Monday, August 9, 2010

Should an entrepreneur study an MBA?



In an earlier post I discussed the fact that I don't think I'll finish my MBA. If I had my time again, would I have started one? What's the value that an entrepreneur can take from an MBA? This is something I've given quite a bit of thought to over the past couple of years.

Probably the best place to start when analysing this is to look at each of the reasons people do an MBA.

1. Getting a good job
When I was working at Google's Mountain View head office I went along to a session where some senior manager's were discussing whether it's worthwhile studying an MBA. Some on the panel had studied an MBA, others hadn't and they were all very open and honest with their thoughts. The basic thing they all said is that hiring people for Google in the US they essentially ignored all MBA's unless they were from one of the top 5 schools in the world - Harvard, Stanford, Wharton, Kellogg or Insead. And even then, it was more about what people had done in their previous jobs than whether they had the bit of paper that said they had an MBA. There are a lot of people working at Google Australia who have studied at the Australian Graduate School of Management, so there's no doubt that's not ignored when hiring here, but from what I saw of hiring practices it was certainly more about the person's work experience than the piece of paper with the MBA written on it.

That said, something the managers at Google said was that the networks you get from studying an MBA are all very valuable. These can be particularly useful if you're looking for a career change, particularly when changing industries. Using your MBA network to learn more about an industry, who the good employers are and who the right people are to meet can be very valuable when looking for a new job in a new industry. But unless you're looking to do that, an MBA is not going to be a big help in getting you hired, your work experience is more important.

Of course all of this is completely irrelevant to an entrepreneur as you're goal here is to employ yourself.

2. Learning about running a business
This is clearly an important point for any budding entrepreneur. If you'll be running your own business it helps to have some theory around how to do that.

As I mentioned in my earlier post, the Managing People and Organisations course I took in my AGSM MBA was very rewarding. I learnt a lot about what motivates me, what motivates other people and theories on how to create motivating, exciting work environments that inspire people to perform at their best. Had I not already completed a Commerce degree the Accounting, Finance and Marketing courses would have also be relevant in helping us start Shoes of Prey. So my MBA provided some value on this front. In a comment in the previous MBA post, Steven Noble mentioned a business simulation that he did as part of one of his final MBA subject which sounded like it covered a lot of the strategy side of starting a business.

All of that said, I think the best way to learn how to run a business is just to do it. Investing the time and money you would put into an MBA into experimenting with a startup is probably a better way to go. Tim Ferriss discusses creating your own MBA on his blog. (Thanks Libor).

3. Developing a strong business network
There's no doubt a lot of people get a lot of value from an MBA. My friends who studied at Harvard have glowing things to say about the course there. Warren Hogarth, a good friend from high school is now at arguably the top Venture Capital firm, Sequoia Capital and Scott Griffin is a co-founder of the very successful online accounting firm Etax and is now working on a couple of other entrepreneurial projects, and they both say they took a lot from the course. Harvard is one of the best places to study an MBA in the world, and Warren and Scott both say the people they met in that course, as well as the material and quality of the lecturers are outstanding.

I met a lot of great people in my MBA course at the AGSM, however as I mentioned earlier I met more people studying with a smaller group in Brisbane compared with Sydney.

What do you think? If you're planning to be an entrepreneur is it worth studying an MBA?

5 comments:

  1. good summary Mike. Couldn't agree with you more. I'd add to 1) that at Google it really depended on what type of job you are applying for and where the job is (as you mentioned). From my experience at G, in 2007 there was a huge shift in the US to start hiring Product Managers who had MBA on their resume. Of course, their skills were important, but MBA was a huge plus. On the other hand, the directors in EU, they were not too happy about that requirement as an MBA degree does not necessarily make you a good PM. I shouldn't speculate here, but it sort of goes with the ideology that PMs need to drive products to make money (and not only be cool products as it was a trend in the past) and who else to call than an MBA person to make money :). Can't really speak how it is looked at now though.

    To your question: perhaps it is worth checking out the curriculum of a few MBA courses and just pay/take the course you are most interested in and would get the most out of. Instead of spending the time and money on a full blown MBA degree.

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  2. 1. Is something else worth considering that an MBA (arguably) brings some credibility to yourself? Not such an issue now, but when you are looking to raise $50 million for your next venture it might be something that brings some comfort to potential investors. I do agree with your comment though, all any qualification does is provide you a bit of education and potentially opens doors. Previous work expereince is more important.

    2. I have no idea if this is the case, but an MBA might give you tips on raising capital and expanding your business.

    3. It sounds like you don't want to finish the MBA so it doesn't sound worthwhile. Maybe you are better waiting till you have a mid life crisis and if you still want to do it go to one of the top 5. At least then you will have a piece of paper that is actually worthwhile and more life expereince to get something out of it.

    Yok

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  3. On a side note - do you think your law degree was useful? Why did you leave Clayton Utz?

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  4. Hello Michael, I know this is an old post but I am keen to know your thoughts now?
    Also, what do you think about the Masters of Entreprenership and Innivation vs an MBA?
    I am in this boat at the moment, interested to know what you think! Thanks.

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    1. Hi Marianne, I'd probably even go further than I did when writing this post regarding it being much better for an entrepreneur just to get stuck into starting a business rather than studying an MBA, or even a Masters of Entrepreneurship and Innovation. Those degrees are certainly helpful for an entrepreneur, but if I reflect on what I've learnt in 2.5 years with Shoes of Prey v what I would have learnt from a 2 year full time MBA, they're worlds apart, my Shoes of Prey experience is many orders of magnitude more useful.

      If your goal is to switch corporate careers I think an MBA can add a lot of value, there's certainly a lot of benefit to having a degree like this, but for an entrepreneur, entrepreneurial experience is much more useful.

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