In the magnificent bazaar of educational investment, the MBA has long been the crown jewel; a golden ticket to corporate utopia that promises business savvy, status, and riches. But behind the slick brochures and cocktail parties is a reality check that many graduates only find out after their bank accounts have been drained to the last penny. The contemporary MBA has transformed from a technical business education to something that could be characterized as a great ritual of corporate conformity, one that leaves many questioning whether they’ve bought an education or just a pricey club membership.
Let’s go on a tour of the revered halls of business education, where students shell out a lot of money to learn things that probably could be learned from good books, actual experience, and less cash. The MBA phenomenon is an interesting example of how expectation and status can precede the actual value of education. As Mark Twain would have joked if he were talking about business education today, “I never let schooling interfere with my education” – a sentiment that rings pretty true when looking at what a lot of MBA programs offer in return for the investment.
We know where we are today from the history of business education. The University of Pennsylvania’s Wharton School began in 1881 and was the first formal business school in the United States. Harvard Business School followed in 1908 with the case method that still dominates MBA courses today. Both of these pioneering programs were designed to professionalize management during the industrial revolution and were a good concept. But during the 1980s and 1990s, business schools turned into something that some of their detractors today refer to as “finishing schools for capitalism.” Tuition fees skyrocketed, while the applied relevance of these programs increasingly became uncertain.
Look at the cost of financial education: An MBA program from an elite school India can cost ₹10 lakhs to ₹30 lakhs or more. This includes tuition, living costs, and most importantly, the lost wages from not working for two years. For this amount of cost, students get a generic set of courses that have not changed much, even though the business world has changed a lot.
Finance, marketing, operations, and strategy courses are taught mostly through theories and examples that are far from real business problems. Peter Drucker said, “Management is doing things right; leadership is doing the right things.” By this principle, one might wonder if two years and a lot of money spent studying management theory is really the best choice.
The debt of most MBA programs is a special kind of mental trap for graduates. When faced with over lakhs in loans, the dreams of starting a business or doing something of value are redirected to the need of a well-paying job right away. Companies like Goldman Sachs and McKinsey are not just good choices, but a requirement of loan repayment. This way, the MBA system does something amazing as it turns creative thinkers into workers whose single greatest loyalty must be to their monthly loan payments. The cost of the loans guarantees they follow the corporation’s line, especially when they might want to be more adventurous in their careers.
Consider Jayesh’s cautionary tale, a young idealist who entered a highly ranked MBA program to launch a green energy company. Two years and lakhs in debt, he now spends his days creating spreadsheets for a consulting company, rationalizing cuts in the type of firm he used to fantasize about launching.
“The loans don’t pay themselves,” he joked grimly like all the others in his position. His business aspirations are not lost; they simply have been deferred to some far-off future when he will be successful enough for such “risky” activities. The same opinion have been once shared by Zerodha founder Mr Kamath about ‘why his company, somehow didn’t employed IIM guys at the initial days of company, as those guys have different prespective about careers.
This leads us to an uncomfortable reality that business schools would not like to acknowledge: the overwhelming majority of truly revolutionary businesses were started by people who did not have an MBA. Steve Jobs, Bill Gates, Mark Zuckerberg, Elon Musk (who has economics and physics degrees but no MBA), Jeff Bezos, and others started life-changing companies without the assumed benefit of an MBA degree. Even Warren Buffett, who went to business school for a short while, has famously remarked that MBA schools teach a lot of things he has spent his life trying to forget.
Historical fact is that conformity; something business schools are particularly good at instilling, is actually contrary to real innovation. Harvard Business School’s Clayton Christensen, in his groundbreaking book on disruptive innovation that set the thinking in motion, explained that established thinking actually keeps people from seeing revolutionary possibilities. MBA schools, with their traditional courses and case studies, unwittingly instill a homogeneous style of thinking exactly when diverse thinking is needed most.
According to news sources from September 2024, top IIMs are encountering issues with campus placement. Aside from the worldwide economic slowdown, over-hiring following the COVID-19 outbreak is also blamed for the downturn. According to a report, all prominent IIMs, including Ahmedabad, Bangalore, Calcutta, Lucknow, Indore, and Kozhikode, are experiencing heat. Debashis Chatterjee, the director of IIM Kozhikode, was not concerned with placing everyone, but admits that some students may not get desired employment. Ankur Sinha, chairperson of placements at IIM Ahmedabad, was also allegedly concerned about a 10-15% drop in the number of offers from big global corporations.
Think about the worth of accomplishing something that is more than money. Two years of experiential education/internship in startups, established companies, or personal business gives learning that no school can provide. Benjamin Franklin got it right, “Tell me and I forget, teach me and I may remember, involve me and I learn.” A classroom, as nice as it is with whiteboards and PowerPoint, cannot compare to the intense learning from being actively involved in business work.
There have been new business school alternatives in recent years that cost very little. Services like Coursera and edX allow taking courses from the same professors at great business schools for free or a very low cost. Startups like Y Combinator offer rapid, experiential business schooling alongside helping people get real businesses off the ground. In addition, traditional apprenticeships are also becoming increasingly popular by which experienced business individuals train skilled people directly in the workplace.
MBA program supporters argue that the degree’s worth is not in what you learn but in whom you know and the endorsement it confers. This is a good point, especially for established programs, but it begs the issue of education’s efficiency. If the best benefit of spending lakhs comes from being accepted into an exclusive club and having a resume bolstered, do there not exist simpler ways of achieving these rewards? As someone would have wisecracked about business education, “The cost of an MBA is like the price of vanity – high in cost and questionable in value.”
For those who truly desire formal business education, the shorter and more specialized programs are a great choice. Special master’s programs, executive courses, and certificate programs provide specialized knowledge without requiring much time or money.
Some of the most vocal criticisms of the traditional MBA programs come from the organizations that these programs claim to ready students for. Many studies have confirmed that an MBA does not in fact have any correlation with an individual’s performance as a manager. Some companies observe this lack of correlation and have created their own training programs that are specific to their needs instead of using the general set of skills that are taught in MBA programs. Google, Amazon, and other top companies are placing more importance on proven skills and problem-solving abilities over degrees when making hires.
What would be more valuable for go-getters? Picking up particular skills that can be applied immediately. Creating actual businesses, even tiny ones, to learn entrepreneurship in action. Learning from other disciplines in broad reading rather than focusing everything on business theory. Having mentors who’ve accomplished what you wish to do. These approaches cost much less than mainstream business schooling but can have more practical outcomes.
Business life demands independent thought and questioning of the way things have always been done to create new solutions. The irony is that the schools that are educating business leaders might be creating the opposite, like debt-ridden individuals who take orders instead of giving orders. When we are facing a sophisticated business world with new challenges and opportunities, the best business education might be learning to think outside of normal business education.
In the end, the question is not whether or not MBA programs are valuable, as many are; but whether or not they are worth the substantial time and money required to learn them. For increasingly discerning observers and potential students, the answer is unequivocally “no.”
