A Time to Hang In There
Published on February 10, 2009
“I want to quit the MBA Program. The job situation is miserable. The economy is headed down the drain. I enrolled here with expectations that I would get into brand management—I deserve it! Now, it seems that you can’t deliver. I can’t see doing the work and running up more debt just to go back to the job I had before B-school. I’m outta here.” 
These are words that chill a teacher. They reveal a gap between expectations and achievement. They suggest a failure of courage and ambition. They are a symptom of the jarring adjustment required by the current economic crisis. And they imply confusion about the role of professional education in society and in the life of the individual.
Sure enough, these are tough times for everyone. The students now in B-school applied at a time when it looked like school was a sure thing: an entry to a better life. Then came the crunch. Money for student loans became scarce. Job prospects declined. Companies scaled back their recruiting—but they have not tempered the salaries they did offer. The aspirations and outlook of MBA students have shifted. Some openly wonder whether they should quit. I attended a big meeting of B-school Deans last week; this topic was a subject of conversation.
Plainly, there is an alternative to B-school, the school of hard knocks. An article published in the Wall Street Journal makes the pitch: “How to Succeed in Business: Drop Out of School?” It glowingly details the examples of three drop-outs who succeeded: Bill Gates (founder of Microsoft), Mark Zuckerberg (founder of Facebook), and Larry Ellison (founder of Oracle). The odds of hitting it that big are quite small. You should read the comments that follow the article: they tilt on the side of “stay.” Ironically, the article was published on December 21, 2007, about the time that the present recession began. Taking the advice of the Journal, one would have tried to launch his or her small business boat into the face of a rising gale.
I don’t have a lot of experience with this problem. The overwhelming majority of MBA students stick it out; they vote with their feet in favor of the MBA value proposition. Voluntary departures from Darden in mid-program are extremely rare. From my time at Darden (27 years) I can think of only two cases. One guy left in 1997 to found a dot-com business and hit it big—since then he has been a friend and benefactor of Darden. Another guy left in the mid-1990s to be a trader in mortgage-backed securities for—you guessed it—Bear Stearns. Today his whereabouts are unknown. These two cases are polar examples of quitting early. You might hit it very big; then again, you might not. Certainly, we celebrate risk-taking in B-school, but our counsel is to take risks intelligently and unemotionally, avoiding the elation you feel in the bubbles, and the fear you feel in the crashes. These two cases are important for another reason: the students were reaching out for attractive opportunities, they weren’t running away. My first piece of advice for a student (or an executive, for that matter) would be to make a move out of strength, not weakness. Whenever you move, you must have a vision of what you are running toward.
In his play, Rosencrantz and Guildenstern are Dead, Tom Stoppard wrote, “Every exit is an entrance somewhere else.” B-school is an incredible threshold. How, when, and in what direction to cross the threshold are exciting questions. To step away from that threshold is to enter somewhere else entirely—if you have an appetite for “somewhere else,” why did you come to B-school to begin with?
Maybe the core issue is discouragement or the angst that you get from watching the stock market too closely. Most MBA students took a great risk coming to B-school: entered (and won) the application sweepstakes; left jobs; borrowed money; uprooted themselves and possibly a family. But by now, the worst of the risk-taking is past: the marginal cost of finishing the degree is comparatively small—indeed, that cost represents the price of a call option on future careers. Is this so risky? Given the range of possible outcomes in the near future, the value of that call option is probably high. If the flexibility afforded by B-school is unimportant to you, why did you come to B-school to begin with?
Anyway, the uncertainty we all face will be a fact of life for the indefinite future. We have suffered financial crises and recessions in the past with some regularity; they will happen again in the future. The current conditions are very good training for years to come. The ability to assess and bear sensible risks is at the core of business and entrepreneurship. Frankly, if you can’t stand this kind of uncertainty, why did you come to B-school to begin with?
By now, the last three paragraphs drive home a point: the impulse to leave in mid-program may be less about the MBA and more about the individual. There has been and still remains a very positive argument for getting an MBA:
Education adds value. Generally, research finds real rates of return on investment upwards of 10% and as high as 50%.  And there is a correlation between years in school and earning power—but that’s only the quantitative part. Every year, students graduate who are more self-confident, better communicators, and more promising leaders than when they enrolled. And they have joined an alumni network that has helped in good times and bad.
Long career ahead. With the benefits of modern medicine, you can probably look forward to a career of 50 years. Are you judging the worth of an MBA by only the first job you get out of B-school? Take the long view. If you could discount the marginal benefits of an MBA from a competitive school over the next 50 years, I’d guess that they well exceed the costs. Don’t discount the future too steeply.
The call option is valuable. Figure it out with B-school concepts: you have a contingent claim in the context of high uncertainty. This is a setting in which the value of flexibility is high.
Here’s how I would reply to the four claims of the student:
The job situation is miserable. Sure, unemployment is rising nationally; at the end of January it was 7.6%, with some metropolitan areas (like Detroit) reporting unemployment greater than 10%. The reality is that students at a competitive B-school are blessed with an incredible leg up. Today, 67% of our second-year students have job offers, compared with about 81% and 79% in 2008 and 2007 respectively at this time. Sure, it is a softer market…but “miserable”? Be realistic.
The economy is headed down the drain. Today it seems so. But there will be a recovery. When the recovery comes, it will create a huge vacuum for talent that will draw upward those who have good professional training. Forecasters such as the Congressional Budget Office suggest that a recovery in the U.S. will begin late this year and that 2010 will feature moderate growth. Be patient. Even if the economy declines further in the near term, you must look across the chasm toward the recovery. Darden alumni who graduated in previous recession years tell stories that they were lifted upward by the recovery and that their careers have turned out well. The U.S. remains the world’s largest economy, the most diverse, most inventive, and most mobile. It is a democracy with rule of law, civil rights, and respect for the rights of investors. And it is spending enormous sums to jump-start the economy. All of these presage economic growth in the future.
I enrolled here with expectations that I would get into brand management—I deserve it! It’s good to have aspirations. But use of the word “expectations” describes something quite different. No B-school promises you a job. You have to get it the old fashioned way—you must earn it. Don’t nurse a sense of entitlement—recruiters can smell it a mile away and tend to run when they encounter it. See my earlier blog posting on entitlement. Instead, in times as uncertain as these, adopt a flexible mindset—that way, you stay open to exciting possibilities.
I can’t see doing the work and running up more debt just to go back to the job I had before B-school. You should always be conservative about borrowing—as the Subprime Crisis has richly reminded us. But the most valuable asset you have is between your ears. Augmenting your knowledge and wisdom at the start of your career is invaluable. Can you really quantify all the benefits of an education? Attend the best school you can, and then trust the process. The odds are that finishing your degree will put you on a better career path than your old job would afford.
Instead of quitting, I think the student should take four points of advice:
Finish the program; get the degree.
Focus your job search on what you offer that is valuable to employers. Think like your target customer. Be adaptable to the needs of companies. It is always good to have aspirations and career vision. But the reality of this job market is that new MBAs should be open to new, unexpected, and indirect ways of filling one’s vision.
Work the extended network—on grounds and off. Today, more than ever, success in searching for a job comes from a good discovery process. Research reaffirms the value of weak links: people who you don’t know well are most likely to see job opportunities of which you have not heard.
Integrity. Don’t be tempted into behavior inconsistent with the best values. Anxiety can take you down paths you will regret. Treat everyone fairly. Represent yourself honestly. Help others.
One can imagine circumstances under which it would make sense to quit: financial or family hardship, health problems, physical danger, or war. But if it is just a doubt about the future, then stay. Winston Churchill said it best: “Never give in, never give in, never; never; never; never – in nothing, great or small, large or petty – never give in except to convictions of honor and good sense.”