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How Can I Decide Whether I Should Do an MBA?

21/02/2014 15:10 GMT | Updated 22/04/2014 10:59 BST

I don't know much about investing, but from what I hear, a lot of it seems to be about guessing: accepting that all you've got is an educated guess. I used to not know much about the MBA debate, but after writing a book about it, what I learnt is that the MBA decision (like any career decision) is essentially another form of investing. The goods that you're playing with are your time and energy.

If you're clear about what you want to use the MBA as a platform for, or which doors you want it to open, a badge from an elite school can be a tremendously useful catalyst. I met entrepreneurs and corporate rock stars that definitely proved that theory.

However, if you're using the MBA as a procrastination device, you can end up in a weaker position than when you went in: when you graduate, you'll still have no idea what you want to do with your career, but now post-MBA you'll have new debt and a more limited range of possibilities. I met those guys too.

The public debate evaluating the true usefulness of an MBA is a cacophony that only grows louder the further you wade into it. Yet what I found from my own wading is that you cannot know what is right for 'everyone' - you can only (ever) know what's right for you. 'The' MBA decision is fodder for an ongoing universal debate but ultimately 'your' MBA decision is a pretty damn personal cost-benefit analysis.

What gave me clarity was learning to fine-tune my own bullshit radar. That happened by learning about three psychological concepts. These helped me to answer whether or not an MBA was a worthwhile investment when it came to my own career path.

Confirmation Bias

Confirmation basis is the often-unconscious act of referencing those perspectives that confirm the views that we already had. Living in the Internet era means that there is a plethora of supporting material for whichever worldview we choose to adopt. In other words, this is the golden age of confirmation basis.

If I felt like searching for confirmation that an MBA was totally the right decision for any sane person, I had to look no further than the official websites for the elite programs. That's just where it starts.

Any enthusiastic MBA student can point to the research by executive search firm Spencer Stuart that notes roughly 40 percent of S&P 500 CEOs have MBAs. This Economist debate cites that out of all the Fortune 500 companies, around 200 are run by an MBA graduate (40 of whom graduated from Harvard Business School alone).

Meanwhile, every MBA dissenter can argue that Steve Jobs didn't have an MBA; neither did Mark Zuckerberg; neither did Bill Gates; neither did Richard Branson. There is a huge 'college-is-broken' debate going on at the moment. Studies like 'The End of Business Schools? Less Success Than Meets the Eye' by the Academy of Management Learning and Education argue that MBA programs are not worth their hefty price tag.

Those who want a business education but without the price tag can congregate around entrepreneur Tim Ferriss (who the New York Times dubbed "somewhere between Jack Welch and a Buddhist monk" and who was titled, in 2008, Wired's "Greatest Self-Promoter of All Time") and other proponents of the Alternative MBA, like Josh Kaufman, creator of the Personal MBA program. Ferriss and Kaufman are not Fortune 500 CEOs, but much of the power of their personal brands comes from their declaration to be masters of their own destiny. So it makes sense for them to be masters of their own education too.

For every post I read in support of an MBA, I'd read another cautioning against an MBA. It taught me that an MBA is a tool, but the value of the tool is subjective, and whatever argument you want to make, you don't have to look far for support.

Post-Purchase Rationalization

I've met more than one London Business School graduate who has asked me if I know of any startup job openings. I'm usually at least a decade younger than these guys, and the whole exchange often seems ridiculous. If these guys wanted to work with startups, why wouldn't they have approached startups while they were in their own jobs? Why go to business school, pick up a whole load of debt, and then come into startup world?

It makes little sense to me, and when I've tried to politely prod them on it, I can sense that it might be a delicate topic. So I let it go. But whenever I do awaken the dragon and find myself on the receiving end of some long-winded monologue about education being the best investment you can make into yourself and the global financial meltdown and so on, I think about the power of post-purchase rationalization.

Post-purchase rationalization is a built-in mechanism that makes us feel better after we make poor decisions. Also known as Buyer's Stockholm Syndrome; it's a manner of subconsciously justifying our purchases.

I caught myself doing a premature post-purchase rationalization. I'd tell myself that an MBA program would open doors, introduce me to new people, expand my mind. But whenever I sat in on taster sessions, I saw that I could open doors, meet new people, and expand my mind without the degree. They would not be the same doors, people, or expansions, but they would be valid nonetheless.

The person who really brought this point home to me was one banker who went to b-school to figure out what to do with his career... only to end up handcuffed even tighter to the exact kind of corporate job he originally wanted to escape (the corporate gig is the only type allowing him to make decent repayments on his student loan). He had a very sophisticated, complex response when I asked him if he thought his MBA was a mistake. We all need to tell ourselves whatever we need to tell ourselves to sleep at night, but hearing his elaborate justification was part entertaining and mostly tragic.

Cognitive Dissonance

Ever since college, I've worked in the worlds of startups and digital media, where the way of life is pretty flat and non-hierarchal. These are the ecosystems where people wear jeans and flip-flops to work; where 'work' is often out of cafés or co-working spaces or other random spots often at random hours. Your boss can be a twenty-something as opposed to a forty-something, and he or she probably doesn't even think of himself as your boss. I've seen MBAs in this world, and next to the designers and product engineers, the MBAs seem kind of uptight and straight-laced.

Sometimes I wonder if, from being in these laissez-faire worlds and absorbing their worldviews through osmosis, cognitive dissonance stops me from being as open as I should be to doing an MBA. Cognitive dissonance is the excessive mental stress caused by holding two or more contradictory beliefs, ideas, or values at the same time. For instance, if I knew that smoking was unhealthy, but then continued to smoke, I would experience... cognitive dissonance.

Similarly, if I bought into what entrepreneur Josh Kaufman says here:

"MBA programs don't have a monopoly on advanced business knowledge: you can teach yourself everything you need to know to succeed in life and at work. The Personal MBA features the very best business books available, based on thousands of hours of research."

And then went on to sign up for a business degree that would cost me upwards of $150,000, I would experience cognitive dissonance. Why would I spend all that money trying to learn things that I could learn for a fraction of the price, through Josh Kaufman's course? After all, as investor Fred Wilson points out, the very nature of business is changing.

"Networks and markets are slowly changing the global economy and the creative sector is at the forefront of these changes. Instead of going to Hollywood studios for the funds to make their next movie, directors are choosing to harness the network of their fans. Instead of going to the publishing industry for their book advance, authors are choosing to harness the network of their fans. Instead of signing a deal with a record label, musicians are harnessing the network of their fans. The same thing is happening with comic books, video games, theater productions, and many other creative endeavors."

So why would I go do a traditional business degree to get ahead in a world where the way business is being done, is shifting in all kinds of crazy new ways? It makes more sense to pave your own way, to set your own path, to direct your own education, in a world where we can no longer predict anything - right? If you buy into what Josh Kaufman says, and what Fred Wilson says, you will be confronted with the least amount of cognitive dissonance by choosing to stay away from traditional MBA programs.

I was all but convinced that alternative MBA programs would totally suffice. Then this article got me thinking that if I ever wanted to raise money and start a company in the Valley solo, maybe I should pursue an MBA at an elite school:

"On close inspection, the evidence suggests that the keys to success in the start-up world are not much different than those of many other elite professions. A prestigious degree, a proven track record and personal connections to power brokers are at least as important as a great idea. Scrappy unknowns with a suitcase and a dream are the exceptions, not the rule."

I've already written the book and the debate in my own head is somewhat over. In terms of refining my own bullshit radar, it's an ongoing process. Who am I to believe? Whoever I choose to believe. Whoever supports my confirmation bias. Whoever helps me with my premature post-purchase rationalization. Whoever helps me experience the least cognitive dissonance. It all seems very millennial, very Generation-Y, and so too does this: in answer to the question, 'Do I really need an MBA?' - the truest answer is that nobody can decide but you. And even our own minds are faulty. So, good luck to all of us.

An MBA can make or break your career, but the investment is daunting. Is it really worth it? Read the Escape guide on the MBA debate here.