The MBA is a controversial degree. Critics of advanced business programs deride the degrees as expensive pieces of paper. Elon Musk once called an MBA “a bad idea,” arguing that anything taught in a classroom would be better learned by building one’s own start-up.
And yet, about a third of CEOs in the top 100 Fortune 500 companies have a master’s in business administration. They include Apple chief Tim Cook, JPMorgan’s Jamie Dimon and Microsoft’s Satya Nadella. The degrees don’t necessarily come from a top-ranked program either. Ajay Banga, former Mastercard chief and now head of the World Bank, earned his MBA from the Indian Institute of Management.
While an MBA is not a necessity for success, it can strengthen one’s understanding of how large organizations work and prepare students to lead them. MBA program benefits include workshops on leadership skills, networking opportunities, and high return on investment for those seeking to use the degree to switch professions or advance in their company.
An MBA is best viewed as an accelerant. Yes, many concepts taught in a classroom can be self-learned or acquired on the job — one could theoretically learn accounting, financial modeling, and marketing strategy on one’s own — but business students benefit from structured education in these subjects, under the mentorship of professors who have practical experience in these fields. Students have dedicated time to bounce ideas off experts, something not every job can provide when day-to-day responsibilities weigh.
Here are other unique benefits from an MBA program that real-life experience won’t necessarily provide.
You don’t have to reinvent the wheel
A professor once told me that the biggest benefit of an MBA program is learning from companies that have already failed so you don’t have to repeat the same mistakes. This is done by analyzing case studies, the cornerstone of most MBA curricula.
In the case method, students split into teams and are given a real-life business problem written from the perspective of a CEO or CFO. This might involve a tough decision such as which division of a company to cut, how to optimize a supply chain, or whether to buy a competitor. Students then study the case as homework and present their solution to the class. Professors challenge the students with pointed questions, rather than lecture, and press students to elaborate, just as what might happen in a workplace meeting. Finally, the real-life solution is revealed so that students can compare their strategy with how a company actually decided to resolve the problem.
The case method exposes students to common problems they might encounter as employees in a company or as founders of their own business. It gives students practice in handling these problems so that when they do occur in real life, they become smaller obstacles to overcome rather than large challenges that seem insurmountable. They also give students an opportunity to make mistakes without real-life consequences, which brings us to the next benefit of an MBA program…
MBA programs give students an opportunity to fail
Many MBA programs give students the opportunity to form their own enterprises and experiment with running their own business. When I was studying at Dartmouth College, for example, business school students launched their own food truck to try their hand at managing a dining operation and filling a market need. This allowed the students to apply what they learned in the classroom on a project where the cost of failure was relatively low. These types of projects prepare students to make executive decisions, work in teams, and manage finances so that when bigger projects with millions of dollars or more on the line arrive, they will be prepared.
MBA programs teach technical skills outside one’s area of expertise
Most business students, especially early-career professionals, enter an MBA program having specialized in one area, whether it’s accounting, marketing, or operations. While their jobs may have given them exposure to the work of their own departments, they may not necessarily understand how other divisions operate, which is vital for leading an organization.
MBA courses cover a wide range of functions in a large organization. Students will learn, for example, how to generate and analyze financial statements to ascertain the financial health of a company. They will learn the key ratios that analysts calculate to determine whether a business is worth an investment. They will also learn indicators that marketers look at to assess the success of an advertising campaign.
While all of these technical skills could be learned on the job or self-taught, MBA students can learn them faster and under the tutelage of professors with expertise. In fact, skills in accounting, marketing, and operational analytics are all typically taught in the first year, meaning students have the second year to experiment with applying them.
Finally, you might meet your next business partner in an MBA program
Many of the world’s top companies began as ideas tossed around between MBA students. Nike’s origins trace back to a paper that founder Phil Knight wrote in Stanford business school about the Japanese shoe market. Grubhub began as a venture idea pitched at a competition at UChicago’s Booth School of Business. Countless other founders began companies only after graduating from business school.
There is a reason why so many companies trace their origins to an MBA program: the schools attract students with drive and often a desire to strike out on one’s own. Many founders with business ideas may have a brilliant concept but just haven’t found the right partner. Business school is often the place to find one. If you’re interested in applying for an MBA and deciding on the right program, Crimson can help. Don’t hesitate to reach out to one of Crimson’s expert advisors. We can’t wait to meet you!