Finance, General ramblings, Life, MBA, Thoughts

The Much Hated MBA Degree

There have been at least two occasions where I’ve gotten involved in a squabble with some people over the relevance of an MBA degree. One is a Physics major, currently enrolled in a Ph.D Program and the other is a Computer Engineer. I’m a little tired of defending this degree because most of the arguments that I encounter are uninformed and irrational. It’s become an inside joke to make fun of anyone who’s pursuing an MBA.

I have a unique background in that I studied Science in 11th-12th, then did law for under graduation and now, I’m at the brink of completing my MBA. So, when I talk about the merits of an MBA degree, then it’s not because I dislike Sciences or Arts. I don’t know how good the Indian B-schools are, to tell you the truth. They don’t appeal to me because I cannot comprehend the idea of having the school decide my courses for me. Everything is so fixed in the Indian MBA Curriculum. For example- There is a fixed time for attending classes all day long that only reminds me of my school days. Also, the Indian MBA system leaves little flexibility for full time workers. They are forced to quit their jobs in order to enroll into an MBA Program. I don’t know whether an average B-School in India offers specialization courses, but I think not. Even if they do, then there won’t be too many courses that you can choose from. Most of these degrees are focused towards “Management” or “Sales/Marketing”. And it is because of programs like these that people form faulty opinions regarding the MBA Degree.

I got my Bachelor’s from one of the top colleges in India, which is based in Pune. The faculty’s supposedly outstanding and the college boasts of a library that’s one of the biggest among all the Law Schools in India. Why is it that I ended up bunking all my classes and not giving a hoot about what the teacher was talking about? Surely staying away from home, the least I could have done was attend classes and complete my homework. The syllabus and the method of teaching made me sleepy. I was better off completing everything on my own rather than ask the professors, who were too high-headed. I don’t know if I studied only to pass exams or to really learn something.

When I compare this with my MBA Program, I find that I’ve learned much more. I don’t want to turn this post into an Indian-Education-System-Sucks kind of post, but I need to make a distinction between my level of interest now and my interest in studies during undergrad years. I’ve learned concepts about Finance and Accounting which wouldn’t have been possible had I not taken up this program. Very often, I converse with people who don’t have an MBA and talk extensively about the economy and the industry. I was surprised to see that what was so obvious to me about a particular issue wasn’t so obvious to him. And I don’t use words like “mitigate” and “diversify” and “asset” all the time.

There is a lot of difference between people completing an MBA degree in Finance and an MBA Degree in Marketing. It’s just my opinion, but I feel that most of the concepts that are “taught” in a Marketing degree are things that are of common knowledge and can be picked up by anyone. You really don’t need to spend two years of your life learning that stuff. Most of the times, when people talk about their dislike for an MBA degree, they base all their arguments upon the assumption that an MBA degree is synonymous with a Marketing or Management degree. Says an executive

“If you’re talking about a sales position, I’d have to say that the MBA is pretty much useless. If you’re talking about an executive position, an MBA is useful, but only marginally. The sad truth is that the training is just too theoretical to make any difference.”

I came across an article at BNET that’s as baseless as a column on celebrity gossip can get-

Finance

Course Description:
Examines the role of finance in supporting the functional areas of a company and fosters an understanding of how financial decisions create value. Topics include basic analytical skills, principles of corporate finance, functions of modern capital markets, and risk analysis.
Most Useful Skill:
How to read a balance sheet.
Most Useless Skill:
Understanding the history of double-entry bookkeeping.
Hidden Agenda:
How to exploit investors without getting caught.

I’m not very sure if the person writing this article even has an MBA. I was never taught “The History of Double Entry Bookkeeping”. In fact, book keeping is very easy. Even constructing a balance sheet is very easy. What is difficult is analyzing it. How many of you who are reading this article has heard about Modigliani and Miller? How many of you know about the Markowitz Portfolio Theory? If an MBA is that useless, then you should be knowing all of this. Also, there wouldn’t have been so much of demand in the job market for an MBA either. If the average starting salary for an MBA in the US is about $75,000/year, then it’s because of a reason. Surely, the person adds something that’s perceived to carry value to an organization.

Of course, this doesn’t mean that an MBA teaches you all that you’ve got to know. You can develop people skills and managerial skills only when you encounter real life problems. What the degree does do is give you analyzing tools that try to make the process easier. At the end of the day, it’s for you to decide if $100,000 and your time is worth it.

Advertisements
Standard

20 thoughts on “The Much Hated MBA Degree

  1. I’ve always been told that MBA = BMW. Screw what critics say, a masters degree is a masters degree. Mine happens to be in a technical discipline, but I almost did an MBA program myself

  2. actually most MBA in india are targeted towards finance degree and train people how to read stock market and trade…. 70% of the IIM grads end up doing this job either at wall street or dalal street…
    i wonder if it has anything to do with business in the first place.
    and no wonder the CAT has undue weightage towards number crunching.

  3. This is an interesting post. I think you’re right about what you’re saying. And I don’t think it’s only just with MBA. Any institute or course what so ever is completely fixed here in India. This is one of the reasons I’ve been against this system. I don’t understand the logic of studying something that isn’t even going to benefit me. Doing that till 10th grade is one thing but studying Chemistry and Physics can be very frustrating for somebody who’s completely decided on being a computer engineer. I totally believe that if I could have studied computers for these two years in my life, I would have been much more brilliant than I ever would be. This is the only reason an increasing number of Indian students are getting frustrated and committing suicides. I would have loved if you would have made this post into an “Indian Education System sucks” post because quite frankly, it totally does suck. We can say that we are more stringent and Indian students are more brainy than the others. But well, it’s not only being brainy that counts is it. One needs to be street smart as well and Indian education doesn’t teach you that. All it does is to teach you to mug up and mug up more. I believe that this is one reason because of which many brilliant people have ended up being nothing and many of those who don’t think and just study end up earning huge packages. The system needs to change completely..it’s only when though.

    Argh, Indian education gets me all emotional, angry and screwed.

  4. @Patrick, LOL. I like the comparison betn. an MBA and a BMW! Yes, a masters degree is a masters degree, else people wouldn’t be enrolling in such programs.

    @Ankur, Depends a lot upon your area of concentration. It has a lot to do with business and not just trading. People have such skewed opinions and it pains me to correct them. I don’t think that most of the MBA Programs are designed for “trading and dealing with stocks”. I find my friends who are pursuing an average, Indian MBA (Not IIM, ISB or XLRI) talking about Marketing and Management all the time.

    [btw can you update ur rss feed so that people can read the entire article from google reader]

    It’s set that way. I want the readers to just read the first few lines in the Reader and then come here to read the entire post. 🙂 Or, if you don’t like the first few lines, then you don’t need to. Heh.

    @Swen, So I figured. 🙂 Sounds very silly.

    @Carrot, Didn’t realize that you were only in your 1st year! You’re quite young. Hehe.

    @Ish, Yeah, I’ll do a post on “Indian Education Sucks” too. They only encourage students to mug up, which helps them develop stellar memories and nothing else. It should be more application based instead of being theory based. It only gets worse when you come to college, believe me. They don’t encourage innovative thinking either.

    You know what you should do? Learn what you like by yourself and don’t bother too much about school. Get enough grades to get into a decent college. You won’t learn anything much in college either. It comes down to your interest. That’s it!

  5. exactly we have created a hierarchy
    ibankers, traders, other finance, strategy & consulting, sales & marketing, and HR. its less about where ur aptitude lies and more about how good are your marks.

  6. @Ankur Aggarwal:

    In India, we definitely have. It’s quite pathetic having to choose from such a narrow number of courses. Here, I pick and choose whatever I like. Even if it won’t count towards my graduation credits, I can take it. So, I did basic courses in Marketing and Management and almost all the courses available in Finance.

  7. ruhi,

    this a far better analysis than i have read in most mainstream publications. even i gave up the idea of pursuing an MBA in an Indian b-school because of the same reasons u mentioned- i don’t want to go back to school. 17 (1 +10 + 2 + 4) years of mugging and learning by rote has been more than enough for me :).

  8. very well written! What you say about the system is true. but then there are a few colleges in India which have electives and have interactive courses! sigh that Indian system is so old fashioned.

  9. @Apollo:

    Apollo, Thanks 🙂 I know what you mean by mugging…we super retention powers thanks to our education system.

    @Sreejith, I wish there were more colleges apart from the Elite ones that would offer electives. People would get better bang for the buck!

  10. Well, I dont think that well informed people, in general, make fun of an MBA degree. I agree with you in that MBA should not be taken as a degree which gives you very profound hard/technical skills. It’s more of a giving you broad knowledge of business and basic analytical tools. It’s also a lot about networking and learning from your classmates who come from diverse cultural and professional backgrounds-especially in North American context.
    Yes, MBA in Finance is more like Masters in Finance for many people.

  11. @lallopallo:

    I agree. My grievance is against uninformed people who has unrestricted opinions. Generalizing MBA across the world is a mistake. From what I’ve seen, most B-schools in India suck big time.

    Again, I wouldn’t compare MBA with MS in Finance. The latter is quite theoretical and research based. It would be ideal for people who want to take up Ph.D in Finance.

    Btw, thank you for stopping by and commenting on so many of my posts 🙂

  12. Ruhi:

    As entrenched positions go, MBAs defend an MBA and those without MBA ridicule it. However to a cold rationalist, it strikes as fantastically presumptuous – and amusing – for non-MBAs to comment on the value of an MBA.

    On your observation about the Indian MBA, I have several thoughts.

    First, it depends really upon where one studied. And there is considerable variation to be seen between schools. The IIMs (I do not know anybody from or anything about the two recent additions to the pack) are generally very rigorous and the combination of the quality of teaching, the superb quality of the peer group, and the wide range of academic and non-academic choices makes the experience very good. Some of my classmates – and most recently, I – have had the chance to attend Universities outside India which confirmed this.

    Second, the IIMs in general set out to develop ‘generalists’ and not specialists. At least, IIM Ahmedabad does. We are allowed at best to skew our subject mix to appear as if we majored in strategy or finance, but in reality, the choices are constrained because the school aims to foster a general management mindset. Why? Because the school does not claim to train managers, but to prepare leaders. To non-MBAs, this sound like a cliché. However the difference is evident when one experiences one versus the other kind of person as a line manager! A manager keeps status quo, a leader challenges it and shapes alternatives. This may explain why some MBAs feel like misfits in run-of-the-mill corporate organisations. They were prepared for a stage of life which organisations only present them when they are much older. Result? Frustration and the often-flogged interpersonal skills failure. The latter by the way is universal criticism of MBAs, not just Indian MBAs. MBA = mediocre but arrogant.

    Third, the experience varies a bit depending on whether the school is a free-standing institute or situated in a wider University. Having seen the second context in later life, I can say both contexts are mixed blessings.

    Fourth, yes, it may be true as someone commented that many IIM graduates take highly paid finance jobs. But why not? What is wrong with applying the concept of NPV, whichever order of jobs one wishes to choose, to one’s own life? Some choose salary, some choose wealth. Incidentally the only mega-millionaire ($$$) from my class went into an unglamorous industry – sugar – and made a killing. So I am afraid considering that comment came from someone still studying for a ‘technical degree’ (from his blog’s ‘about’ section) I would be inclined to discount it.

    Besides there is an intake bias too. Engineers used to make an overwhelming % of the class when I was at IIM-A. Most people like their comfort zones; so many engineers gravitate towards numerical and structured fields like corporate finance. Some people like actively to leave their comfort zones. I did and some of my closest friends did too. To each his or her own, no?

    Above all, an MBA gives you choice. Like a few other graduate degrees. But like everything else, it is a tool-kit not a readymade professional ramp. It is what one does with the tool-kit that counts.

  13. @Shefaly:

    Thank you for your detailed comment.

    //However the difference is evident when one experiences one versus the other kind of person as a line manager!

    Now, not all managers are ‘line managers’. 🙂 A manager can be a leader to his subordinates and peers as well.

    //They were prepared for a stage of life which organisations only present them when they are much older. Result? Frustration and the often-flogged interpersonal skills failure.

    Agree 100%. I’ve seen it happening myself.

    //Besides there is an intake bias too. Engineers used to make an overwhelming % of the class when I was at IIM-A.

    Isn’t it funny that there are so many science students pursuing an MBA andsStill, I hear most of the criticism from people who have similar skills? 🙂

    //I did and some of my closest friends did too.

    Yes, I agree. In fact, I have jumped around a lot myself. Like you said, to each his or her own. It’s stupid how people find a need to generalize everything.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s