’d add it while responding to Deborah today – Quite a few bits of research now show college grads are unhappier at work than non-college grads. This is one from Gallup – http://bit.ly/1zayWO4
Great question, Tim. I work with biz owners in the worst slums in the world in Nairobi, Kenya. Every single one of them would be better off if they went to college vs what they experiencing every day in those slums. But it’s the wrong question.
Asking the question that way assumes something unique, special, magical about college that can’t be found somewhere else or some other way. I would rather ask the question this way:
“What percentage of people who have never had a chance to build a better life would be happier, and better off, if they had that chance?” To that question I would answer, 100%.
Some of them might find college to be the process that gets them there. Others would start a business in high school, drop out of college to start one, work for someone else who mentors them for years and encourages them to become life-long learners, others would do it a hundred other ways.
College is one process some people might use to become happier or better off. But again, the education industry wants us to believe it is the holy grail, THE WAY, to a better life and more happiness, and again, there is zero correlation between education and success – none, nada. The correlation is directly related to the individual’s desire to advance themselves and any opportunity the choose to do so.
Lifelong-learning and complete commitment to success are critical (personal traits). Formal education is not (process). It’s never the process, it’s always the person.
I feel that it is definitely about the branding, as previously mentioned. The degree has given my personal more credit, I have had promotions directly related to obtaining my bachelors in business management, and now the same for my MBA.
My current employer only has a hand full of the senior management staff who lack an college degree. The other directors look down on them or question them for not having the “learning experience” of college.
My MBA has directly impacted my salary, added to my personal brand, given additional credibility, and been worth the experience. One thing to note, I worked while earning my degree and have always had high ambitions.
I’m with Chuck in terms of principle. I do believe success is absolutely within the individual, and the means to drawing out one’s potential is also thus. Unfortunately, the term MBA has become a brand in itself. It is a major business and students are the customers. If indeed an MBA correlated to guaranteed higher salary, than ROI speaks for itself. Who wouldn’t get one? The fact is some pockets are not that deep and those individuals without the sheepskin, yet equally gifted and competent, are as Dustin D quoted, “looked down upon”? I have watched a company who’s stock went from $36.00 at its height to around $1.00. A typical top-heavy corporation full of MBA’s who sat fiddling in their ivory tower while their stores were hacked to pieces by stupid decisions that had nothing to do with reality. The culprit was something they forgot to teach in b-school: COMMON SENSE. That’s what the Kroc’s and Gate’s of the world had over formal education.
After reading all of these comments on the value of MBA vs if it is critical to the success of my business I feel that I have to side with Tim on this one. And my reason being is that my whole approach with my business before my MBA was good, clear understanding and I worked with the previous owner for 11 yrs. I knew the business in and out! After my MBA, I took it to a whole new level and yep you guessed it even more success. I gained valuable skills that I did not have or did not have so developed from “learning on the job”, but I was on both ends of the spectrum here and I can say from MY OWN personal experience my MBA contributed to enriching my skills and making my business more successful.
Oh and for the record, the previous owner of my company did not have an MBA!
Plenty of books in the library
I don’t need anyone to read to me in order for me to understand what i need to do in order to successfully be an entrepreneur and own my own business. It’s all right in front of us. Chuck Blakeman you give me so much hope thank you, sincerely. If the process is not done right then perhaps it’s the person who’s to blame. But if the person will scratch a lions eye’s out to win the mouse then i’m willing to bet he re-routed..he COULD’VE built a spear stabbed the lion in the eyes instead of damaging his nails or let the lion eat him:)Poor lion with no eyes, only a good CEO would come back to offer the lion a VP position, possibly Janitorial depending if the lion is trustworthy. Every person and process is different..their always changing and interchanging. All, my dreams DEPEND on FINDING an INVESTOR. An investor who loves inventions and nature. Option # 2..pull loans out like it’s no one business? Connections would be good right about now. Over in out..Fayetteville, Arkansas. 21 year old female with business desires and visions that blow 9 out of ten people away. I need advice on where EXACTLY to find investors. WHERE TO MAKE PROTOTYPES (GUESS IT DEPENDS WHAT U WANT TO MAKE). pLEASE I NEED HELP.
LOL – best comment in this whole string.
I hadn’t seen your second message when I wrote the first about your library books.
Have you made a prototype of whatever you are hoping to market? There just might be some Chinese company(ies) that would make one for you for a small charge – they like to do that to get the production later on.
I can’t promise anything, but try Victor Dawson – victor @ summitgroupintl. com . He’s a good friend and runs 3to5 Clubs for us in China . He has spent a lifetime making contacts with production facilities over there of every type and if someone would do a prototype, he will find them. But he will have to see that your product is worth his time to do this for a low or no charge. If so, he makes his money on taking a small percentage of the ongoing sales. Bottom line – if the product/idea is good, the money will come.
Kaci, getting investment is a matter of the team you put together and the product-market fit, because investors write checks now to make themselves money later. They bet on startups they think can grow and prosper and generate cash out for them later. Finding the investors isn’t the first step; first you generate the team and the product. Investors don’t evaluate your desire or commitment until after they believe in your team and your product and your market.
When you’ve got a team and a plan and you’re ready to pitch, the best place to start the search for investors is by registering at gust.com, an investment platform used by about 600 local angel investment groups, which is entirely free to the entrepreneurs who use it. Don’t sweat the details or format of the plan, by the way, just the guts of it. Investors won’t read your plan until after they’ve seen a summary, been interested, and then heard a pitch. If at that point they’re still interested then they’ll want to read the plan, so you’d better have it ready by then; but the plan is your screenplay for your pitch, mostly, until it becomes important when investors are actually interested and want to pour through the details.
Realistically, here’s where a bit of education would help a lot. Not the whole MBA degree shebang, certainly, but obviously, to do this all credibly takes some knowledge and experience (hmmm … does that sound like education to anybody else in this thread?). You don’t need an MBA degree, but you do need to understand who the investment process works, how to pitch, what makes an idea interesting to others, etc. Yes, you could get that in the library from the right books, that’s true. But for accelerating the process, I’d suggest you go immediately to the nearest Small Business Development Center (SBDC). Arkansas has an excellent SBDC program and I’m sure there’s one hear Fayetteville. SBDCs are in the business of helping you create a business. They offer courses and counseling in whatever dosage you can take — night school for a few weeks, one-day workshops, two-day workshops, individual counseling — at surprisingly economical prices. Since they’re funded by the federal, state, and local governments, they charge way less than competing resources.
Best of luck to you,
Well if your starting a business you dont really need formal education. IF you are going to work for somebody you will probaly need formal education.
As a MBA candidate in Canada. I gotta say its worth it… for myself.
Because of the networking opportunity, low cost for a internationally accredited program, tax deductions, and the career advice. On top of that I get to finish my accounting credentials at the same time. While opening doors in nonprofit, academia ect…
I will be able to brand myself, and network more.
IF you think just studying the books will raise you to the top it will never happen.
Its your ability to get along with others, learn, mindset,and hardwork.
MBA is the beginning and not the end.