Should you get an MBA?  Good question.  What’s your gut telling you?  Which way are you leaning?

Okay, now that you’ve answer that question, put it to the side for a moment and let’s get into the value of an MBA degree and the reasons to get an MBA and what Tim Ferriss and Seth Godin say on the subject.  I had the chance to hear Tim speak yesterday, which is why I was inspired to write this post.  More to come on Tim and Seth in a moment.   You can’t tell by this picture, but I was excited to meet Tim in person.

By the way, an MBA is a Masters in Business Administration and the decision to get an MBA or forget about it altogether is a question that causes a lot internal turmoil in people who are looking to take their careers to the next level.

Is an MBA Degree Worth Pursuing?
This is a question that I get asked a lot and hear asked in forums all the time.  An MBA is a really great degree to have.  It can help you understand all the pieces of running a company and not just the current skill or area you’re working in now.  Every industry benefits from MBAs.  I have a friend who is a doctor and he has an MBA.  Why?  Hospital administration.  He’s better qualified to run a hospital down the road because he’s not just an MBA.  In my line of work – brand management – it’s practically a requirement in the US.

So it’s worth it for me in my line of work, but is an MBA worth the effort for you?

Suzanne over at BNET has an excellent article you might want to check out: How To Tell If You Should Get an MBA

She offers sound advice on whether you should consider an MBA or pass on it.

“An MBA is incredibly valuable if your career path requires an MBA.  If it doesn’t, then it may be helpful, it may be neutral, or it may even hinder you.  Yes, an MBA expands your earning power, if your career path requires one.  Yes, it makes you look more impressive, if the people who are doing the hiring are impressed by that.  Yes, there is a big difference between a top 10 program and the local ‘if you can pay tuition you’re in’ program.  But, how to decide?  Here are some questions to ask yourself (and some questions you need to ask others):”

1. Where do you want to be in 5 years?  What about 10 years?
2. What credentials do the people in your “future job” have?
3. Will the school that you are attending be worth the effort?
4. How much money will your MBA bring you?
5. How much will your MBA cost you?

In a difficult job market, is an MBA really worth the thousands of dollars of your money and the two-year time investment?

The answer is: It depends.  Quick background on me and where I’m coming from on the topic….

The Value of an MBA Degree: My 50 Percent Pay Raise
MBAs are not for everyone, but it was worth the time and money investment for me.  I worked during the day and got my MBA at night.  It took me three years to complete and my company paid for part of it.  I had to go into debt in the short-term to pay for the degree, but I figured it was worth it in the long run.

I was right.

When I was done I had a job offer on the table for close to 50 percent more than my salary at the time. Yes, 50 percent more than I was making at the time.  Ka-ching.

Of course there was nothing overnight about my “payoff” as I worked a lot of hours during those three years – on the job and at school – to put myself in a position to get that next job.  But enough about me, let’s talk about you and your question about the value of an MBA.  In order to understand the payoff for getting an MBA, you have to first understand the reasons why getting one makes sense.

Reasons to Get an MBA
More Money - So you heard my story, but you can probably guess that you’re going to, in general, get paid more if you have an MBA.  The last study I saw was from the U.S. Census Bureau (April of 2009).  The study showed that people with a Master’s degree made an average of $80,977 compared to $57,181 for those with a Bachelor’s degree.  For those with only a high school diploma, the average was $31,286.  Yes, MBA’s are not cheap, but the increased salary can help pay for your loans.

It’s Required – Certain jobs and some companies require you to have an MBA.  There are always exceptions (working your way up from the mail room), but if it’s a cost-of-entry into your industry or company, you’re going to need an MBA to get your foot in the door.

Networking and Business Contacts - An MBA provides instant access to an inner circle of high-powered people.  Business school students spend hours and hours together over the course of the two years.  It’s not uncommon to find a spouse, lifelong friend or business colleague by the time you’re done.  Add in the existing fellow B-schoolers at your new company, along with the network of former graduates throughout the world, and you can see the value of the MBA.

Understanding All the Pieces – When you get your MBA, you’re exposed to all areas of the company, which helps train you to eventually lead a company down the road.

According to Tim Berry of Palo Alto Software, “The best argument for a business education is having a better idea of what’s going on.  It isn’t about making more money. It isn’t about becoming entrepreneurial.

No. It’s about having a reasonable idea of the whole business, rather than just the specific function.  If business education works – and I think we have to admit it doesn’t always – then you have some idea of what’s supposed to go on in finance, sales, marketing, product development, and so on. You avoid tunnel vision. You’re more likely to see the whole forest, not just a few specific trees.”

This idea of being well-rounded and understanding all pieces of the business puzzle is something Ferriss agreed with during his talk.

Great Written and Presentation Skills – By the time you graduate, you’ll know how to make a compelling argument, present it and defend it.  I don’t want to get into too much detail here, but the point is that MBAs are polished business professionals who go on to become CEOs and leaders of companies.

Tim Ferriss and How to Create Your Own Real World MBA
Last night I invested an evening to listen to Tim Ferriss speak at the Apple Store in SOHO.  The talk was part of Apple’s “Meet the Author” podcast series.  Once the podcast is live, I’ll refine my notes and offer up a more complete commentary on the talk.  In short, it was typical Tim (which is a good thing) and his topics and answers were very precise, backed by either research (studies or his reader’s own results) or personal experience.  Make that very successful personal experience.

I did want to talk about a topic that was addressed after a junior in college asked it – which prompted this post.  This kid eagerly sat in the front row (I was in the front row too, of course) and asked about the value of an MBA.  His career counselor was telling him that he should stay on at the college for another 2 years to get his MBA…right out of college.

Uh, really?  Sounds like self-serving advice, but that’s to be expected.  The kid asked Tim what he thought the value of an MBA was and whether or not he should get his MBA or go off and work for a startup.

Basically the kid was asking whether it made sense to just suck it up and get his MBA and the instant payoff or to go work for a startup where he would learn on the job and have to wait a little longer for  his payoff.

What do you think Tim said?

The Alternative MBA Option – The Better Option?
Tim’s response was awesome and powerful.  He took a step back to talk about the importance of a liberal arts education before tackling the question.

Learning to be Curious – Tim feels that the value of a liberal arts education is the fact that it provides a broad base of experiences and trains people to be more curious.  Through the process of questioning and asking great questions, you learn more than if you’re just cranking through a case study each and every week.  Great questions lead to insightful answers and the folks that are curious and passionate tend to be the ones who succeed in life, regardless of their chosen field.

[NOTE: I was too busy nodding my head to write many notes on what he said, but again, I'll insert them once the podcast is live].

Tim mentioned one of his more popular posts on the value of an MBA and his decision to create a sort of “alternative” MBA for himself.  If you’re into angel investing and interested in the program Tim created for himself, definitely read the post.  It’s not exactly a great reference for the kind of alternative program that he talked about yesterday – i.e., working for a smaller company and getting as close as possible to the leaders so you learn faster.

MBA in a Weekend – Learning from Experts
In answering the junior’s question, Tim spoke about the importance of an insatiable appetite for learning.  The right mindset is not to focus on the short-term gains coming out of college or in your work, but to focus on what you’re LEARNING on the job.  Tim talked about alternative forms of learning that were better than an MBA.

For instance, if you wanted to learn how to invest, you would work closely with a successful investor.  If you didn’t have access to one, you could read through Warren Buffett’s Annual Letters to his Berkshire Hathaway shareholders.  Tim actually went to one of Warren’s shareholder meetings just so he could ask Warren and his business partner Charlie Munger a question.

Here’s Tim’s post centered around the question he asked Buffett.

Is it worth reading the post?  One reader definitely did: Unreal story! You gave me a $10,000+ life experience through this posting. Thanks so much for sharing this with us!

Paying for an MBA versus the Virtually Free Real World MBA
The point Tim was making was that you don’t need to invest your time and money in a formal MBA program because you can design one for yourself.  It’s simple and deadly effective if you’re committed to following through on your “course work.”

Your course work can be anything from listening to interviews of successful people to going and seeing them live and in person talking about the subject that you’re passionate about.  I think the value of doing something like going to see an expert like Tim or Ramit Sethi, author or seasoned business person speak on a topic is that you get the quick, digestible version of their life story and experiences.  You get to ask your own personal questions, the voids in their work according you that you want answered.

Getting an MBA on the Job
You can also create a quasi-alternative MBA on the job.  By taking different roles in your company, exposing yourself to different parts of the industrial machine, you can feasibly expose yourself to all the subjects that are covered in an MBA program – accounting, economics, business strategy, marketing, communication.

In addition, you can get real world exposure to a topic that is critical to your success, but often is NOT covered during an MBA program: selling.

You can learn how to sell and just about any other skill by working for passionate and intelligent people.  You can learn more in a year if you create your “course work” and follow through each and every day.  The best part is that you’re getting paid to learn on the job and your additional coursework doesn’t have to cost you a dime.

Sure, your “textbooks” (books and programs from the experts in your area) aren’t free, but there is plenty of free advice and learning everywhere for you to learn from.  Just be sure to put a filter on your information stream or else you’re going to drown drinking from the fire hose of information.

Other Free MBA Resources – I love biographies, business success stories (posts, articles) and interviews conducted by great interviewers.  Of course none of these sources compares to going straight to the source and hearing a pro talk live.  Well, maybe the great interviews are a great proxy for hearing someone speak live or via an audio recording.

The point is that you need to become a lifelong learner to really get to the head of the class in your chosen field.  You can speed up the process by creating your own MBA or Learning Program.  If you’re passionate about your career and you love what you do, you’ll have no problem committing yourself to becoming a lifelong learner.

“Your career, if it is to be a successful one, will be a series of collaborations as a member of many different teams. And the secret to being a valued contributor to those teams will be your development as a lifelong learner.” – Ellen Kullman, CEO, DuPont

The Investor’s MBA via Free Online Reports
By the way, in the Q&A after most people left, Tim stuck around to do autographs and meet crazy fans like me.  He mentioned that everyone should read Warren Buffet’s Annual Letters to Berkshire Hathaway Shareholders.  Not a shareholder?  No problem, they’re posted free here: BERKSHIRE HATHAWAY INC. SHAREHOLDER LETTERS

So to sum up, Tim Ferriss had a unique approach to his own MBA which in a nutshell is about going to work for a smaller company (under 50 people) where you can directly report to someone who is the CEO, COO or VP.  By working closely with and for these dealmakers, you’ll learn a ton of information that can quickly and easily outpace your counterparts in expensive MBA-land because you’re not just learning, you’re DOING while they’re learning.  Big difference..

Another favorite author of mine, Seth Godin, did something pretty interesting when it came to getting an MBA.

Seth Godin’s Alternative MBA
In his post If You Could Change Your Life, Seth had this to say:

“Getting into Stanford Business School changed my life. In college, I trained to be a mediocre engineer (I didn’t set out to be mediocre at it, but I sure was). I was on track to become Dilbert.  Getting into Stanford meant jumping the track. Going from one path to another in one fell swoop.  I didn’t learn much of substance at business school, but that’s fine, because the school allowed me to make a graceful transition. I had permission to reinvent and a platform to do it.”

An MBA provides an easier road to that next level in your career, this is undeniable, but everyone doesn’t need to jump the line if climbing the corporate ladder is not in their plans.  You can create your own alternative MBA program if it makes the most financial and personal sense.  You just have to be clear on why you’re doing it and how you’re going to get the most out of your instructors.  In his write-up of his Alternative MBA Program, Seth quickly summarized the key findings from the alternative MBA he created.

“Learning: The educational lesson that I found the most striking is that the book knowledge was easy to transmit and not particularly essential. Once you get this far, it’s sort of a given that you’re good at school. We read more than a hundred books, and the book learning happened quickly. Our culture has done an amazingly good job at teaching talented people how to learn concepts from books.

I taught for five to twenty hours a week, and very little of it was about the books. So, if concepts from books are easy, what’s hard?

Doing it.  Picking up the phone, making the plan, signing the deal. Pushing ‘publish.’ Announcing. Shipping.

We spent a lot of time on this area. Every morning, each person came in prepared to push someone in the group to overcome the next hurdle. This is what growth looks like, and it was energizing to be part of.

We didn’t do this at all at when I was at Stanford. We spent a lot of time reading irrelevant case studies and even more time building complex financial models. The thing is, you can now hire someone to build a complex financial model for you for $60 an hour. And a week’s worth of that is just about all the typical entrepreneur is going to need. The rest of the time, it’s about shipping, motivating, leading, connecting, envisioning and engaging. So that’s what we worked on.

It amazes me that MBA students around the world aren’t up in arms. How can schools justify taking $100,000 in cash and teaching exactly the wrong stuff?”

What a kick in the pants and an inspiration at the same time.  If you focus on those two things – Learning and Doing – and you follow-through consistently, you’re going to have a pretty good run.

By the way, I heard Seth speak at a free event last year and I have pages full of notes I took.  The information was comparable to the marketing courses I paid thousands for years ago.  It’s amazing what you can learn and accomplish if you decide to create your own personal MBA program.  It’s alway amazing what you can do – for close to no cost whatsoever – if you take full advantage of a traditional MBA program.

Is an MBA Degree Worth Pursuing?
So there you have it.  I’m ending on this point of Learning vs. Doing.  Even though I went for my MBA, I can see situations where it makes sense to forget the formal route and go for the alternative MBA.  Either route can work; it just depends on where you’re planning on ending up and how long you can wait for the payoff.

So, is an MBA worth pursuing?  Let me know what you decide.