Category Archives: Business Education

What’s An Entrepreneur’s MBA Degree Really Worth?

Business Education

[Note: I posted this first on Small Business Trends … I’m posting it here too because this is my main blog. Tim]

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.

Beware of One-Size-Fits-All Business Advice

Advice, Business Education, Growing a Business,

Last Tuesday I had the privilege of taking 10 half-hour appointments with student entrepreneurs developing business plans. The idea was listening, talking, suggesting, and maybe helping with a thought or two. What a kick that is. No wonder I love what I do for a living.

I started each of these sessions with a warning about one-size-fits-all business advice:

would-be mentors and advice givers contradict each other all the time.  Half the time the advice you get today is directly opposite the advice you got last week. And last week’s contradicted what you were told the month before.

Everybody who’s been down a path to entrepreneurship thinks theirs was the right path to take. And everybody else should do it exactly like they did. Get angel investment, or don’t. Have passion, or a big market. Build a team, or lever up. Grow quickly in several markets at once, or focus on a beachhead. Do it like I did. That’s what we all say.

But you have to have the strength to do it your way, not my way. Listen to me, absorb, digest, take some of what I said into your plan, or not. But it’s still your plan. And your business.

Aside: My Tuesday last week was at the University of Notre Dame’s Gigot Center for Entrepreneurial Studies, which is one of the best such programs around. The Gigot Center makes me proud to be a Notre Dame grad (bias alert!), even though my time there was studying literature, not business. What they’re doing at the Gigot Center is all about good business sense combined with a uniquely Notre Dame vision. It begins with fundamentally sound business, but opens up to social business and family business as well.

(Image credit: Jen Tik, Flickr CC)

The Best Argument for Business Education…

Business Education

… is having a better idea of what’s going on.

  • It isn’t about making more money.
  • It isn’t about becoming entrepreneurial.

No. It’s about having a reasonable idea of the whole business, rather than just the specific function. If business education works — and I think we have to admit it doesn’t always — then you have some idea of what’s supposed to go on in finance, sales, marketing, product development, and so on. You avoid tunnel vision. You’re more likely to see the whole forest, not just a few specific trees.

I don’t think the MBA made me "entrepreneurial." I do think that it made being entrepreneurial easier, because as I struck out on my own, I had at least a general idea of the various functions, and what was supposed to happen. I didn’t have to guess what the buzzwords meant. The knowledge was enabling.

More money? Maybe, more likely if it’s one of the top few schools, but even there, a good opportunity costs analysis usually shows that people are not better off, on pure money terms, quitting good jobs to go back to school for two years.

More entrepreneurial? I doubt it.  It’s easy to argue that another two years of schooling is the opposite of entrepreneurial. And also that the qualities of entrepreneurship are hard to teach.

On Teaching Business With Business Plans

Business Education, Business Planning, ,

Remember that old saying about teaching people to fish, instead of giving them a fish? That applies to business planning as well: don’t give a person a business plan, help them do their own instead.

I’m in San Antonio Texas today attending the annual conference of the Association of Small Business Development Centers (ASBDC), where I did a workshop yesterday on using the business plan as a teaching tool. It reminds me how I got into this business planning specialty in the first place. It was because the business planning brings together everything that’s important in a business, from strategy to market to metrics to numbers.

All of which reminds me once again that what works to help people with business planning is to help them develop their own plan, to teach them how, rather than just to do a plan. What you want as an end result is somebody who can use planning process to run the business. It’s not about having a one-time-use document, it’s about planning over the long term, which means regular plan-vs.-actual review, course corrections, and management.

Keep it on the computer. Update it often. And when you need to show it to somebody, that document you print: that’s output, not the plan. It’s an image of what the plan was on the day that you printed it.

And, for teaching entrepreneurship, the business plan is a great way to give a student a full view of what it takes to start and grow a real business.

Is it Possible That MBAs, Like Wine, Need Aging?

Business Education, MBA, Weblogs,

It occurs to me that I’ve had many good experiences, with hires and colleagues and business contacts, with people who had MBA degrees and years of experience. And I’ve had generally bad experiences with young MBAs fresh out of business school.

You could guess the reasons. Arrogance and entitlement come to mind.

Maybe it’s a matter of seasoning or tempering that fresh knowledge with some of the battering that comes later. Arrogance and entitlement leave a lot of sharp edges that time and experience wear down.

I am no different. As I got older, I found that my MBA studies gave me a better vision of the whole business, the forest as well as the trees; and I was glad for that. I’m sure that it helped me in business and was worth its weight in money many times over. And what I got from the degree wasn’t a higher salary, it was the knowledge to make my way on my own.

On the other hand, fresh out of business school, I recruited into a fancy and prestigious position with McKinsey Management Consulting, and I fell flat on my face. I disliked them, and they disliked me. (I did a post on that mistake here). I hated that job.

I’ve heard that fewer than one in five MBAs lasts even a year in the first job after business school.

Do you think there’s a pattern there?

(Image credit: JakubPavlinec/Shutterstock)

Is Getting an MBA Wasting Time and Money?

Business Education, ,

What if the “is getting an MBA worth it” question isn’t really a matter of money? What if it depends on who you are, where you are, what resources you have, and what you want?

Penelope Trunk posted Why an MBA Is a Waste of Time and Money recently on BNET. She lists seven reasons, all of which are about how much money you won’t make if you stop your career to get an MBA. A couple are sad and true (an MBA doesn’t make you an entrepreneur, and doesn’t increase your earning power unless it’s from a top-10 school), a couple of them obvious, and a couple of them whimsical and interesting (it makes you look desperate and puts off the inevitable).

Penelope Trunk is a good writer and successful entrepreneur. She has a knack for bringing up real issues and she thrives on controversy. As proof of that you can try her own list of rants, or, perhaps even more telling, the titles of this list of her BNET posts. (Anybody who can post something on BNET titled Forget the Job Hunt. Have a Baby Instead obviously understands blogging, irony, and the value of taking a contrarian position.)

Her post makes me ask: how do you determine what’s a waste of time and money? Does education pay for itself in earning power? Is that what it’s about?

How many of the best things in life are a waste of time and money? It’s just amazing when you stop to think about it. Except – whoops – no, don’t, because stopping and thinking would be a waste of time. Instead, get to work. Earn money.

And what about the chart here, my attempt to draw the relationship between education and experience as you look at entrepreneurship? Isn’t there a relationship between education and experience, some substitution, but with the ideal a mix of both? And tradeoffs between the two? And a continuum, shades of gray, rather than black or white?

My answer: don’t do it for the money. Don’t do it if it’s a horrible sacrifice. Don’t do it if you hate school. Don’t do it if you can’t afford it. Do it because you want to learn. Don’t do it if you hate school. And a few other points summarized in Read This Before You Get an MBA Degree.

{Illustration credit: my drawing on a chalkboard by Studio Aramita on Shutterstock.com)

Entrepreneurship vs. Education Is A Trap

Business Education, Business Mistakes, ,

Today I’m shocked to find myself not agreeing with a TED talk titled Let’s Raise Kids to Be Entrepreneurs. With a title like that, what’s to disagree with? I’m embedding the talk here too, because I’ve done that on several others, and I’m not going to stop when I disagree. Still, it’s a damn movement now: why get an education when you can just be an entrepreneur instead? I hear it all over the place and it bugs the hell out of me. People acting like these are opposites. I object.

Let me refer you to the TED.com description of Cameron Herold’s talk:

Bored in school, failing classes, at odds with peers: This child might be an entrepreneur, says Cameron Herold. At TEDxEdmonton, he makes the case for parenting and education that helps would-be entrepreneurs flourish — as kids and as adults.

It’s a trap. You’d like to cheer for entrepreneurship as just doing things, as freedom from artificial restrictions like licenses and degrees, getting an idea and building a company. I’m all for that. That’s what it’s been for me in my life. But the very dangerous trap is to use entrepreneurship as an excuse for taking the easy way out of something that would be very much worth working for. Why study? Why work at school? Just be an entrepreneur instead. But first, the TED talk, and then I’ll continue my complaining about it:

http://video.ted.com/assets/player/swf/EmbedPlayer.swf

It’s a trap for two reasons: first, because it’s a cop-out, offering a rationalization for not educating people who struggle. Second, because it relegates education to job training. In both cases it reminds me of tracking people away from school the way they used to do in the 1950s and 1960s, directing the so-called “dumb kids” towards vocational school and job training instead of real school.

So about that first reason, the cop-out factor: In actual life you can’t always walk downhill. Sometimes you have to go uphill. If you don’t, you miss a lot. Baby turtles will walk only downhill after they break out of their shells and that way they either find water or die. Humans need to walk uphill sometimes too. Life takes work. You have to be able to bear down during the crunch times. And knowing how to read, write, add, and subtract is the actual daily stuff of the entrepreneur as much as it is anybody else. Take a look at the Kaufman Foundation’s Education and Tech Entrepreneurship, and you’ll see that in the cream of the entrepreneurship crop, successful founders are likely to be well educated.

And about the second: school, education, ought not to be evaluated according to real or imagined future income. For every self-made genius drop-out like Bill Gates or Steve Jobs there are a few million people stymied as adults for not having stuck with their education, not having done the uphill portions of it, when they were kids. Education is something some people have to forgo because of hard circumstances – struggling families, poverty, true disability – and that is a damned shame. Let’s solve that problem. And let’s not confuse their misfortune with the general rule that entrepreneurs armed with education are more likely to succeed than those who aren’t. And educated humans are better off in their whole lives for having had the luxury of learning to read, write, calculate, evaluate, analyze, and enjoy.

Jonathan’s 7 Extraordinary Moments

Back to Fundamentals, Business Education, , , , , , ,

Jonathan calls this collection The 7 Keynote MBA: How to Save 2 Years and $100,000. page viewA bit of an exaggeration, perhaps, but there’s certainly a lot of education here. And if some posts are great reading, this one is great watching.

Jonathan has collected seven of the best-ever videos about small business, small business marketing, work, and life, and put them into a single post.

It starts with Guy Kawasaki’s Art of the Start video, and goes on from there. That one and two others have appeared on this blog before. All seven of them are golden.

Jonathan calls them “seven extraordinary moments with seven great visionaries.” I agree.

The first one, Guy Kawasaki, takes the better part of an hour. The others are all 15-20 minutes.

Is Education Missing its Target or Just Aiming at the Wrong Target?

Business Education, MBA, Weblogs, , ,

I’d like to think that business education should be about education more than business. It should be about leadership, perspective, and vision, more than about analysis, buzzwords, jobs, and salaries. But is it? Or is that just the kind of high-sounding stuff we write when looking back, years later?

Rethinking the MBAI’ve seen two important pieces on higher education and business education in the last week, one questioning the idea of the MBA, the other questioning higher education in general. While the Harvard Business School writes about a glass half full in The Future of MBA Education, Seth Godin writes about what he calls The coming melt-down in higher education on his blog.

The Harvard post summarizes a new book called Rethinking the MBA, by David Garvin,  Srikant Datar, and Partick Cullen. It’s about six cases of well-known business schools (including Stanford, my personal favorite) revising their programs to deal with a changing world. In the interview, Garvin says:

Yet rebalancing from the current focus on “knowing” or analytical knowledge to more of what we call “doing” (skills) and “being” (a sense of purpose and identity) must occur. Business schools need to think innovatively about how best to use the resources available to them. For example, there are many exciting opportunities to engage alumni in the learning process.

Seth Godin calls his bleak picture “as seen by a marketer.” He predicts “meltdown” in higher education for five reasons:

  1. Most colleges are organized to give an average education to average students.
  2. College has gotten expensive far faster than wages have gone up.
  3. The definition of ‘best’ is under siege.
  4. The correlation between a typical college degree and success is suspect.
  5. Accreditation isn’t the solution, it’s the problem.

He makes several very good points. This observation seems all too true:

College wasn’t originally designed to merely be a continuation of high school (but with more binge drinking). In many places, though, that’s what it has become. The data I’m seeing shows that a degree (from one of those famous schools, with or without a football team) doesn’t translate into significantly better career opportunities, a better job or more happiness than a degree from a cheaper institution.

In both cases, to me, it’s about confusing education with job training and job placement. If you measure success by average salaries and job placements, then as a society you substitute job training for education. The target is growth of the person, not growth of the income.

I have to admit that I started thinking about getting an MBA degree when my dad showed me a newspaper story about MBAs getting high-paying jobs. So now years later, I write about education first; but for me it was about changing careers, from journalist to business.

That worked for me. I did change jobs. However the real value, as I look back, was in the classroom, what I learned, much more than the step up to the next job. Years later, what I expect from somebody with an MBA degree is a better view of the whole business, from finance to marketing to operations, human resources, and so forth. You might work in one functional area, but you have basic understanding of the whole, not just your specific part. And you have a sense of what business analysis is like, how and when it’s useful.

Or at least, that’s what I hope. I’ve also posted on this blog my thoughts on what business schools can teach, what they don’t teach, and questions to ask before getting an MBA.

MBA or Start My Business?

Advice, Business Education, Business Planning, MBA, Starting a Business

Question: I’m 35. I feel like I hit the rock bottom in my career path and I’m totally lost. Some people I know recommended getting an MBA. scales and booksOthers say it is a waste of time and money, since I am too OLD by the time I get the degree, and no one would hire me. Actually I know some unemployed MBAs around me. It is scary! So my question is, does MBA open a lot of doors? Or, should I just keep the money to start my own company?

That’s a tough one: MBA vs. start your own business.

If ever there were a good reason for business planning, this is it. Do that business plan first, to break your uncertainty down into more manageable pieces. Be honest about what you can sell, how much, and how much it will cost you. It’s not just generic start a business vs MBA, but rather, start this specific business, given this business plan, vs. MBA. That’s a huge difference. Are you hitting  the startup sweet spot or just dreaming?

If you come to me with some generalized idea of a new business, or looking for what kind of business to start, selecting from lists of interesting new businesses, then forget it. Do the MBA. Or don’t. But a vague general longing to start some business or other isn’t the same as wanting to start a specific business, based on your strengths and weaknesses and what you want to do, defined in a business plan that makes sense and indicates it is a viable business.

I suspect you emailed me because of my Read This Before You Get an MBA post on this blog earlier this month. And for your situation, I stick with some of the things I said in that post. Specifically:

  • Don’t do it for the money
  • Don’t do it if you hate school
  • Don’t do it if you can’t afford it

To your specific question, though, about an MBA opening a lot of doors: not necessarily. A lot of MBA programs include strong career resource programs that put a high priority on placing their graduates into good jobs; but some are better than others. Some times are better than others. I was 33 when I finished my MBA, and being that old was not a disadvantage at all. But times change. I had classmates at Stanford who were in their late 30s (a very few) and some thought their age was a recruiting disadvantage.

What worked for me, and might work in your case as well, was the MBA came at a time when I was bored and uninspired with the career I was in, and looking for a change.

But you also should realize that there are no guarantees. There are a lot of unemployed people with fancy degrees, and that includes MBAs. The degree is something you do for yourself, for your own personal growth, and not just to find a job. Or at least that’s what I think.

So do a business plan. Then ask yourself that question again.

(Illustration: Daria Filimonova/Shutterstock)