What Do You Do If You Can’t Afford an MBA?
An MBA is expensive. There’s no doubt about it. So, how do you afford one?
According to U.S. News & World Report, the average cost of an two year, full-time MBA from one of the top business schools in the U.S. is over $130,000. That number doesn’t include the cost of boarding and books ($40,000), peripheral expenditures ($20,000), and the cost of lost income ($120,000). Altogether, your total opportunity cost could come to around $300,000 for a two-year MBA.
If that number sounds astronomical, you’re not alone. While earning an MBA can advance your career path and greatly enhance your future earnings, few people feel blasé about the upfront cost. However, with a little bit of research, insight, and know-how, paying for your MBA doesn’t have to be out of your reach.
If you’re a prospective MBA student worried that you can’t afford an MBA, here are a few ideas to help you pay.
New Kellogg Study Reveals Common Entrepreneurial Traits
When most people think of the “ideal” entrepreneur, they picture someone like Mark Zuckerberg, an individual who is young, ambitious, and nonconformist. They imagine someone who is eager to change the status quo. We tend to mythologize these young disrupters as the consummate startup founder with these common entrepreneurial traits.
However, a recent research study from Northwestern University Kellogg School of Management has revealed that’s not the case at all. The reality is that most successful entrepreneurs are actually middle-aged, have extensive experience in their industry or sector, and their serious innovation arises from the result of their deep experience.
Entrepreneurs Are Knowledgeable
“Those with industry experience are much more likely to hit a home run than those who come from outside the sector,” explains co-author Benjamin F. Jones, Professor of Strategy and Entrepreneurship. He goes on to say, “If you’re familiar with the ins and outs of an industry, having worked in it, and you have a strong professional network, your odds of success are greater.”
Most successful entrepreneurs have to know the products, customers, suppliers, competitors, and channels of distribution well. They have to know what works and what doesn’t.
For example, Ray Kroc gained years of experience in the restaurant industry before he experienced his breakthrough success with McDonald’s. The same goes for David Duffield, the founder of PeopleSoft. He began his career understanding the nitty-gritty details of the software industry before he made his innovations.
Entrepreneurial breakthroughs mostly happen to people in their 40s, like David Duffield, founder of PeopleSoft, according to new Northwestern Kellogg entrepreneurship research.
“I’ve studied age and creativity for a while, and there’s a pattern of Nobel Prize winners, inventors, artists, and innovative minds making breakthroughs in their 40s,” Jones says. “I don’t think it’s an accident that we see the same pattern in business. These are people who have been around for a while and seen what works.”
Entrepreneurs Learn from Every Experience
However, it’s just working knowledge of their industry that leads to entrepreneurial success; it’s the ability to learn from every experience. Successful startup founders need a combination of education, experience, and specific market knowledge to get their innovations off the ground.
There’s also a need for entrepreneurs to have access to an extensive network so that they can learn from those around them. Most founders work within their social networks to facilitate creation and to get their ventures up and running.
Entrepreneurs Try Again and Again
Finally, there’s the law of batting averages. The more chances an experienced entrepreneur takes, the greater the odds are that one of their opportunities will be successful. Not everyone is willing to keep trying even after a list of failed ventures. For example, Ray Krock was in his fifties before McDonald’s became a success. Before that, he struggled to get any of his ideas to take off.
“It’s a matter of probabilities,” Jones explains. “Those who study their industry and pay close attention have either learned some things through trial and error themselves, or learned by watching others. Maybe failure itself is a useful instructor. Or maybe it’s just about having more swings of the bat.”
You can read the full article on Kellogg Insight.
This article has been edited and published with permissions from its original source, Clear Admit.
Handling the Customer Employee Relationship, According to Northwestern – Chicago News
Let’s explore some of the most interesting stories that have emerged from Chicago business schools this week.
Customers Can Be Jerks. Here’s Why Some Employees Retaliate – Kellogg Insight
Northwestern University Kellogg School of Management Clinical Professor of Management and Organizations Cynthia Wang co-authored new research that seeks to understand the broader implications of employee reactions to unpleasant customers. Do they respond in turn with hostility and try to sabotage the customer or do they turn the other cheek?
Among the extensive psychological research in this area, Wang and her co-authors were drawn to a model known as the social intuitionist model, which argues that moral-decision making is the result of snap judgement and heightened emotion.
“In that heightened emotional state,” Wang explains, “we begin to view problem customers as not worthy of fair treatment—a phenomenon psychologists call ‘devaluation of targets’—which leads employees to see those customers as subhuman.” The reverse, where customers also treat employees poorly, also rang true.
Wang adds:
“These decisions are very quick and implicit. We don’t necessarily notice them going on.”
You can read more about the research here.
Brexit Clouded by Uncertainty, Says Gies Professor – Gies School of Business News
United Kingdom Prime Minister Theresa May canceled the House of Commons Brexit vote that was scheduled for December 11, putting a Brexit solution on hold for now, leaving the future of UK’s relationship with the European Union up in the air.
The UK is still scheduled to leave the EU on March 29, 2019 and parliament needs to strike a deal to make the departure as smooth as possible. Major challenges include finding a solution for the border between Northern Ireland and the Republic of Ireland, along with dealing with the consequences of leaving the European Union for businesses and jobs in both the United States and the UK.
Candace Martinez, University of Illinois Gies College of Business Clinical Assistant Professor of Business Administration, remarks, “If the UK cannot arrive at a solution to the Irish border quandary, a ‘backstop’ approach is a last resort,” noting that Northern Ireland voted to remain in the EU on the June 2016 referendum.
Martinez adds, “Uncertainties are everywhere. This is uncharted waters, to be sure.”
You can read more from the interview with Martinez here.
Sales Class Challenges Students to Provide Creative Solutions for Nonprofits – DePaul Business News & Events
As part of the Marketing 386: Social Impact Sales course at the DePaul University Driehaus College of Business Center for Sales Leadership, students are partnered with a local nonprofit, providing marketing and sales advice. “After working in teams, students present their business plans to the nonprofit toward the end of the quarter. A winning team is then selected by Drehmer and the non-profit to present their creative solutions in front of executives at 3M in St. Paul, Minn.,” according to DePaul University’s Jaclyn Lansbery.
(Left to right) Center for Sales Leadership Executive-in-Residence Charlie Drehmer; Isaly Varela; Mark McLellan, national channel operations manager at 3M; Dominique DiVito; Gavin Hultgren; Ava Kilborn and Mike Nowak / Photo via business.depaul.edu
Charles Drehmer (BS `03, MBA `04, MA `16, Ph.D. `17), who teaches the course, says: “The Social Impact Sales class is extremely rewarding for both me and the students in that we truly make difference in people’s lives. The class is as real as it gets, where students meet with the client to discover their needs and wants, design and execute a market research study and then present their recommendations to the client. Not only does the project provide students a hands-on real-world experience, they also get to make a positive impact on underserved communities.”
Last fall, students worked with Chicago Community ToolBank, providing a marketing and sales strategy. “The project focused on a new program, Corporate Days of Service, which offers private companies a unique team-bonding experience where they use the ToolBank’s tools and facilities to build furniture that is donated to a nonprofit organization of their choice. Students also worked together to build bookshelves that were donated so they better understood what new service would entail,” Lansbery writes.
Isaly Varela, an undergraduate business student in the program, adds, “The class has given us the skills to think critically about marketing and sales along with being comfortable with ourselves.
To read more about the program, head on over to the official DePaul Univesity website.
The Trainee Grunt Work Dilemma, Explained by Northwestern Prof Luis Rayo
Working alongside colleague Drew Fudenberg—the Paul A. Samuelson Professor of Economics at MIT—Northwestern University Kellogg School of Management Professor of Strategy Luis Rayo asks, does the trainee grunt work dilemma make complete economic sense?
Kellogg Insight author John Pavlus talks with both Rayo and Fudenberg about their new research on the topic, “to determine whether the relationship most resembled an economic quid pro quo, or something more akin to a prolonged test of skill, or merely a rite of passage.”
“Master-level knowledge is extremely valuable, but also very difficult to transfer efficiently,” writes Kellogg Insight author John Pavlus.
The “fundamental economic problem” Rayo faced when he was studying under a professor during his undergraduate tenure is that “master-level knowledge is extremely valuable, but also very difficult to transfer efficiently.”
“Consider an idealized transaction between a master sushi chef and an unskilled protégé: the protégé, ideally, would simply ‘buy’ the expertise he wants for a fair price up front, just as he would for any durable good. Unfortunately, the cash value of the chef’s accumulated knowledge is likely to exceed any amount a novice could possibly afford.”
Rayo and Fudenberg find that if the trainee cannot immediately “pay” (hypothetically) for the training, then the person training them is not in a position to “drop everything” and help them learn. In contrast, if the person training them offers to let the trainee pay them back down the line, then the trainee has unfair leverage in the economic exchange.
“Given this economic impasse—a novice wishes to ‘buy’ knowledge that she cannot currently afford from a master who cannot reliably extract payment for it in the future—how can the two parties make their exchange?”
The (Potential) Trainee Grunt Work Solution
Rayo and Fudenberg’s potential solution is a mathematical model where “the master and novice simultaneously choose how much time and effort to expend working with each other.”
“One way to profit from your novice is to keep him around working for a long time by training him slowly,” Rayo tells Pavlus. “Maybe his brain would be able to learn all of your knowledge in one or two years, but you might take ten years.”
The trainee grunt work dilemma arises often early in the training process. Considering those starting their careers are not often economically in a stronger position than the person training them, the trainee needs to work, but doesn’t yet have the requisite knowledge to complete higher-level work. However, Rayo argues, there is a benefit.
“In professions where there’s a considerable amount of knowledge to transfer, the model predicts that you’ll tend to observe large amounts of menial work early in the relationship,” he says.
To curb instances where the trainer overworks the trainee, or forces them to do tasks that are not related to the productivity of the job (such as hazing), Rayo and Fudenberg argue regulations need to be in order.
“For example, in 2003 the Accreditation Council for Graduate Medical Education introduced rules restricting the average number of hospital work-hours for medical residents to 80 per week. But Rayo’s model predicts that this kind of regulation will simply induce the hospital ‘masters’ to extend the length of medical residencies to compensate. And there are, indeed, places where this is happening.”
Rayo says, “If you’re serious about regulating these employment relationships, the model shows that it’s better to limit hours worked and limit the overall length of the apprenticeship at the same time.”
While the thought of regulation makes some shudder, Rayo argues its for the greater good. “What masters lose from the regulation is less than what apprentices gain from it.”
Check out Pavlus’ story “Why Do Trainees Get Stuck with So Much Grunt Work?” over at Kellogg Insight.
The Big Picture: The 5 Most Important MBA Numbers of 2018
Each year there’s a ton of new information that comes out about MBA programs. From new rankings to the latest GMAC news, there are a thousand little tidbits that can overwhelm applicants, students, and alumni. We’ve collected the most important MBA numbers of 2018.
To pare down the news into the information you need to know, we’ve taken a look at the big picture of the MBA for 2018 and outlined the five most important pieces of data you need to know. We’re talking about everything from the decline and U.S. MBA applications to the increase in female enrollment, the higher salaries and GMAT scores, as well as the increase in interest in technology. Continue reading…
How Woman Can Close the Pay Raise Negotiation Gap, and More – Chicago News
Let’s explore some of the most interesting stories that have emerged from Chicago business schools this week.
Are You Willing to Stretch the Truth While Negotiating? – Kellogg Insight
Research trends have found that men are more willing to lower personal ethical standards during negotiations than women when it comes to pay raise negotiation.
However, a new study from Northwestern University Kellogg School of Management‘s Maryam Kouchaki, Assistant Professor of Management and Organizations, finds that there’s a situation that throws a wrench in the works: “when women negotiate on behalf of others.”
Kouchaki and her UC Berkeley co-author Laura Kray write:
“A woman who is negotiating on behalf of someone else will lie at roughly the same rate as her male counterpart. But, if she is negotiating on her own behalf, she is much less likely to deceive. Women in advocacy roles [get] as much done as men.”
You can read more about Kouchaki’s pay raise negotiation research here.
Will EU Migrants Pay Their Fair Share of Taxes? – Chicago Booth News
The Chicago Booth Initiative on Global Markets surveyed its European Economic Experts Panel, which is comprised of “50 economists and top researchers,” about whether recent European migrants are likely to “contribute more in taxes paid than they receive in benefits and public services.”
LSE’s Daniel Sturm writes, “Being younger and typically better educated, their [the migrants’] fiscal contribution tends to be positive as suggested by recent research for the U.K.”
Goethe University Frankfurt’s Jan Pieter Krahnen agrees:
“As [the] employment rate among migrants goes up over time, and much of taxation is indirect anyway, chances are that the statement comes true.”
Director of the European IGM Panel Christian Leuz is less optimistic. “[It is] too early to tell. Labor market outcomes are often worse for [a] long time. Demographics are [a] plus. Much depends on fast integration into [the] labor market.”
You can read more from the panel’s discussion here.
Faculty and Students Team Up with Northern Illinois Food Bank – Quinlan School of Business News
Loyola University Quinlan School of Business’ Urban Social Benefit Incubator teamed up with the Northern Illinois Food Bank to develop a “new system for serving its families” to replace the precarious first-come, first-served process it currently employs.
Quinlan is proposing “an online ordering system that allows for pick-up at strategic locations in the community, such as a grocery store.”
Harry Haney, Associate Director of Quinlan’s Supply and Value Chain Center, who is helping spearhead the initiative, writes:
“It’s important to us to serve nonprofits and social enterprises to help make a difference in the community. Plus, our students are learning the real-world side of business and gaining additional educational exposure.”
You can read more about Loyola’s food bank initiative here.
