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Sunday, June 19, 2011

Why and how to do MBA?

Rancho, the hero of 3 Idiots, says to the heroine 'Your prospective bridegroom is a fool. He did Engineering, then MBA and now he is working for a Bank. If he had to work for Bank, why did he do Engineering?'. Is Rancho right in his criticism?

Let us delve deeper to understand the two forces at work that has made the above possible: Demand of MBA skill set and pipeline of graduates that feeds the demand.

Demand of MBA skill set has been growing

Demand of MBA skill set has been growing because the 2-year course in MBA produced three speciality skills ( especially in India) : Finance,Marketing and HR that were required by growing private sector companies.

The boom of investment banking (increasing mergers, share market access, and disintermediation of funds) specifically fuelled the need of finance skill sets. Even though courses like CFA have sprung up to meet the demand gap, the organisational 'angle' of MBA still make MBA the favourites. If you observe the salaries offered at MBA Campuses, you will still find 'Finance' hogs the limelight. Sales and Marketing jobs in companies today are still filled mainly by these MBA's. Personnel jobs, inside India, are still filled by HR MBA's.

It is a myth that MBA course is meant to develop the skill of 'Management' ( Managing people and business operations). As Management is a 'doing skill-set', short courses of Executive MBA are more suitable to develop this skill-set than the 2- year full time course of MBA.

Options for graduates ( the pipeline doing MBA ) are shrinking

While the demand for MBA skill set has been growing, the options for graduates - the pipeline that supplies graduates to MBA course for post graduation - have been shrinking.

On the one hand, the jobs for graduates have been shrinking because companies can afford to get post graduates at the same price. Company prefers to give a job to MSc instead of BSc, if it has choice. Jobs for graduates are also not growing at the same pace. For instance, while Engineering graduates have increased in number ( Every year more than 2.5 lakhs graduate as Engineers in India), jobs for technology skills have not kept pace with this number. Therefore, for average graduates, option of MBA has been a ticket for a safe job. Why should graduates not prefer to do MBA?

Rancho will ask me: Why do above-average Engineering graduates join MBA when they can get better technology jobs? They do it because they realise their mistake of choosing technology as their graduating path. As i have discussed in my blog for students, thinking competency folds in unpredictable ways.Even Noble prize winners move from physics to biology to chemistry. How can a engineering graduate know that he will stick to technology?

Scenarios of doing MBA course

In my coaching, i have observed four different scenarios of graduates doing MBA. I am narrating Engineering examples below because they face this dilemma strongly than other professionals:

Scenario 1: A IIT student wants to do MBA to change his graduating path, because he is sure technology path is not meant for him. Follow this approach, if you can manage to get admission in Grade I MBA Institutes - the top 10 institutes - like IIM's. If however you cannot get admission in Grade I Institute, work for few years, and change over to MBA. This is a better approach, because it is far easy to 'assimilate' the teachings of MBA after work-experience.

Scenario 2: A student from top Engineering institute doing Electrical Engineering is not very sure of his choices - whether to do post graduation in Electrical or do MBA. This student should work for 2-3 years in Electrical Engineering and take a decision later to continue with Electrical or change to MBA. Only 'Engagement' with the activity tells us what we want. Morever, moving from Electrical to MBA is possible after 3 years; the reverse movement is not available after 3 years.

Scenario 3:
A student from an average Engineering Institute cannot get admission in Grade I MBA institute after finishing his graduation. In such a scenario, it is better to get admission in Grade II MBA institute with niche speciality. For instance, find a niche MBA, such as Rural Management.

Scenerio 4 ( alternative to scenario 3): If generic MBA is the only option, then you will have to do numerous things to exploit the advantage of doing MBA, such as focusing on specific industry like Banking or FMCG right from start, finding assignments with a live company and so on.This approach requires high degree of Career intelligence than other approaches.

Where do you fit?


  1. In today's TOI, i read that, in the current batch of IIM-B, 91% students are engineers. Surprisingly though, even now, 20% of the MBA students are freshers. ( students without any work experience)

  2. Hi Sanjiv,

    It's really a nice blog to make up mind for MBA or non MBA. Can you share your views or can provide a picture to distinguish for an MBA as regular or a MBA correspondence.

    Pavan Yadav

  3. Pavan,

    Generally speaking, it is not a good idea to do MBA correspondence course, because MBA is about 'doing skills'. However, if MBA degree is required for some reason, then do MBA from one of the courses being offered by IIMs. IIM now a days offer a one year MBA course in a specific subject in your town through distant learning. That could be a better option.

    Once you start working, and you do not want to use MBA to change your 'work-path, then it is better to do 'executive mba' course of short duration with a good institute like IIMA,or IIMC.