Benefits of MBA Degrees: Online or Offline

Har­vard Busi­ness Review gives finan­cial advice on whether age deter­mines whether the per­for­mance of CEOs with MBA degrees online or offline will improve:

Are CEOs with MBAs actu­ally stronger lead­ers? The answer might depend on the age of the CEO.

Inspired by the rag­ing debate last year over the role of MBAs in the finan­cial cri­sis, we tried to ana­lyze whether hav­ing an MBA influ­ences over­all CEO per­for­mance. In a large-scale study of CEO per­for­mance since they took office, we found that other things equal, MBA CEOs had a slight per­for­mance edge over their non-MBA peers. In our analy­sis and rank­ing of the per­for­mance of 2,000 CEOs around the globe, CEOs who had an MBA on aver­age ranked 40 places higher than CEOs who didn’t have an MBA (a sta­tis­ti­cally sig­nif­i­cant effect).

Ben­e­fits of MBA Degrees Online

My response is com­pli­cated, and it has noth­ing to do with age. Bear with me.

I’m almost 30. As my biog­ra­phy details, I have been at the bottom-rung of a news­pa­per as well as the boss of a pub­li­ca­tion. I have been the entry-level employee of an online-marketing firm as well as the owner and pres­i­dent of a busi­ness in the same sec­tor. In true jour­nal­is­tic fash­ion, I have seen enough pos­i­tive and neg­a­tives to form a few, objec­tive opinions.

Here is the nut­shell: An MBA is the same as a liberal-arts degree, except that it focuses on the busi­ness world. After study­ing for my MBA at two, dif­fer­ent uni­ver­si­ties on two, dif­fer­ent con­ti­nents, I have learned enough to have a solid foun­da­tion in every aspect of busi­ness from eco­nom­ics to finance to mar­ket­ing to man­age­ment to prod­uct supply-chains. Admit­tedly, I have become a jack of all busi­ness trades but a mas­ter of none.

(Now, some of you are right­fully ask­ing: So what is the point of an MBA if I majored in busi­ness in col­lege? And you would be cor­rect. If you stud­ied busi­ness for four years, ignore the MBA unless your com­pany or boss requires it down the road. The most that an MBA will teach you is inter­per­sonal skills for man­age­ment through sem­i­nars and classes — like when I learned how to use team­work to sail suc­cess­fully in Key West with my Exec­u­tive MBA class from Suf­folk Uni­ver­sity in Boston. But one should be able to learn the same lessons if he is at all cog­nizant of inter­per­sonal rela­tions in the work­place. The other thing that an MBA at a good school will pro­vide is net­work­ing oppor­tu­ni­ties through your class­mates for the future.)

Get­ting an MBA

Still, the ques­tion is: What is the value of an MBA? Here is my answer.

At upper-management lev­els in most large com­pa­nies, most peo­ple — hope­fully! — know what they are doing. The vice-president of sales and mar­ket­ing knows how to max­i­mize rev­enue. The vice-president of finance knows how to man­age the money through finan­cial hold­ings. The vice-president of oper­a­tions knows how to min­i­mize pro­duc­tion costs. So, what is the role of the CEO?

First and fore­most, the CEO should com­mu­ni­cate a vision — ide­ally handed down through the board of direc­tors — to upper-management. This much is obvi­ous. But what is left unsaid is the CEO’s role as an medi­a­tor between dif­fer­ent depart­ments with dif­fer­ent priorities.

Say that Com­pany X has $1 mil­lion in profit after a given quar­ter. How should the com­pany invest this money? Should the money go towards improv­ing marketing-and-sales efforts? Should it go towards finan­cial invest­ments and hold­ings? Should it go towards decreas­ing operations-costs? This is the deci­sion of the CEO, because each depart­ment is going to clamor for addi­tional resources to help its own efforts.

This is where a CEO with an MBA will come in handy. Most CEOs today, at least accord­ing to what I learned in busi­ness school, are for­mer CFOs — that is, they worry about the money. But this is a prob­lem. Depend­ing on the com­pany, the funds might be invested bet­ter else­where. The job of a CEO, in this con­text, is to ask the right ques­tions of the vice pres­i­dents and decide where it is best to allo­cate resources. And, regard­less of the age of the CEO, this is only pos­si­ble when the exec­u­tive has enough knowl­edge to ana­lyze the basic struc­tures of each depart­ment — with­out bias — and know how to act accordingly.