Why Entrepreneurs Don’t Need an MBA
The MBA has traditionally been the go-to for business entrepreneurs looking to become business leaders. Yet, business today is evolving. With a plethora of resources available online, it’s important to reconsider whether or not the MBA still offers what it used to.
Martin Hoffmann, CEO of Business & Investor Labs and a guest writer for Entrepreneur, recently wrote an article arguing that while an MBA can provide a useful toolkit, they are better suited for established businesses rather than startups.
“While there are many benefits to pursuing an MBA program, this path also comes at a major cost; tuition as well as opportunity cost can weight heavy on an entrepreneur’s wallet,” Hoffmann writes. “The good news is that today, there are options that provide equally as much value at less of a financial hit.”
A recent report from the Financial Times found that over the past two years, less than one in five MBA graduates choose to go into entrepreneurship.
The MBA is Built for Established Businesses, Not Volatile Start Ups
Hoffmann argues that the MBA is more useful for corporate decision makers, rather than those looking to build a start-up.
“At their core, MBA programs are built to provide predictability for corporate decision-makers,” Hoffmann writes. “As such, they teach decision-making based on evidence and historical data.”
On the flip side, Hoffmann highlights how the rapid growth in the business world requires thinking ahead – not looking back at historical data.
“The real world of growth businesses, though, is messy and packed with wicked problems,” Hoffmann writes. “Core business decisions are often questions of judgment, building on a deep understanding of the specifics of customers and the business environment. Since those two elements are changing rapidly for growth businesses, they cannot build on the luxury of predictability and reliance on historical data. Instead, they require a forward-looking perspective and intuition.”
In addition, Hoffmann highlights how MBA programs tend to use standardized tools and frameworks like the Five Forces model or SWOT analysis. And while these tools are helpful, Hoffmann argues that they do not inspire original thinking – a critical mindset in building a company.
“Standardized tools do not encourage the launch of original products and business models in crowded marketplaces,” Hoffmann writes. “In contrast, it’s more often than not multidisciplinary thinking and a broad perspective, which lead to outstanding products and business models.”
The Most Valuable MBA Asset: The Network
With the explosion of information available online and cheap resources for students to learn about business, the MBA’s most useful asset lies in the resulting alumni network a graduate will gain.
While Hoffmann agrees with this reality, he argues that there are a number of opportunities available today for students to build a network outside of the MBA environment.
“Meetups as well as conferences enable you to build your real world network, while LinkedIn, AngelList and other business-focused social channels can help you build and maintain your network from your desk — all at a fraction of the cost of an MBA,” Hoffmann writes.
And while having a brand-name school on your resume can impress investors or employers, work experience, Hoffmann argues, is even more valuable.
“When it comes to social proof, you may want to ask yourself why you need to invest in an MBA just because investors, employers or business partners aren’t able to judge your skills based on other measures,” Hoffmann writes.
Develop Your Skills and Build Your Plan
Rather than dishing out thousands of dollars for an MBA education, Hoffmann – who holds a law degree – argues that entrepreneurs should take advantage of the plethora of resources available to them already.
“General Assembly, Udemy and Udacity, among others, offer many courses and nanodegree programs, which can help you develop skills in a targeted way,” he writes.
On top of technical skills, Hoffmann also highlights the importance of intellectual skills, such as critical thinking, problem solving, and lateral thinking.
“While technical skills take center stage early on in a business’s life cycle, it’s the critical and original thinking that will ultimately set the business apart,” Hoffmann writes. “And with AI increasingly replacing many routine tasks, the thinking will remain as a true unique selling proposition.”
To develop intellectual skills, Hoffmann says some form of traditional education is essential. At the very least, a BA can help applicants gain intellectual skills.
In order to be successful in their entrepreneurial pursuit, Hoffmann says entrepreneurs need to create an action plan. The first step, he says, revolves around analyzing hiring boards of businesses in industries you are active in and creating an inventory of requirements. He calls it a “personal development day.”
“That day would be used to go through available resources such as courses and meetups in order to design a path to unleashing the skill set that best fits the requirements from step one,” Hoffmann writes. “It’s best not to go this path alone, and industry-specific social media groups and forums are a good way to find like-minded companions.”