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 Kaufman believes that MBA programs “teach many worthless, outdated, even outright damaging concepts and practices.”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.