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The Value of MBAs

No longer a golden ticket?


When it comes to the contemporary, real business world value of MBAs, there are varying schools of thought.

Initially, MBAs targeted those who aspired to leadership positions and were a cliched requirement for reaching the top rungs of finance or management consulting or the C-suite of large companies. An MBA was often considered the business’ “golden ticket” to fastracked corporate success, six-digit executive salaries and vague, ladder-climbing prestige.

During the past decade or so, the MBA has seen a dramatic evolution. It has been transformed from a sacred must-have for senior management positions to a modern nice-to-have in coporate, entrepreneurship and the business galaxy of high-techs and start-ups.

Today, one of the many positives about an MBA is that it can be appied to most industries; particularly for people uncertain about what industry is right. There are a series of specializations and concentrations like strategy, corporate finance and operations that can be explored in MBA programs. There is a trend for students to choose an MBA program specifically for an entrepreneurial path to launch startups or join early-stage firms.

“While some things have remained the same, such as a core focus on business fundamentals and general management, there have been changes in both academic focus and program delivery,” says the knowledgeable Chris Lynch, senior director, Masters & Professional Programs of the Alberta School of Business at Edmonton’s University of Alberta. “In terms of academic focus, the bigger changes have been around experiential learning or application of knowledge in practical/real-world settings, and the ability to target studies in more specialized areas.” He explains that the value proposition differs slightly based on a student’s specific background. Today’s MBA degree is designed to give students solid business knowledge, the skills and confidence to make business decisions and to expose students to different ways to thinking.

“While there are many different reasons for someone to pursue an MBA, students would typically fall into two main groups,” he says. “Some look to use the MBA as a way to transition into a completely new industry or take their career in a different direction, like moving from a nursing role into management consulting. The MBA is a catalyst for that type of change and the networking and career support available to students through the program.

“It can also be a key motivation for students to stay within their current organization or industry and move into management or higher level leadership positions. The MBA provides practical business and management training to help students move up in their career.”

There are subtle but signigficant differences between an MBA vs. a BA, BComm, BS, BBA or CGA. “Compared to other degree options, the MBA places a lot of emphasis on experience and learning from both the instructor and from your peers,” Lynch notes. “We require students to have post-graduation work experience prior to entering our program and, on average, students have between five and eight years of work experience before starting the MBA.”

Traditional MBA basics like leadership, senior management, finance and risk managaement, are still vital components of MBA courses. However, the transformation of businesses is translating into a dynamically changing focus for MBA programs. “While students still gain core business knowledge and principles, the MBA has expanded to allow students to focus in new areas and industries,” he says.

“Over the past five years, we have introduced more courses and an MBA career track focused on business analytics. We have increased both course offerings and applied learning options in innovation and entrepreneurship, and introduced career tracks that focus on public sector and healthcare management. All are designed to be complementary to our core curriculum and allow students the opportunity to learn more industry specific skills.”

Entrepreneurship is a vital category of today’s business, and many MBA programs for entrepreneurs host specialized entrepreneurship and innovation centres, which offer networking opportunities and even accelerators or lab space where students can build their new businesses. Increasingly, business schools are building these and other resources, which can be leveraged by entrepreneurship-minded MBA students.

An increasing number of students use MBA experience to build and launch startups.

Most business schools have now incorporated the entrepreneurial focus into the MBA curricums. Lynch points out that once a student has a solid grounding in business fundamentals, the Alberta Business School program offers a number of targeted courses specifically for students interested in starting their own company or working in the start-up space.

“The courses, like New Venture Creation, concentrating on the development of a new enterprise and the management of an existing small business; Technology Strategy & Innovation to develop a high-level understanding of the dynamics of technological change, the sources and distribution of innovation and how companies and society benefit from highly-innovative organizations; and High Technology Business Development with emphasis the interface of science and technology product development, including challenges facing new start-ups are a mix of both theoretical knowledge and practical application.”

The unvarnished truth is that opinions about MBAs differ and the jury’s out about the business world perception and value of an MBA.

“The unfortunate reality is that one of the few objective measures in assessing a large pool of applicants is grades,” explains the plugged-in and experienced Adam Pekarsky, founding partner of Pekarsky & Co., a leader in recruiting executives, advising boards and offering thought leadership in Western Canada for over 20 years. “So, academic achievement is still relevant but should be thought of as table stakes because other qualities like emotional intelligence, networking, relatability, work ethic, empathy, hustle and tech savviness are harder to assess than academic achievement when considering to hire someone.

“The irony, of course, is that those other skills are actually considerably more important and valuable to employers. Employers want to know that anyone they hire possesses the requisite grey matter, and the preferred way to do that is by assessing academic achievement.”

With years of experience dealing with employers and candidadtes, Pekarsky gently bursts the clichéd bubble of MBA as a golden ticket. “I wouldn’t say employers are asking for or expecting MBAs, but there’s no doubt they still have value. If it’s a competitive situation where employers have choice, preference is going to be given to the candidate with the MBA over the candidate with a straight B.Comm.”

He notes that MBAs hold value but emphasizes that an MBA focus on entrepreneurialism is particularly valuable. He adds that general management would likely be the best approach, “as most young people don’t know what they don’t know and the risk of specializing too soon. What happens if, after a few years, they discover they don’t don’t like the specialty?”

Lynch emphasizes that the actual value of an MBA depends on the specific role and organization. “There are a number of firms/employers who actively recruit for MBA graduates. Recruitment has expanded from traditional roles in consulting and financial services to include more technology firms and larger organizations with management development programs. More generally, for individuals looking to move up into management positions within their industry, the MBA is a strong signal that the individual is prepared to excel in a management role.”