What’s in the video? Costs and benefits | The cost of time and limited presence | Learning at work vs in a course | Why to defer the MBA | Why MBA in India, Singapore and the Far East are better options | Go where the growth is.
When it comes to career advice, I am an important port of call for my young nephews and nieces.
One of them—my 27-year-old nephew based in Bangalore—called me recently. He has five years of work experience as part of a global computer technology firm where he has worked closely on the digital innovation agenda of BFSIs, telcos and others.
He was planning to apply to top tier B-schools in the USA this year. Over the first five years, he had worked tremendously hard in building his profile for the Ivy League colleges. And his preparation for GMAT was in full swing.
Then COVID-19 struck out of the blue. And all his well-laid plans have now been impacted.
Uncertainty is rife. No one knows how long this period of hiatus will last. Or when it would be safe to travel by air again. And more importantly, whether there would be jobs available when he graduates. In fact, not just jobs, even the relevance of the traditional MBA could come into question in the post-COVID world.
A key part of the MBA programme is the experience of engaging with peers on campus. No one is willing to trade that for Zoom lectures. Given that the total investment is in the region of Rs 1.5 crore (including board, lodging and tuitions), my nephew is right in pressing the pause button. He also has to evaluate the opportunity cost of spending two years of his life on campus, away from the hubbub of corporate life. Clearly, it isn’t without reason that it is turning out to be one of the most important decisions of his career. To make it even more complex, the young man is under pressure from his family to tie the knot.
My nephew tells me that he is not alone. Several of his friends are in a similar fix. They need to quickly decide whether they should change tack, give up their MBA plan in the US and focus instead on doing it in India.
It seems like a whole new world. And infinitely more complex than what I went through 25 years ago when I had to decide when and how to apply for an MBA. I am unsure on how best to advise him. What should I tell him?
~ Name withheld on request
Thank you very much for asking this question. Your nephew does seem to have a problem. And just as you called me and spoke of this wonderful opportunity that your nephew has, I coincidentally got a call from a young gentleman whom I had mentored a few years ago. He was running a startup at that time. And I'd helped him build that startup, and helped sell it to somebody and then he moved on to a consulting house in another country. And just like your nephew, he is five years into his career. This is what we do at this stage. We go for the big leap and we do our MBA. We have enough work experience, we have the money, we can explore and live the world. Live the entire MBA experience. Make the leap, because we are looking for a steeper learning curve. And we are looking for a faster professional growth curve at this stage.
The uncertain present has blighted our ability to envision the future. How can we know that the MBA will pay off in the same way that it used to before the virus struck?
And, therefore, we must reassess the space. The chances we hold, and the chances we can take. The costs, and the payoffs, the certainties and the probabilities. And all of these have changed.
It used to be fairly standard to work in industry for three years or so, and then apply for an MBA in order to put oneself on the fast track to becoming a CXO in a large firm, and to equip oneself for a role in a startup, if one was in a hurry. This goes out to those of you who were to apply for an MBA this year, whether in India or abroad. Your choices just became much harder.
So, I will say the same thing to your nephew, as I said to my young friend: This is what they teach you in an MBA—you need to weigh your costs and benefits.
So let's talk about the cost.
First, your nephew has a cost estimated at Rs.1.5 crore. I’m assuming that’s just tuition. Because the cost of living is huge, if he gets admission in a large city or a big and vibrant city—where of course the learning and the corporate exposure along with the MBA is so much more. Some institutes insist on all students living onsite, which means one cannot even think of living in a smaller space, or further away. The costs of transport are much higher than we are used to, sitting here in India, and I assure you, they add up.
So, maybe one of the things that you can do to mitigate that cost or reduce that cost is to think of maybe a one year MBA instead of a two year MBA. INSEAD has an 11 month programme. ISB too has a shorter programme. INSEAD in fact even has a three continent programme where the costs are marginally easier, and you get exposure across three different types of economies and engagements with a corporate. But that’s only one part of the cost.
Two, the cost of time. As a B-school student, your time is your most precious resource. One of the key things one takes away from this programme is a network. A network of peers, and access to a network of alumni. Under current circumstances, we will all be forced into social distancing. The core peer experience of the MBA may or may not be exactly what all of us expected. It's going to be a different experience. We may even be taking classes online rather than in person. So it’s not just the classroom engagement, but also projects, discussion groups and socials that will take a hit.
The cohort is not a band of brothers (gender agnostic!) anymore. So, without that peer bonding, the value of the MBA programme certainly takes a hit.
The next most important resource in an MBA is your presence.
Presence has a unique value in an MBA. Now your presence means your engagement in the classroom, your engagement in projects with corporates, your internships, and the way you engage and build your peer networks, because these are going to be your career networks for life. How you work with your cohort depends so much upon your physical presence, and how you exude and enable and work with that. That's going to be a bit iffy for sure in the next year or so. I would actually count that as a cost and not a benefit at this stage.
A third thing to consider is visas—especially work visas. The world has become a little bit more uncertain. So visa immigration rules are still tricky. The US, for example, is promising a tighter regime and is already talking about pulling back on their one year CPT (curricular practical training) experience. The UK has a new system where the work experience allowed after completing the course is still uncertain. The UK is trying to open up but it really is not convincing. Even getting an internship is tough, let alone an actual job offer if you are going to these countries as a foreigner—or as they say, alien. Without that year of employment included in the foreign MBA, the return on investment shifts a bit. Will you be able to work in other countries after having invested so much money and time in doing your MBA? I think your nephew is right to be quite concerned about these.
Now for the returns, the benefits.
On the MBA track, the curriculum and the content is still going to be fantastic. The learning is going to be great.
What’s the faculty like? There are two types of B-schools depending upon their faculty. The ones who teach theory based on past experiences in business. And faculty who create these theories. If your nephew is able to get admission to an MBA institution where the professors are actually finding solutions to the crisis, where they are inventing the new normal, helping organisations and governments out of crisis, then the learning within the MBA programme is going to be immense. This is a live lesson in managing the unknown, which is really at the core of every elite MBA programme.
These professors can do so because they have the funding, they have access to real business via their consulting and investing, and because they have arrangements that give them the freedom to create. Do weight your options in light of these opportunities.
But if your nephew happens to get admission to an MBA programme where the professors are receivers of theory, the learning is derivative. Then he should weigh it against the returns on his job track.
Your existing job is a huge resource in shaky times. In uncertain times, people are not sure of even keeping their jobs, and he has a job. He has an income. He has a great team, he has people who are ready to support him within the workplace and work with him. These are huge resources. And more importantly, he happens to be in a field where the learning curve in the job is going to be immense. He's going to have to hustle. He's going to have to learn. He's going to have to engage, to solve—all the things that they teach you in an MBA. Not everything that is taught in the MBA will happen at work, but the skills that you're required to demonstrate are actually learnable in the workplace as well, for now.
The returns on staying in the job depend upon the industry. If you find yourself in health tech, you are in for a boom, and a fantastic, steep learning curve. And you’ll be paid for it. But if you serve in an industry like tourism, or airlines, there is a chance that the near future is going to be wobbly, and one is clearly better off in the safe haven of a business school, investing in learning. Now, if your industry itself is under threat, then this is a structural shift that you should anticipate, and evacuate, as you would when you know an earthquake or cyclone is about to hit your area.
Timing matters too. Let’s think through what will the state of the job market be one year from now if it's a one year MBA, or two years from now if it’s a two year MBA? That's the core question. To be honest, at this stage, none of us can promise a booming job market in two years’ time.
In three years’ time, three-and-a-half, four years’ time, we’re almost sure that things are going to be well within the new normal, the four wheels are going to be oiled, things are going to be much, much more stable than they are now.
The question isn’t about whether to do an MBA—your nephew should certainly do it.
The question is: when should he do his MBA?
So, if your nephew thinks about doing this MBA, maybe a year from now, a year-and-a-half from now, he may find himself in a more secure place, having had the best of both worlds—the learning curve within the crisis at the workplace, and then the organized, systematic learning which is obviously far wider than now.
With what the workplace can provide now, and then an MBA after that, he'll be ready to face the world in ways that will strengthen him.
So, good luck to him. And good luck to all of you who are actually trying to answer this question where you analyse costs and benefits and whether you'll find yourself in a good place right now. Use this opportunity for learning and growth as well. If you find yourself with a great MBA, use that opportunity to work with your professors and watch them in action. But your decision depends upon where you are right now.
So I hope this helped take care of the dilemma, and do ask me any more questions you need. Thanks.
Still curious? Here's more food for thought:
- How B-schools can prepare students to be life-long learners (because what they teach is becoming outdated rapidly).
- How business schools in India have killed off research.
- Management education in the past 70 years has been underpinned solely by economic theories. These theories completely ignore value systems and non-financial impacts. Will management education rethink its role?
- The B-school campus placement BS—and how to clean it up
- Why a liberal arts education is necessary (because entrepreneurs need to be able to understand humans)