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M. B. Eh?

Posted by James King at 1:00 22/08/09

What is the point of an MBA? Do I need one to start a company?

An MBA (Master of Business Administration) is a post-graduate professional degree. MBA courses cover a variety course subjects, such as accounting, IT management, marketing, financial forecasting, supply management and economics. The depth of the course offers great insight into business, knowledge of a large number of case studies and introduces a wide selection of planning, analytic and operational frameworks.

MBA courses often require significant business experience. Entrants are subjected to a Graduate Management Admission Test (GMAT) before admission. Some courses require the student to complete an internship and often allow for specialisation in the student’s chosen business subject area.

The UK based Association of MBAs (AMBA) offers the only professional membership association for MBA students and graduates. London Business School ranks as one of the best, if not the best, MBA schools in the world.

FIG’s Business Viability Test is based on John Mullins’ (a professor at London Business School) New Business Road Test.

John’s Bio: (an abridged version from the London Business School website)

John W. Mullins is Associate Professor of Management Practice and Chair of the Entrepreneurship group at London Business School… An award-winning teacher, John brings to his teaching and research 20 years of executive experience in high-growth firms, including two ventures he founded, one of which he took public.

His trade book, The New Business Road Test: What Entrepreneurs and Executives Should Do Before Writing a Business Plan (London: Prentice-Hall/FT 2003), is the definitive work on the assessment and shaping of market opportunities.

The book is fantastic. It is practical and well illustrated with case studies. The book manages to be both technical and very accessible without being patronising. A very fine balance that his writing style allows… I’ll cut the complements before I get overly flowery with praise.

Suffice to say that we were privileged to have met with John and worked together to integrate his IP into the FIG process.

As FIG focuses the attention of our support to undergraduates and recent graduates, has worked with an MBA professor, clearly encourages academia, it would seem logical to assume that FIG encourages the completion of MBAs… well, Yes, we do… but not unreservedly.

There is a proviso; we do NOT think everyone should complete an MBA. NOR do we think that you need an MBA to start a company. NOR do we think having an MBA will guarantee that your company will be a success.

Prior to researching for this article I thought to complete an MBA you needed to pass your GMAT to see if you have real business experience… but can you really judge “real business experience”? Some of my personal contacts have been awarded MBAs and (I promise you I am being kind in saying this) have limited experience at best.*

*Ironically, of course, this is my judgement!

It turns out that some MBA courses are indeed letting grads with no experience in based on a GRE (Graduate Record Examination) rather than the GMAT. Which, many will argue, devalues the MBA achievement as entry becomes less selective.

One point you can’t argue is that having an MBA can really help your pay packet.

But does it help a start up business?

Simon Woodroffe, a successful entrepreneur who left school at 16, makes a relevant point in The Independent, that MBA students are taught to be risk adverse and risk aversion is not a quality that is abundant in many successful entrepreneurs.

In the same article an academic from Oxford, Professor Anthony Hopwood, highlights the obvious and important benefits of an MBA course –
“The MBA provides content and knowledge”

Key.

Surely an improved knowledge of case studies and practical frameworks can only be a good thing?

Well... a little bit of knowledge can be a dangerous thing… Shoshana Zuboff, a former Harvard Business School professor, ponders whether her teachings have caused damage on a global scale.

As ever, I would propose that it comes down to the individual’s use of knowledge to create intelligence.

If you can use the knowledge gleaned from an MBA and become more intelligent by drawing your own conclusions, the business world may well become your oyster.
In my experience, MBA grads make fantastic members of management teams. An MBA course can definitely help an entrepreneur, but an MBA qualification does NOT make an entrepreneur. You do NOT need an MBA to start a business.

And if you are wondering whether to start a business or complete an MBA I will point to Paul Walsh’s comment here -

“The fact you’re asking the question leads me to believe that you haven’t recognised a real problem that people need resolved and you have the answer. So, in short, study for an MBA whilst you continue to earn money in full time employment.”

Common sense that I’ll elaborate on in the next article.

Hope you found the links and discussion useful.

James
 

*** N.B I tripped over this article from Business Week - if you are interested in applying for an MBA this is great advice

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