May 23, 2008

ROI / MBA - revisiting my thoughts

Long ago, in March of 2007 even before I started INSEAD, I made a post on ROI (return on investment) of MBA. I was not a fan of ROI arguments then, and now, when I am close to finishing my MBA, I am even more convinced of the futility of making ROI calculations, and specially if you are graduating from top programs.

Part of doing the MBA is the acceptance that there is a risk in that investment, and the confidence that in many cases it pays off handsomely. For some, it happens early, and for some, a little late. In my case - my post MBA salary is about two hundred and fifty times*** my first salary out of engineering school! If every decision of my career was based on some strange ROI calculation and if I stayed away from INSEAD because I felt my fee was too high, I would have simply missed a chance I would get in very, very few other places. I have to be pretty clear that it was because I was at INSEAD that I got my opportunity.

So, just to reassert - if you're going to one of the top programs

a) There is a high chance you will do just fine - think long term
b) You have a career that spans 30 years or more ahead of you and not 3 years. Don't think in terms of 3 years.
c) Myopic ROI calculations are dumb, that's what they are.

***before you get all curious and excited about this dramatic assertion - take a step back and do a case analysis!

salary-ratio = new-salary/old-salary; either new-salary is very high, or old-salary is very low. what could be the key drivers behind old-salary very low? perhaps I graduated long ago, perhaps I graduated in a country where beginning wages are very low? perhaps my first salary was an unusually bad salary due to specific conditions? any of these (or more) could be true :) so let's not get too worked up over a ratio without understanding what's behind it. Nevertheless, I wrote that just to illustrate how sometimes over time our calculations become absurd. When I graduated, I never, ever imagined I would be earning that many multiples of my beginning base. But it happened.


Anonymous said...

Hi necro...
i am SWE from Bang,india.. i can see reason for high ratio.. :)

Sharkon said...

Hi Necro,

Did u get into any of the Big 3 consultant companies? Hope you beat the INSEAD mean salary by a mile.

- A SWE from Bglr Slogging for INSEAD

Sharkon said...

Hey Necro,

Been an avid follower of your blog.
Have some questions.
What are the options open for a SWEng after MBA? I heard google recruits from INSEAD. What are the positions offered @ google?
Finally, Can you give me a heads up on the Consulting World? What type of candidates suit this line (Insead thinks suit)?

Abt myself..I am a Sw eng in freescale semiconductors bglr(4yrs exp).Retaking GMAT (690(50q,32v)and 4 AWA first time) this tuesday.

Wim De Bruyne said...

Hey man,

where on earth did you graduate?


necromonger said...


Ha Ha - somewhere far and cheap ;)

Sharkon - Please email me with questions and I will answer.

Kalyan said...

250X !! Dude, now thats a quantum leap. Indeed. Congrats Necro

Adventures In Money Making said...

My first programming job paid Rs 3,000/mo. thats about $90/month! haha - I can see how you're making 250 times that! :D

btw, I got in UCLA (& USC with 50% tuition waiver). since I'm interested in Investment Mgmt, I'll probably go for UCLA.

necromonger said...


Indeed! which is why I said don't read too much into ratios :)