The $200,000 Question: To Get an MBA or … Not?

Business school isn’t cheap. Students at established MBA programs are forking over upwards of $200,000 for two year programs, including room, board and books. And because many students leave solid jobs to get a business degree, the opportunity cost of interrupting a fledgling career — and missing two years of salary — adds dramatically to the tab.

Nor does an MBA guarantee success. A decade ago, Jeff Pfeffer, an acclaimed Stanford Business School professor, co-wrote an article called “The End of Business Schools,” in which he made the case that the business school industry generates “less success than meets the eye.” MBAs, he said, don’t earn as much, learn as much, or build as many breakthrough companies as anyone thought.

Let me be clear about where I stand here. I’m generally a fan of graduate business schools: I’ve been teaching at one for twenty years, and I got the degree myself. But as an investor and board member, I also work with lots of great entrepreneurs and leaders who’ve done just fine without an MBA. It’s important to acknowledge that many of the key factors that contribute to business success are the ones you learn at your mother’s knee, and that others can only be picked up on the front lines.

The more you’re determined to get out of an MBA program, the richer an experience it will be. As you’ve likely heard, one of the most valuable elements of business school is the network of connections you make with your fellow students, who may become partners, clients, customers and references. The imprimatur of your school will also help open doors and get calls returned in the early years of a career. But even that advantage won’t last forever. A decade down the road, where and whether or not you got an MBA will be less important than what you’ve done since.

Business schools are certainly good places to learn the rudiments of finance, marketing, accounting, strategy and operations management. The better programs will help you figure out how to apply those skills while you’re still there. And the best ones will give you insight into your strengths and weaknesses and enable personal transformation.

But the fact remains that many successful MBA alumni have the kind of drive that would’ve allowed them to flourish even if they’d never gone to business school. And some of them may have found success sooner. If you’re an entrepreneur itching to get started, or a professional hungry for change and advancement, sitting in classrooms doing projects, taking tests and writing papers for two years may simply not be the ideal path for you.

Like so many decisions in business and in life, whether to get an MBA demands a cost-benefit analysis. For some, it might be the right way to build a network or find the right career. But for others, there’s a growing selection of affordable and effective ways to get a formal business education.

A few alternatives come to mind:

In-house business and management training

Accessible and always-improving on-line courses

Part-time (3- or 4-year) MBA programs, paid in part or all by the employer

One-off night or weekend courses

Specialized, one-year programs providing training in a particular industry, such as hospital management.

OJT: on-the-job-training, or the school of hard knocks

That last one’s important. You can learn plenty from teachers and books, but there’s always an element of experience that can’t be replicated on the page.

As most senior business leaders will tell you, leadership is less about analysis than about synthesis — the art of putting together the puzzle pieces that an ever-changing marketplace is hurling at you. That’s why, for pure leadership, hands-on training in industry, entrepreneurship and even the military can’t be matched.

If you’ve decided an MBA is right for you, consider a program that focuses on management and leadership, and one that will let you customize your curriculum to develop skills for a particular industry. Look for a faculty, too, that mixes scholars with experienced business practitioners.

Either way, don’t just run the numbers. The business school decision is more than a calculation about how much money you’ll make afterward and how long it’ll take you to recover your investment. The right choice can transform your career. The wrong one can be an expensive and time-consuming detour.