Posts Tagged ‘Business School Rankings’

Should I do my MBA at Harvard, London Business School, Wharton, or just carry on with my job and forget about this whole MBA business?

The 2015 Financial Times ranking came out today with the top three business Schools in the world being Harvard, London Business School and Wharton.

FT Rankings

 

Before I answer the question “Do I need an MBA”, I have a question for you. Why do companies value MBA graduates from these business schools?

Do you think it is because they have a good education? Do you think it is because they are clever? Do you think it is because they have demonstrated some sort of social skills?

Of course these factors are important, but you can also have all of these things without an MBA.

I mean let’s take a step back and ask, what is the point of an MBA? You can pick up Josh Kauffman’s book ‘The Personal MBA’, do some online courses and get the material off a friend and you are pretty much learning the exact same thing right?

Well there are many arguments for an MBA, one of the main ones being the network you build, but the most interesting one I will focus on will be something I didn’t initially think of before having this conversation with one of the leading Strategy professors at London Business School.

Before I tell you what our discussion was about, I first need to explain the concept of a firm’s signalling policy. If a company like Facebook has a great project that they think they can make money out of, (e.g. the Occulus Rift), they can take on some debt to finance and invest in this project. When a company that size takes on the right amount of debt, the “markets” usually react positively. This is because people in the “market” are considered as “clever” and know that well established companies are only going to take on debt if they are sure they have a good project. In other words, they are putting their money where their mouth is, rather than being all talk and just make an announcement saying “we have a great project coming up that will make us a lot of money”.

In the same way an MBA student is kind of like a company. He/she takes on debt to pay his/her MBA tuition fees, which can take on numbers such as £60k+. Firms see this as a signal and place their trust in an MBA student’s abilities. They are thus willing to pay them six figure salaries as the signalling concept shows how strongly the MBA believes in his/her potential.

A lot of the world is based on beliefs and expectations of the future. This is just some food for thought for those who hear about how much it costs to do an MBA and think “Do I really need an MBA”..  “I mean Wow, that is a lot of dollar”.

Posted 26/01/2015

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