B-school Confidential: Are MBAs Obsolete?
by Penelope Trunk

Posted on Wednesday, October 3, 2007, 12:00AM

The Master of Business Administration degree has been a holy grail for decades. If you wanted a career that mattered, and you didn't have the aptitude for medical school and subsequent courses in cutting up bodies, an MBA was a good ticket to prestige and riches.

But things aren't so clear anymore. If the MBA used to be the entrance fee to climb the corporate ladder, there are few corporate ladders to climb anymore -- and people are increasingly experimenting with ways to speed up that climb anyway. One way is to skip the MBA altogether.

So if you're thinking of getting an MBA, you should probably think twice. Here are five signs that the MBA is becoming devalued:

1. Only the top business schools have high value.

The difference between the value of a top-tier MBA and all the others is very big. In fact, if you don't get into a top-tier program, the value of your MBA is so compromised that it's not worth it to stop working in order to get the degree. Go to night school instead.

A lot of people already know this, which has made the competition to get into a top-tier b-school fierce. So much so that you probably need a consultant to help you get in. Wondering how effective those consultants are at gaming the system? So effective that schools are publicly saying they're trying to change the application process in order to undermine the effectiveness of application coaches.

2. Business schools are compromised by a lack of female applicants.

Harvard Business School is so concerned that it's not receiving enough female applicants that it's changed the admission process to accommodate the biological clock. This means that students will have less work experience coming into the program.

In the past, business schools have said that prior work experience is important to the MBA education. But apparently, the lack of women is so detrimental to the education that Harvard is willing to take less work experience.

While the changes are beneficial for women in some respects, one has to wonder if this doesn't compromise the value of an MBA for everyone.

3. Business school is like buying a high-priced recruiter.

The best thing you get out of business school is a good job afterward. But how do you know you wouldn't be able to get that job without business school?

In an article in The Atlantic, management consultant Matthew Stewert says you probably could. He also says you should consider paying a recruiter to get you a good job, and spend your time taking philosophy classes instead. That's because philosophers, as Stewert writes, "are much better at knowing what they don't know. ... In a sense, management theory is what happens to philosophers when you pay them too much."

And if you are thinking of becoming a CEO, Sallie Krawcheck, herself the CEO of Citigroup's Global Wealth Management, says you should be an investment banking analyst first. That's because being a CEO is really about making decisions with limited information, and that's what analysts do best.

4. Hotshots don't go to business school anymore.

For a while now, it's been clear that the true entrepreneurial geniuses don't need degrees. The most effective way to learn about entrepreneurship is to practice in real life. You don't need an MBA for that.

Now that trend is filtering into the finance industry. Pausing one's career to get an MBA used to be non-negotiable for investment bankers. But today, the top candidates in finance are choosing to forgo business school. They're already making tons of money, and they're well-positioned to keep making tons of money, so the MBA seems unnecessary.

The upshot of this is that business school might start looking like something for people who are feeling a little bit stuck in their careers and need a jumpstart, rather than just a starting gate for superstars.

5. People go to business school for the wrong reasons.

An MBA is very expensive in terms of time and money, and it solves few problems. If you're not a star performer before b-school, you probably won't be one after you graduate And if you just want to make a lot of money, the odds of you of doing that are only as good as the odds of you getting into a top school -- currently about 1 in 10.

If you're still wondering if an MBA is necessary for you, here are five more situations that might put the nail in the coffin of the MBA.

The bottom line is that very few careers today really require an MBA. If you're getting one for a career that doesn't require it, you might look more like a procrastinator than a go-getter.