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Are MBA degrees a waste of time, money?

November 15, 2010

MBA degrees blasted as waste of money by critics and impacts of recession
By Oregon Tax News,

– Did you know that of the 50 best-performing CEOs in the world only 14 had an MBA?

Josh Kaufman, a 28-year-old entrepreneur and former assistant brand manager for Procter & Gamble (P&G), thinks business school is a waste of time and money. Instead of paying $80,000 to $100,000 to attain an MBA, Kaufman suggests self-education. In an interview with Poets & Quants, Kaufman stated that MBA programs are 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 Kaufman believes that MBA programs “teach many worthless, outdated, even outright damaging concepts and practices.”

Kaufman began working for P&G immediately after graduating from the University of Cincinnati. Nearly all of his associates and managers held elite MBA degrees. Therefore, Kaufman began reading textbooks, including the “Essentials of Accounting,” and “Competitive Strategy” by Harvard professor Michael Porter and “The Effective Executive” by Peter Drucker.

“After I went through the self-education process, I felt like a peer,” says Kaufman. “I was able to walk into a boardroom and hold my own with people who had graduated from Stanford and Wharton. It was very exciting.”

Kaufman left his job at P&G in 2008, and started a business practice that focuses on one-on-one coaching and consulting for $1,000 a month and created a 12-week online crash course delivered live and on video for $997. His website, PersonalMBA.com, features what he considers the 99 best business books that lay out all the basic principles of business and a community in which to discuss the ideas with others.

Kaufman is not the only successful business entrepreneur without an MBA. Earlier this year, the Harvard Business Review published its list of the 50 best-performing CEOs in the world. Only 14 CEOs had an MBA, and only eight of those were from U.S. schools.

So what happened to the prestige associated with MBAs? Many experts blame the economic crisis on the declining reputation of elite business schools. During the recession, applications to business schools significantly rose, but recently, a Graduate Management Admissions Council (GMAC) survey reported that 47 percent of MBA programs saw a decrease in applications, with 9 percent reporting a decline of more than 20 percent since 2009. In an effort to overcome the decline in applications, business schools began admitting a larger percentage of applicants in 2010 than they did in 2008, when the recession-era B-school application boom was at its peak. According to data compiled by Bloomberg Businessweek, a third of the top 30 U.S. business schools became less selective when admitting applicants to their full-time MBA programs in 2010.

Despite the decline of MBA program reputation across the nation, Harvard business school professors Srikant Datar, David Garvin and Patrick Cullen argue that the MBA program is not dead. In their recent book, “Rethinking the MBA,” the professors suggest business schools played a contributing role in the financial meltdown of 2008. They argue that too many MBAs graduates failed to learn the “importance of social responsibility, common-sense skepticism and respect for the risk they were taking with other people’s money.” Therefore, the professors believe that colleges offering MBAs should revise their curricula to be more responsive to the global economy and better meet the challenges that face the next generation of business leaders.

  
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Discuss this article

coffeetrader November 15, 2010

I agree with this article. I have recently read where now thanks to this current economic situation it is brutal. I have read that thanks to it, there are now 5,000 phds who are now janitors. I guess they are just waiting for the economy to turn around. It is probably going to be a long wait.
I am a small business owner. I do not have a MBA and I do not think I will eventually hire someone with such a degree. Because a “Kelly Girl” or a temp from another agency can do the same thing that a MBA can and not have huge egos.

Paul Benjamin November 29, 2010

George W. Bush hand an MBA from Harvard and failed at every job he ever did that didn’t require his family’s political connections.

Paul B Is A Douche November 29, 2010

Good one Paul Benjamin. You really proved your point with that comment. Thank you for enlightening all of us on the US financial crisis and the state of the global economy abroad.

^hah November 29, 2010

he’s mad you insulted his butt budy

Matt November 29, 2010

I think Josh might not be a credible source on this. He essentially has a business that has a vested interest in convincing people MBAs aren’t worth it.

Btw, I really don’t buy the story that he was a fresh grad, and he only needed to read a few books to go toe to toe with MBA grads. Keep in mind most business school grads already have 5 years of experience under their belt. I’ll take someone with experience over a fresh grad who has read every book.

Business school has never really been about general business education. If you go to business school, that doesn’t make you an expert in every aspect of business. It is good a turning out management consultants, not managers, not business owners.

Top business schools are feeder organizations for consultant firms and investment firms. Don’t ignore the fact that MBAs who end up in those places start at $110k/year.

ricky November 29, 2010

than what the degree use for?

Thorazine November 30, 2010

Master of Buriness administration …. hmmmm. Should not someone
who holds such a degree actually run their OWN business, rather than someone else’s?

Hardly mastery if they cannot make it on their own by their own initiative and money.

Jose S November 30, 2010

I agree, with this article to a certain extent however no matter how many degrees you have it still won’t guarantee you a million dollars nor a overnight successful business. Everything takes time and work regardless if you have a masters or MBA. Also just because you have an MBA doesn’t mean you should stop learning, a successful business person is one who adapts to the changes in the environment.

Michael November 30, 2010

There will always be the debate of whether any degree is “worth it.” That entirely depends on what your personal goals are. This author naturally will argue that an MBA isn’t, given his livelihood. But as someone who has an MBA and worked extensively in industry and for myself before going back to school, I can say first hand that it’s impossible to attain the same learning experience a decent MBA program offers from reading a few books. I just wrote a piece about it, in fact: http://www.michaelmusgrove.com/2010/11/23/the-value-of-an-mba-to-an-entrepreneur/

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