The Inevitable Decline Of The Elite Full-Time MBA

I want to explore the changing dynamics of how people earn prestige, the new dynamics of credentials and status, and what this might mean for how people navigate work and their careers in the future.

I am going to look at this through the lens of the full-time MBA, something I did from 2010 to 2012, but increasingly irrelevant and overpriced in today’s world.

What is the “job” of the Full-time MBA?

I’m a fan of the “jobs to be done” framework. It looks at the job that a service or product is performing. It’s not a useful frame to argue whether or not a business school is worth it. Instead its more useful to see what jobs the service performs and if there are better ways to pay for those jobs.

There have been a lot of arguments over why people get MBAs and what people are paying for. In my own experience and upon reflection, I think the MBA gives people three core things:

  1. Confidence: Being in a positive, ambitious, and friendly environment that will help you overcome the everyday friction and self-doubt that most people face when trying to achieve anything, leading to an increase in confidence.
  2. Hidden Codes: Learning some of the hard to understand behaviors, norms, calculations, frameworks, and styles of communication that enable one to aim towards large goals without getting laughed at by the established leaders in these spaces
  3. High-Paying Jobs: Access to a number of high-paying jobs across a wide range of industries and functions that hire a new crop of MBA graduates every year and know the unique demands of this group of graduates

This system works extremely well, I think, because of the incredibly tight link between MBA programs and the companies that hire from those schools. The schools need a steady number of openings of jobs that pay six-figures and offer interesting problems and potential career paths. The companies need a steady crop of middle to senior managers that all behave in predictable ways and might produce future executives.

The secret force keeping this together is a large group of alumni at these companies. They want to keep hiring the students from their schools because it helps them stay connected to a University (often a source of nostalgia and memories of youth) and gives them a source of prestige within their company, especially if they discover a “rising star.”

Wildly Expensive, But Still (Mostly) Working, For Now

This state of affairs has been operating quite smoothly and without much competition for 50+ years. As the industrial economy has grown and globalization and financialization have created more attractive post-MBA career paths with 6-figure jobs, the MBA programs have been able expand and raise tuition.

It’s also notable that the MBA has steadily infiltrated the tech industry despite the popular meme that MBAs don’t know how to run businesses. Currently the four biggest tech companies all have MBA CEOs: Cook (Fuqua), Pinchai (Wharton), Nadella (Booth), and Jassy (HBS).

I graduated in 2012 and over the last eight years I’ve seen a steady flow of my classmates from more traditional industrial-era companies to BigTech. If there is one other thing you learn at business school, its where you can make the most money working a full-time job.

Despite full-time MBAs costing more than $75,000 per year just in tuition one can still make a good argument that these programs are worth it, especially if you are confident you want to work in the types of jobs these schools have access to. The median salaries of HBS grads is almost $150,00 and if you know anything about BigTech or Finance salaries, its quite easy once you’re in these worlds to find a job making almost a quarter million dollars a year within five years after grad school.

Networks are credential-making machines

Despite many people thinking the technology industry would make the MBA irrelevant, it strengthened it. However, the technologies and social networks it produced are enabling a new way for the worker to engage and own their own career in ways we haven’t really seen at scale. I predict that 2020 be seen as a major inflection point for many full-time MBA programs.

Consider that when I graduated college in 2007 almost no one used LinkedIn and my only source of potential connections was through my school’s alumni database or the connections of people I knew.

Thirteen years later the ambitious young person is part of many different networks. When I lived in New York I was part of many different communities:

  • An informal group of people interested in organization change I met through my writing online
  • Virtual and in-person events led by companies like Culture Amp, Live in The Grey and other startups on wide ranges of topics
  • A group called IVY which held events for young professionals but kind of operated as a way to meet potential significant others
  • A volunteer group with 100 other young professionals as part of a two-year program I was part of
  • Alumni networks of two companies I worked for
  • Two alumni groups for my schools

Now, as a citizen of gig world, I am part of many more networks. In a world where connecting with others based on interests, skills, and passion is easier than ever, connecting based on a common degree feels stale. Hence why I rarely open emails from my schools. They are stuck in a world based on credential and endowment size rather than having an understanding that in an opt-in world, where you devote your energy is a signal to others about what matters to you.

Schools are going to have a hard time adjusting to a world in which anyone in the world can now earn prestige from their desk. Some examples:

  • Launching a startup and joining incubators around the world
  • taking an online course with a engaging community
  • attend conferences and meetups in your field
  • Writing or sharing content publicly in your expertise
  • Hosting or participating in online meetups
  • Engage with people in your industry on twitter and sharing interesting ideas
  • Attending online schools like Lambda Academy

Schools are certainly still in the mix but for many people its becoming a much smarter bet to at least test out one of these alternative pathways before spending months studying for exams and dropping 5 or 6 figures for a credential.

That’s not to say this is easy to understand. This new dynamic of network-driven prestige is messy and often illegible to people who have not engaged with it.

Older people will often say things to me like “you can do what you do because you went to MIT.” They are still operating in the hierarchical prestige view of the world. Success is a result of having earned the right credentials.

They are often surprised when I share that I landed a writing gig on Twitter after sharing an essay I wrote on a similar topic or that hired me as a presentaiton coach after watching my YouTube video.

My essay and video were both proof-of-skill. They were able to exactly the person they needed. For good or bad, this type of dynamic is coming to every part of the economy which is going to put tremendous pressure on high-priced credential-awarding institutions but it also offers a tremendous advantage for the individuals and employers that learn to operate in a new way.

The Better Options Are Emerging

One of the reasons the MBA has remained relevant is that better options have not emerged.

Consider my friend who has felt stuck in his career for four or five years. He’s been successful but doesn’t really like what he is doing and has wanted to experiment with working on startups. He’s not a natural at reinventing himself and has been talking about doing a full-time MBA as the way to make that shift.

Top MBA programs are mostly driven people that aren’t sure what they want to do but are sure that they want to be successful.

I’ve coached many people like him over the years and 100% of them end up going to business school. Yet last week he texted me that he had decided to do the On Deck Fellowship. For $2,500 he’ll join a 10-week program focused on helping people transitioning to launching a startup or at least working in that space.

He’s saving $147,000, two years of salary loss, and is likely going to get many of the benefits that the MBA would given him, especially the confidence and hidden codes mentioned above.

As these better options emerge people are starting to realize that paying an insane amount of money for a grad degree is quite a dramatic way to make a career change.

On Deck is creating the space for strong connections to form and making the bet that people don’t need to hang out at a university campus for another 94 weeks to continue to develop those bonds, find their own opportunities and learn the skills they need to follow their path.

The driven young person is used to already accessing all sorts of apps, communities, networks, and services and as higher education becomes unbundled there will be countless new paths that emerge.

On deck is betting “finding the others” is a bigger problem to be solved rather than getting access to high-prestige jobs. If people can find the others and start working on what they want to be working on, especially the kind of people already doing that, the jobs and opportunities will come.

They even share their playbook:

Not that schools are going to do anything about it.

About Paul Millerd

Paul is a writer, creator, and curious human that is passionate about how people can reimagine their relationship with work to do things that matter. He published The Pathless Path in 2022.

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