I recently blogged on whether I thought my MBA was worth doing (considering the time, cost and opportunity cost investment (here: ‘A reflection on MBA programs – was it worth it?’). That was very much a personal reflection on my own MBA.
I have also been thinking about MBA costs in a more generic manner, in particular about what it is that you actually get for your money – I’ve structured these thoughts into two levels: (i) what you actually receive, as a student, and (ii) the other costs of providing an MBA program. Clearly there is a connection between these two categories, but the thought approach is slightly different.
I set out below some thoughts for each of these two categories.
What you receive, as a student (direct costs):
- Rental cost for space in classroom
- Books, lecture notes, etc. (paper, plus rights for any knowledge contained, and costs of preparation)
- Professors’ time allocated to the MBA program
- Direct overheads (for running the MBA program, to make it happen)
- Other logistics costs that might be included (eg, food, accommodation, travel, etc.)
The other costs of providing an MBA program (indirect costs):
- Unallocated rental costs (eg, when classrooms not being used)
- Unallocated professors’ costs (eg, downtime, research time, etc.)
- Infrastructure (IT systems, back-office, accounting/finance, etc.)
- Profit (of the school)
These indirect costs are not insignificant, and apart from creating and enabling the MBA experience opportunity, do not visibly add to the benefit for each MBA student – ultimately however, students bear the cost of this. Also worth noting, the costs are potentially offset by donations or grants that the school might receive.
Together the costs make an MBA program a relatively high investment for the student (resulting in many students carrying the burden of student debt into the early years of their careers, or longer).
This leads me to a further thought: why do an MBA – is it the most efficient way of accumulating the knowledge/skills/networks?
Much of the knowledge of an MBA can be obtained from books (in fact the same books that are used in an MBA – a quick search of Amazon or Google Books will sort you out here). Indeed, some of the books are even written by MBA professors (or the authors become MBA professors), and through books you can benefit from the
So what does an MBA bring that is difficult to obtain yourself by reading books?
- Experience of professors, and access to this network (asking questions, off-line discussions, listening and learning from their own experiences, etc.)
- Student network (developing friendships, business networks, etc. and learning from your colleagues, who provide different perspectives/insights)
- Classroom dynamics (discussion in class, challenging the concepts that you hear presented to you, etc.)
- Diligence and commitment (a strict schedule of classes, homework, and tests, as well as competitive tension helping maximize overall performance and attention)
So, if you did an MBA, did you take the opportunity to capitalize on these opportunities (otherwise you might just have been wasting your time and money!). If you are planning to do an MBA, make sure you think about the above.
Perhaps most important is the last item, ‘diligence and commitment’. Outside of the MBA program your spare time is again in your own hands – while some do/can, not everyone is able to dedicate/prioritize their time to personal and business development as they did/would in an MBA program.