Do you still need an MBA to reach the top?
The rolled-gold guarantee of business success used to be completing an MBA. No longer. The business landscape has shifted and, so too, has the role of an MBA.
Having this qualification got your foot in the door of most organisations. It said the crème de la crème of business talent had just arrived.
The number of students who hold postgraduate degrees has increased in Australia, and some estimates say they’ve doubled in the past 30 years.
Also, the barriers for business startups have dropped through the floor. So, more people have found different routes to match their business aspirations.
The changing nature of organisations has also played a role. ‘Soft skills’, such as communicating effectively across teams, have beaten the finer points of business administration in candidate selections.
Back in 2015, advisory firm EY dropped academic qualification thresholds for graduates – a sure sign of which way the wind was blowing.
They decided academic qualifications didn’t predict business success. A lot could be learned by doing the work rather than classroom knowledge.
There are more people learning about business and more traditional business administration skills may have lost their sheen – so what are MBA providers doing to stay relevant?
Matching course skills to new trends
Scentia CEO Ben Foote saw the trend emerging when he took the job in January this year and he has aligned the Australia Institute of Management’s (AIM) MBA program to reflect reality.
“Soft skills, in terms of success within a complex business environment as automation and AI and technology advances, have become increasingly important,” he told The Pulse.
In April, AIM dropped the cost of doing an MBA from $42,000 down to $32,000 and gave students five years’ access to short courses more in step with the current business environment.
“Examples include ‘leading with mindfulness’ to ‘design thinking’. These are skills that aren’t necessarily taught as part of a regular MBA program curriculum,” explained Foote.
According to the World Economic Forum’s Future of Jobs Report, the top four skills needed by 2020 are:
- Complex problem solving
- Critical thinking
- People management
“You go back a decade or further and communication was extremely linear within a business environment,” said Foote. “Now it’s highly complex and everyone in a business needs to understand and communicate effectively with everybody else.”
But those four skills the World Economic Forum came up with are also skills you can learn by starting your own business and using agile methodologies.
So why should somebody still fork out $50,000 on an MBA when they could get the same result (with potential profits) founding a startup?
Why not just start a business?
With the barriers to new business starters being lower than ever and the experience being a great way to learn key business concepts, why not launch into it?
Colin McLeod, Program Director at the University of Melbourne’s Masters of Entrepreneurship program, says people can learn those skills by running a business but it’s a risky game.
“An investment in a business is a one-shot thing,” he told The Pulse. “If the business fails, you’ve lost $50,000. It can be very difficult to prove that you have learned anything that is transferrable to another venture or even another job.”
He also warns that skipping formal training means you risk losing the benefits of networking.
“Establishing a network is a really critical part of being a successful entrepreneur. It’s a lot easier if you can join an existing network – it’s very hard to do from scratch,” said McLeod.
But Foote says simply learning by doing can work for some people.
“I think it makes sense for some people. I wouldn’t discourage them from doing that to learn if it works for them,” said Foote.
But he said part of AIM’s MBA program changes focus on more practical real-world experience rather than book learning. Aspiring business owners are now a target market.
“A lot of people come into the program with ideas for businesses they want to start up. They essentially get time to build their assessment around the projects they are pursuing,” said Foote.
“It goes a long way towards achieving their startup dreams, and we’re seeing more and more of that within our student cohort.”
MBAs still offer people a great set of skills to succeed in business (and people are still pursuing them in strong numbers), how those skills are gained have widened in recent years.
The way MBA programs have evolved prove the changing demands of the professional environment, and doing an MBA is still worth it for those looking for the skills to succeed within a business environment.
But, it’s no longer the only game in town.