- What is the value of completing an MBA? since I graduated from
the INSEAD MBA in 2016, I got asked this question a
lot from family and friends on my Instagram channel Firm
Learning and the last day I also posted several pieces
on my learning journey, my reflection on what I
took away from the MBA and there was well I
received lots of questions on whether it's actually worth it to complete an MBA in these times. In this video, I'm covering
the top five reasons why I believe an MBA
might make sense for you. So I hope this helps you
to evaluate for yourself whether doing an MBA
might be worth your time and your money. Hi there my name is Heinrich and welcome to another coffee
break with Firm Learning. If you are already a subscriber, I'm so grateful that
you're following me here on this YouTube journey and if
you're not a subscriber yet, if you take any value out of
this video, please consider subscribing and also
hitting the like button for the YouTube algorithm.
So what is an MBA program? So for those of you who don't
know, just let me give you my brief personal definition of it. The MBA stands for Master
in Business Administration. It is an academic degree. But the big difference
compared to many other master programs that exist in
business, especially in Europe is that it is a post experience program. This means that you're usually only able to get into the program
if you have several years of work experience. So typical MBA program
would have an average work experience of their
class of four years. So the average person who
attends an MBA will have four years of work experience
and usually the bare minimum that you need to have is two
years of work experience. And this is often also
only possible if you come from a so called accelerated
career environment, which is to pretty considered
either consulting or banking. Where you're assumed
to just have collected lots of experience in two
years so most of the time, if you come from a more
regular industry background, you will be expected to have
at least the full four years of experience before you
can enter the program and the second key difference
to the more traditional business oriented master programs. As they exist, especially in Europe, is that why these master
programs are usually more focused on preparing you for an academic career. The MBA is more professional degree that is supposed to help you prepare to become a manager in the
real world if you wanna to put it this way, right?
So really to prepare you to succeed in a business environment, and not in a specialist role, but more in a general management role. And so before I talk about
the reasons why I believe it could make sense for you to do
an MBA, let me cover the top two reasons why you maybe
should not do an MBA. And these two reasons come
down to the investment that you need to make when doing an MBA. And this investment consists
of both time and money. So if we look at it at the
time aspect of things and MBA program usually takes
either one or two years, with some programs in the middle and what you would typically
see as the US programs are on the longer side of the spectrum, so rather on the two years side of things, whereas the European or
International programs are more on the one year side of things. Though of course, there
are some deviations from that rule in both directions. And of course, you need to
realize that one to two years are a significant time investment. Instead of doing the MBA,
you could work on your career in the job that you're currently having, and also advance in this job in this one to two years of time. And you need to be convinced that by doing an MBA, you
can actually accelerate your career so much that this
loss of time will actually be recovered later down the path. And the second element of the cost. If you currently look into how
expensive an INSEAD MBA is, this is the program that I competed. It currently costs about 85,000 euro for the one year MBA experience. So I was lucky that when I completed it, I believe it only was 65,000 euros. So you can see that the cost of these programs rather tend to go up over time and I also had the privilege
to get some funding from my employer at that time,
but many other didn't needed to pay the full amount. When you pay for such a
program you need to consider that not only you lose the money, but you will in this time
period of the MBA in these one or two years, you also cannot work. So you're losing the salary, the income for this time period as well. So it's kind of a double
cost because you need to pay for it on one side, and
then also lose the salary of it on the other side. So doing
an MBA can be quite expensive. And again, you need to
believe that then later down the road, you recover the cost
due to an accelerated career development and a higher
salary that you incur, which you wouldn't have got
if you wouldn't have done the MBA. So is there any basis to
believe that you actually can recover this investment?
Well, there are many rankings of MBA programs out there. One
of the probably most renowned is the Financial Times MBA ranking. And in the current 2020 edition, you see Harvard Business School on one, Wharton of the University of Pennsylvania on number two, the Graduate
School of Business from Stanford on three and the INSEAD program
on number four in the global ranking. And in these rankings,
you typically see how salaries and other KPIs of the alumni of these programs developed. So if you don't look
into the Harvard figures, the program ranked number
one, you see that the average salary of the alumni corrected
for purchase power parity. So the weighted version lies
around 210,000 US dollars. And this is supposed to
correspond to an increase compared to the pre MBA salaries of
110%. Just for your information in this financial time ranking
this is measured by looking into the salaries of the alumni three years after completing the program. For the INSEAD MBA the
numbers are a bit lower, on average alumnus would
yield a salary of 181,000 US dollars, three years after graduation, which would correspond to a
salary increase of 101% compared to their pre MBA salary. Of course, now the Harvard MBA is two years while the INSEAD
MBA is one year so the return on your investment regarding
time is even higher now for the INSEAD one. So looking at this, yes, there
seem to be some plausibility that after doing these kind of programs, you salary can be boosted to level high enough that it actually
justifies the time and the money that you invest upfront. But be aware that this is only a spectrum. So while it might be
worthwhile for many people, there will still be a
certain group of people doing this MBA for whom
it didn't really work out as they hoped. And of course, these are
some of the most renowned some of the flagship
MBA programs out there. There are many, many other
MBA programs which have KPIs that fall short and of
course, you need to be aware that these programs are some
of the globally leading ones. And it's not guaranteed that
you get admitted to them, you need to show a certain
level of professional and academic performance
in order to get admitted. So you might be stuck with
one of the lower tier programs and the stats of these programs
usually are not as good but then on the other
hand side of the cost also not as high. So now we talked about
two more obvious things, time and money and why
this is super relevant, and probably most people
already think about if they ask themselves whether they wanted one MBA. In this video, I'd like
to cover five reasons five advantages that I
got from doing an MBA, which I believe are less
obvious or maybe less clear to many of you who think about doing that. So I'd like to cover
this in this video now. And of course, now I forgot
one of the biggest advantages of doing an MBA. And this
is that you're going to get all kinds of great and crazy shirts. I mean, look at this amazing
sports shirt off the INSEAD MBA this is what you would get as well. Doesn't matter where you do it. But now jokes aside back to the video. So let's start with number one. And this is looking at the
MBA as some kind of Joker card that you have. After the first years of your career, you might find yourself already
kind of stuck in a certain box in the corporate world
maybe you're an accountant or you're a controller or you did lots of marketing and sales. And you're afraid that
if you just continue your career, the way
you're currently doing it, you will be just so
stuck into this position that it will be really
difficult for you at some point to transition into a completely new role. So one of the reasons
that people do an MBA for and I found out by looking
into my peers in the MBA that this works really well
is to make a bold transition into a new role. And if you think about it, conceptually, most people think of doing
these kind of conditions in three dimensions, you
can either transition to a new geography, or you
can transition into a new industry, or you can
transition into a new function. So regarding geography, maybe
you currently work in Europe, and you'd like to make the
transition to work in Asia on the US. So doing an MBA can help you with that, or you would like to change
industry, maybe you've worked a lot in automotive, and now
you'd like to work for retail or for healthcare. Again, doing an MBA can be helpful to you, or you'd like to change functions. So currently, you worked
a managerial accounting or you've worked in production, or you worked in marketing and sales, and you'd like to switch
to another function. So it doesn't matter which
of these three dimensions you would like to change. The MBA is like a joker card that you can pull out once in your career, and it can help you to
make this transition. Because on the MBA, you
get exposure to all these new sectors, all these new
fields, roads, you can take new courses that are relevant
to the new role that you'd like to take. And all of this will help you transition into your new field. The only thing that many people will give you as an advice
is to not try to change all these three dimensions
at the same time. So do not try to change
the geography, the industry and the function at the
same time if you're looking to do a transition after the
MBA, but try to keep at least one of these three dimensions constant, and try to only change two of them. Because experience shows that otherwise, you will have quite some difficulties and the change is just too much. But of course, if this is
what you really want to do, there's always a way to
make these things happen if this is what you're really after. So the second reason is
regarding the type of content that you learn and what does
this thing to have about MBAs is that because they do not
have so much in academic focus, they can focus much more on
teaching your practical skills that you will not find in typical
other university programs. So as I am someone who has
already studied business in an undergraduate level,
so the business degree from the University of Munich and then I even have a
master's degree in finance from the London School of Economics. So even for people who
already have business exposure in the university fields, it is true that if you do
an MBA, there will be some repetition because the MBA
program does not assume that all the people already
have a business background. So teaches you foundational
courses, which will be some kind of repetition if you already
have a business degree, but the truth is then that
later on there will be lots and lots of courses,
which you will likely not have had in your regular
standard University undergrad business degree. So to give you some examples at INSEAD there were courses
offered or negotiations. So how do you negotiate and
we did lots of role plays with professional negotiation coaches to improve our negotiation skills. We had a course on corporate turnarounds So how would you actually handle a company a situation where the company
is in too heavy financial distress, and you will
need to turn around? What are the implications
of that? How do you behave in this kind of context as
a manager, and of course, lots of courses on entrepreneurship
on building businesses on identifying new business models, and many other aspects of
it. So this is really hands on experience that you will
not get in most other more academia focused master
or bachelor programs. And this is what is so
special about the content that is taught at an MBA. The third reason for doing
an MBA is the network that you build. And this is a bit of a cliche point, there are people out there
who claim that getting and building a network is
one of the main reasons to do an MBA so while I
wouldn't necessarily agree with that, I agree that it
is one of the key advantages of doing it during your
MBA program, you will have the opportunity to build
friendships and deep relationships with the so many of your classmates and there will be
friendships coming out of it that really last your whole life. And when you choose what
program is right for you, I would recommend you
that you also have a look what geography your
program is focusing on. So if you, for instance, aim
to build a career for yourself in the US after your MBA, it
would likely make lots of sense to also do an MBA program,
which is in the US, because this will help you
to build a deeper network in the US if however, you'd
like to rather work in Asia, probably doing an MBA
somewhere and that geography might make more sense for you. But especially the INSEAD
MBA for me is that one of the distinguishing factors of
the INSEAD MBA experience is that it wants to be an
especially international program, so tries to really balance out the class. There's no one dominating culture, no one dominating geography in the class. So we really have contacts
from literally all around the world after you complete the program. And this for me means now
pretty much doesn't matter which country I want to visit or which country I might
work in in the future, there will be some
people who I can call up and talk to them afterwards. And this, of course, is
a great feeling not only from the professional perspective, but also from my private
and personal life. The fourth key reason from
my perspective to do an MBA is the cultural awareness that you build. And again, this depends a bit
on what program you choose what the profile of this program is, but INSEAD was a highly
international program and just meeting all these
people from that many cultures really had a big positive
impact on my life. During my MBA, I had the
opportunity to spend half the time in the French campus, but the other half also
in the Singapore campus. So spend roughly half a
year in Asia in Singapore, and it would be very typical. And I heard this a lot from
people doing other MBA programs as well so this is not only
specific to the INSEAD program, but would be very typical
that almost every weekend, there would be all kinds of
trips being organized by people who are native of
different other countries to then visit this country with a bunch of other MBA friends, so in the one year of my MBA
program, I was in Israel. I was in Singapore, of
course, I was in Vietnam. I was in Indonesia. I was in Thailand. I spent two weeks with friends in India. I was in China, I was in the US. And this is just a selection
of all the countries that I was in. And to be honest, before I did the MBA, as somebody who lived in Europe, Asia was a pretty faraway place for me. I was there a couple
of times for holidays. But I really didn't have any
clue what Asia was all about. But now after I've spent
half a year of my life in Singapore, after I've
visited so many countries there and I've met so many local
people during the MBA program, this really opened up my
mind and I have a completely different relationship with the continent and I could very well imagine
to live there to work there to spend my time there. This really has helped me
a lot to better understand this whole continent. Though of course, it is clear
that given the diversity of cultures and countries
on the continent, whatever I have learned
can only be a brief scratch of the surface. And the last key advantage of
doing an MBA that I like to share with you is that it
really is a time where it helps you to self reflect on yourself, on your goals and on your ambitions. So while I was working at
McKinsey before the MBA, there was really little time to rest. And while I learned an
insane amount of things, were working at McKinsey, there
was really little downtime, really the time that allowed
me to just introspect, to self-reflect, and to ask myself, what the right move for
me as now going forward. And the MBA really is
a great time for that. Because it's not only that, you will often have a bit
more time for yourself than during your regular work. But also given the fact that
you have all these inspirations from the courses that you take
from the people that study with you from the
countries that you visit. All of these inspirations
really help you to take a step back and ask yourself what
you really want what your objectives are. What you want to do in the future in this, again helps you to make the
right decisions for you what you wanna do after the MBA. So guys, I was just out here on the run, where I remember even another
reason even another advantage of doing an MBA that I forgot
in this is that an MBA, which were just the crazy
change of environment. It can really help you reset your habits. And what I mean by that,
just as an example, you know, before the MBA when I
was working at McKinsey, I really struggled with
sports, doing sports regularly, who really, some really
struggled with sports, but because of the change of environment, because of all the new impressions
that I had during my MBA, this really helped me to pick
up a regular running habit. So I literally went
from not running at all to running regularly. And then shortly after the
MBA, I did a full marathon. So 42 kilometers 26 miles, which I did sub 4 hours which
was a great success for me. And surely this would
have not had happened. If I wouldn't have done the MBA. And I mean just look at the environment. These are just all the side products. And this is also one of the
effects for me for sure. That came out for me for the MBA. So take care all of you
and enjoy have a good day. So these are my five reasons
that after reflecting on myself is what I think I got out of the MBA most to this is not to say
that an MBA makes sense for everyone. So whether an MBA is
worthwhile for you depends on, I think lots of factors
are outlined a few also in the beginning regarding
the time investment and the money investment. But I hope this video helps
you make these deliberations for your Senate, and also
hope to have added a few more considerations and reasons which
maybe were not that obvious for you when you were
thinking about doing an MBA. So let me know in the comments below. Do you already hold an MBA? Are you thinking about doing
an MBA? What are your pros and cons? Let's have a conversation there. I'm going to answer to every
single comment that you write if you took any value
out of this video at all. please hit the like button
for the YouTube algorithm. And of course, subscribe to
this channel to learn even more. I'm going to release at least
one new video every Saturday. And if you'd like to see
even more content for me, follow me on Instagram under
the handle Firm Learning. I'm posting new content pretty
much every day at the moment. I hope you like it. Thank
you very much for watching. I very much appreciate your time hope you're all having a great weekend. Stay safe and keep learning
everybody this is Heinrich from Firm Learning. Bye there.
