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.