Considering an MBA but feeling unsure about the myths surrounding it? Gain valuable insights from this podcast episode of Business Casual, where our hosts debunk the most widespread misconceptions surrounding the degree. From the common belief that a business background is required to gain admission, to the misconception that only finance or consulting careers benefit from an MBA, this episode provides important information to help you make an informed decision about your future. Learn that a high GMAT score is not the only factor in admissions and that getting an MBA is not a magic wand to easily achieve any career option listed in the career outcomes report. 

Stay informed and make the best choice for your career growth by listening now!

Episode Transcript

[00:00:07.210] – John

Well, hello, everyone. This is John Byrne with Poets and Quants. Welcome to our weekly podcast, Business Casual, with our co hosts Maria Wich Vila and Caroline Diarte Edwards. We’re going to talk about myths today. The MBA for some is something of a mysterious degree degree and mysterious experience. And there are a lot of myths that are attached to the degree, and we want to explore them. Maria, do you have a number one myth?

[00:00:34.080] – Maria

I think my number one myth about getting an MBA is that it is a magic wand to easily achieve any of the career options that are listed in the career outcomes report. So I think people look at those career outcomes reports and they look at the salaries involved, or maybe they see someone in the news and it says, oh, 20 years ago, this person got an MBA from a certain school. And so they think, well, all I have to do is get into the school. And then if that happens, boom, I’m instantly guaranteed the job at McKinsey. I’m instantly guaranteed a job at Goldman Sachs or whatever. And that is really not the case at all. I know you guys are probably sick of this little quip that I have, but it’s Harvard, not Hogwarts. It’s not magic. They can teach you a lot, but they also cannot change the fabric of space time, career vision continuum. And so certain employers, it doesn’t matter if you’re at Harvard and say, Lbs, Stanford, it doesn’t matter. You could eventually maybe get to that job that you want, but you might not get it straight out of business school.

[00:01:38.430] – Maria

You might have to take a few detours and do a few preliminary steps to make a complete pivot into something like, say, private equity. And this is something that I think a lot of folks just, they’ll say things like, oh, I’m not sure where will I eventually work? Will I like it more at McKinsey or at Bain? And I’m like, whoa, hold your horses. Like, you need to get an offer. A lot of dominoes need to fall into place first to even be in that position to begin with. So I think that’s my number one myth.

[00:02:03.550] – John

That’s a good one. Caroline, your number one myth?

[00:02:06.400] – Caroline

From an admissions perspective, I think that perhaps the number one myth is the GMAT. And I often speak to candidates or I sometimes speak to candidates who think that if they can ace the GMAT, then they’re almost guaranteed to get into a top school. And that is absolutely not the case, right? And then I also speak to candidates who count themselves out from applying to a top school because their GMAT isn’t fantastic. So I think that often candidates put too much weight on the value of the GMAT in the admissions process and get their hopes up too much if they’ve done really well on the GMAT and think that that’s going to open all of the doors for them. And as we’ve discussed before, it’s just one part of a much bigger picture and it is important, but it is certainly not the be all and end all of what it takes to get into a top business school. It’s just one part of a much bigger picture. So I would like candidates to keep that in mind when they are evaluating their chances for getting into a business school.

[00:03:11.520] – John

I’ll tell you, my number one myth has to do with the perception that many non business majors have about business school. Many nontraditional students, and when I say nontraditional, I mean to a business school, believe that the population that centers around a business school is a group of people who are greedy, who are interested in nothing but money and therefore have little to offer the world. And while that may seem to be an exaggeration, particularly for people who don’t feel that way, I can tell you that many people who major in other fields that are far away from business feel that, particularly those in humanities, there’s also what’s happening. And probably for the last quarter of a century in the US humanities, education has been in tremendous decline. And part of that decline is caused by parents who are pressuring their kids to major in business at the undergraduate level and then to go for graduate degrees, not in philosophy, geography, English or whatever, but in business. Because the fact that you actually get a job and earn money and have a decent living and to that extent I think it’s hardened the opinions of those who have stayed in the humanities about business.

[00:04:35.790] – John

And the truth is very opposite from those beliefs, which is you’re going to find in a business school a remarkable array, an eclectic group of people with fascinating backgrounds who come from all walks of life and all over the world. And the diversity of backgrounds and the diversity of opinions and perspectives and the desire to do something meaningful with your life is a powerful combination. Business school students are not naturally greedy and interested on only money and that has never been more true than it is today. That’s my big myth. There’s a big pet peeve for me.

[00:05:17.960] – Maria

Maria that’s interesting that you actually bring up, then, a myth about undergraduate, the undergraduate experience that you have to major in business, especially. I think parents and families, understandably, want to push their kids towards business, law, medicine. But just realize that a lot of these banks and consulting firms happily hire, readily hire people with English degrees, history degrees, philosophy degrees. It’s more about how well can you think? Do you have a good mind, basically? And some of the critical thinking, the communication skills that you get as a humanities major are in fact more powerful in some ways, right? Someone who can crunch a ton of numbers, but who communicates in an off putting way or who can’t explain their thought process. Well, that person will actually be less successful, typically in business than someone who perhaps you can teach someone how to add and subtract, but you can’t necessarily always teach those softer skills. So I don’t know how many parents of high school people we have listening to us right now, but I would just urge you to not be so focused on one specific major.

[00:06:22.830] – John

So true. What other myths are there out there that you’ve heard from candidates who are now considering an MBA degree but have long delayed the consideration of one because of one reason or another that turned out not to be true at all?

[00:06:40.700] – Caroline

Well, one that I think that often comes up is candidates hesitate because of the cost of a program and think that if they haven’t got the financial means behind them already, then they can’t afford to go. And it’s true that it can be very off putting when you look at the fees and the total cost of when you include all the living expenses, et cetera, et cetera, and you take into account your foregone earnings for two years or one year. It is a very expensive proposition, there’s no denying that. But as we’ve discussed in the past, the return on investment typically is very strong, especially if you go to one of the top business schools. And that, I think, is a useful data point that is reflected in some of the rankings. We love to hate the rankings, but some of the rankings do collect useful data on the financial progress of MBA alumni. And certainly it seems to show year after year that people are doing very well post MBA and that it really is generating a return. And then also, of course, many candidates can qualify for scholarships and there’s a lot of financial aid available, especially at the top schools.

[00:08:06.160] – Maria

Right.

[00:08:06.480] – Caroline

And many of them have very, very deep pockets. So if you are a candidate who comes from a background where perhaps you haven’t had the opportunity to earn a big salary or to save a great deal, then you may well qualify for quite substantial financial support. So I think it’s a shame sometimes candidates count themselves out from going to business school or they count themselves out from applying to a top school because of the headline price and haven’t necessarily realized that there’s potentially a lot of financial support available to them. And in any case, that MBA degree will generate returns for them that will enable them to recoup their costs pretty quickly.

[00:08:52.410] – John

Yeah, that’s true. And then the other part of this is there are people who think it should be Harvard, Stanford, Wharton, or Bust, or if I don’t get into an M7 program, it’s not worthwhile. Right?

[00:09:03.790] – Maria

Maria yeah, this is absolutely one of my biggest pet peeves. I really think people need to keep their eyes on the prize as to what attracted them to the degree in the first place. And those very benefits that Caroline was just mentioning, right? It’s not a matter of, well, only the people from the M7 have good career returns and good results, and everyone else is out of luck. No, all of these MBA programs, for the most part, right, any sort of reputable program, not top seven, not top ten, but top 30, 50, maybe even more, can really provide a lot of value to you in your career. And it’s interesting. Sometimes people, I don’t think, believe me, but I say to them, look, I know people from Harvard Business School who they have not necessarily succeeded. They have not necessarily gone on to make the big bucks. Some of them have even gone to jail. And yet one of the most we’re not going to cough cough, but it’s true. And yet simultaneously, within sort of my extended network of people I know, they’re one of the most financially successful people by far, went to UCLA Anderson.

[00:10:14.210] – Maria

UCLA Anderson has an amazing entrepreneurship program, and people just don’t they either don’t believe me or they discount it. And really it’s the person makes the school, and it’s not the school makes the person again, it’s not Hogwarts. It’s not like they put a sordiding hat on you or they wave a magic wand and now you’re suddenly this amazing entrepreneur. You’re suddenly transformed, and you’re a completely different person than the person you were going in. If you believe in yourself, which hopefully you do on some level, otherwise you wouldn’t even be applying, you should believe in yourself that you’re going to have a lot of success regardless of whether or not you go to a top 510 or 25 school. To Caroline’s point about the people being afraid of the cost and hesitating because of the cost, yes, there is financial aid available, but there is, I think, less financial aid than perhaps there was for people at the undergraduate level because they do take into account things like your most recent salary. And so maybe somebody who did get a big scholarship to go to undergrad and is now working in finance, they might be expecting the same treatment again this time around out, and it might not happen.

[00:11:16.160] – Maria

And what I say to people, even if they don’t get a scholarship, is when they accept you, they’re taking a bet on you. They’re placing a bet on you versus the other people that they rejected for that same spot. And if they are willing to place a bet on you by giving you one of these coveted spots, you need to be willing to place a bet on yourself, because how can you go to a school and say, yes, I deserve you know what? I’m going places school. You need to you’re going to want me in your alumni pool. You’re going to want me to represent you 10-20 years from now, and yet you’re not willing to put your own skin in the game. So that’s my sort of tough love to those folks.

[00:11:55.030] – John

Maria, I’m shocked that you would point out that Harvard MBA from your own alma mater would be in jail.

[00:12:03.350] – Maria

I don’t love it.

[00:12:05.750] – John

We actually do know a few. And if you actually were to search on poets and quants, you’ll find them, you definitely will.

[00:12:13.930] – Caroline

But I think all business schools have alumni who they probably regret admitting to the school. Right, it does happen. And I also know people who have been to top schools who are floundering in their careers. And some of the most successful people I know are not people who’ve been to top ten business schools have been to other business schools. So it’s absolutely right that it’s about who you are and what you make of the experience. And some people will be incredibly successful going to a tier two or a tier three business school.

[00:12:49.510] – John

Yeah, that’s really true. And when you look at the ROI data, it does turn out that a lot of times the people who go to a school that is not ranked very highly have a bigger increase, have a bigger MBA bump immediately after getting a degree than those who go to an elite school. Now, part of the reason for that is you have to be quite accomplished to get into a Harvard, Stanford, Wharton, INSEAD or London business school. And you probably are earning a good amount of money to begin with. So the actual percentage bump may not appear to be as big as it would be from someone who is applying to, let’s say, a public university that’s not in the top 20 or top 25, and then the employer rewards that person very handsomely upon graduation. So you tend to get a bigger bump immediately. Longer term, I think that all gets ironed out. And there’s no doubt we’ve done some research with firms that show that generally the higher ranked schools do return a larger lifetime income number than the lesser ones. Another myth I think about the MBA is that it’s essential to be successful in business.

[00:14:13.310] – John

We know that it isn’t essential. We know that. I think it does increase the odds that you will have a more meaningful career and be in a position to make a more meaningful contribution in your job. But it still isn’t an essential ingredient to success in the world of business. I would rather have it than not. And one of my big regrets is never having gone to get an MBA when I was much younger. But what do you two think about that?

[00:14:39.070] – Caroline

Well, John, I don’t think that you have suffered through not having gone to business school, and I think somebody should give you an honorary MBA degree for your contributions to the industry. But absolutely true. I’ve heard that they say at HBS when the students join, that you do not need to be here to be successful. You would be successful in any case, right, that cohort of students who have managed to get into a school like Harvard Business School do not need that experience in order to be successful in their lives. They would be successful, right? But the wonderful thing about going to business school is that it opens doors that might otherwise have been closed. So perhaps you will you’ll be able to do things that you wouldn’t otherwise have been able to do and you’ll be successful in a different dimension than you might have been if you had not gone to business school. And I think there’s also I live in here in Silicon Valley and you often hear comments coming up about how going to business school is not valuable. We’ve heard comments from that about that from Elon Musk and Sheryl Sandberg and various others in the tech industry.

[00:15:55.670] – Caroline

And so, yes, maybe you don’t have to have a business degree or have gone to business school to do well, but it certainly reduces it opens doors and it reduces risk, right? So if you want to be an entrepreneur and you go to business school, you’re going to have a much stronger foundation which will enable you to increase the chances of being successful if you do start your own business or you join a startup right. It reduces the chances of you failing because of some aspect of whether it’s whether it’s cash flow or not understanding the process for fundraising or not having enough strategic perspective. The wonderful thing about business school is it gives you that breadth of understanding across all aspects of business and gives you the ability to tackle any business challenge. And that is an incredibly valuable basis to have if you’re going to start your own business. So whilst people do sometimes say entrepreneur doesn’t need to go to business school and having an MBA isn’t terribly valuable for that type of profile, I completely disagree.

[00:17:10.810] – Maria

And you know, Caroline, when I was making the decision to go to business school, the very nice and very smart billionaire scion who ran the company I was working for at the time, came and tried to talk me out of it and he was making the argument, the argument about getting in as well as going. He was making the argument of, like, well, you don’t need this because the way you’re going, you’re doing so well, you’ll be running a division within X number of years anyway. And that was a good it was a very compelling argument. But what ultimately tipped the scales for me was this idea of probability of I had seen other people in this company be elevated to run a division or to perform an acquisition for the company. And then once they’re in charge of the acquisition, then they go to run it once it’s part of the it’s been sort of integrated. And I had also seen people just fail miserably. And I thought to myself, the ultimate reason that ultimately tipped me was I thought, well, if I’m going to get one of these jobs anyway, eventually, isn’t it worth it for me to spend two years to really make sure that I know what I’m doing, so that if I get that job, it’s not a guarantee of success, but at least I am limiting I am increasing the probability of success.

[00:18:16.660] – Maria

It’s not 100%, but maybe I’ve increased it from, say, 25% to 40% or something along those lines. And so that was what ultimately convinced me.

[00:18:24.130] – John

True. And now we’re talking about basic skills and tools that you gain from the MBA. We’re not even going into the whole area of the value of that network of people, like minded people who want to make a real difference in the world and who think that this degree can help them do that. And having those folks on your side as friends and at least in school as colleagues even, is a tremendous advantage for a lot of people. And I think that’s a really key part of any great MBA program. So I think we debunked a good number of very popular myths. I want to add one. I’m not so sure that anyone who does their homework would consider this a myth anymore. But I want to put it out there because while a lot of progress has been made in enrolling more and more women in business schools, I think there is still a persistent belief that business schools are largely maledominated cultures that are less welcoming to women and particularly female students. I think that is a myth today. Yes, there are fewer female faculty members than there should be. Yes, there are fewer female protagonists and case studies than there should be. But by and large, I think most business schools have very well embraced and welcomed female applicants and students in a way that makes them feel very included in most business school cultures. Do you two agree?

[00:20:02.050] – Caroline

Yes, absolutely. And actually, there’s one other thing I could add to the list of common myths. John? I sometimes speak to candidates who think that they don’t have a good chance of getting in because they have a nontraditional profile, right? So maybe they are a journalist or they’re a lawyer or even a musician. And I remember admitting a poker player. Sometimes people think that I’m not a management consultant, I’m not an investment banker. I don’t have the profile that they’re looking for. And in fact, often it’s a non traditional candidates who actually have a much better chance of getting in.

[00:20:43.470] – John

Many of the others, yeah, I love.

[00:20:45.870] – Caroline

Working with the nontraditional candidates because they often have fascinating stories and really interesting ambitions and fascinating motivations for heading off to business school and the dream of what they want to do in the future. So actually, they often have a better chance of getting in than those profiles that they think are the typical feed of profiles into business school, which, unfortunately, often there are way too many investment bankers and management consultants applying to business school. And their chances can actually sometimes be surprisingly slim.

[00:21:18.900] – John

True. Well, there you have it. All right, for all of you out there, we hope we have debunked any of the myths that perhaps you may have had about an MBA program. And what you can tell from this discussion is we are all in. We believe in this education. We’re tremendous ambassadors and advocates for it. You don’t have to convince us. Well, thanks for listening. This is John Burwood. Poets and quads.