The Naked MBA

When you start business school you spend a lot of time answering the question “What do you want to do?”.  The first day of orientation you’re on autopilot, answering by repeating your application essays verbatim: “I plan to draw on my previous experience as a junior research analyst to go into investment banking at a bulge bracket firm.” You speak boldly about the path you envision for yourself, from your first day on the job to the champagne toast on the day you become CEO. Everyone around has the same air of confidence as they lay out their career goals:

“I’m planning to go into private equity—that’s where the real money is.”

“Consulting is where it’s at if you want to have a real impact.”

“I’m pursuing sports marketing and eventually plan to run a media conglomerate.”

Suddenly you’re faced with a whole roomful of possibilities you hadn’t considered. Your own plans seem less and less interesting. By the next day you’re telling people “I’m considering investment banking but I’m also looking into consulting--oh, and I feel my skills would align well with a career in entertainment media.”

By the time on-campus corporate presentations start, your calendar is booked solid because you’ve signed up for ALL of them. You find yourself ducking out of a cocktail hour with Morgan Stanley to rush to the tail end of a presentation by L’Oreal, then rushing off to an informational interview with BCG. You tell yourself you’re keeping all the doors open while you figure out what your calling is. The truth is, you’re running yourself ragged trying to keep up with the recruiting processes of four different industries, leaving you with no spare time to reflect on your career choice. It’s time to close some doors.

But eliminating options is hard—even for super-smart MIT students. A recent series of experiments showed that hundreds of students could not bear to let their options vanish, even when it became clear that this wasn’t the best strategy. The students played a computer game that paid them real cash to look for money behind three doors on the screen. They could switch rooms to search for higher payoffs, but each switch used up a click to open the new door (they had a 100 click limit). The best strategy was to quickly check out the three rooms and settle in the one with the highest rewards. But if they stayed out of any room, its door would start shrinking and eventually disappear. This is where students ran into problems--they wasted so many clicks rushing back to reopen doors that their earnings dropped 15 percent!

The moral of this story is clear: closing doors makes you more successful. And it’s the only way you’ll survive business school. If it helps, don’t think of the doors as locked forever—people change careers and average of 5 times in their lifetime now. A closed door today can be opened again tomorrow. But for now, do yourself a favor and start eliminating options so you can walk confidently through one of the doors you’ve left open.

A friend of mine who works on Wall Street spent last Saturday interviewing undergraduate students for her bank’s summer internship program. At the end of the day she felt exhausted—and surprisingly unaccomplished compared to a bunch of 20 year-olds. “These kids are amazing,” she told me. “They’re only juniors but they’ve already had five internships at major companies, been to every continent, and founded a start-up company. I’m going to be working for them one day very soon!”

Today’s college students are more accomplished than ever before. Many have been working for years already, and we’re not talking about delivering papers or flipping burgers. They have landed internships at large companies, or enrolled in prestigious summer programs that send them to far-flung places on intensive study courses and internships. They have started websites, been club presidents and organized charity drives at their schools that would put the Red Cross to shame. Yet business schools are still telling them they can’t apply unless they go get four more years of work experience after college graduation.

In 1966 close to one-third of students went to Harvard Business School straight from undergrad. Now students straight from college make up less than 1% of the student body. In top MBA programs the average student has 4-6 years of work experience. It’s true that more work experience can give you a clearer idea of what you want to do for your career, and that having a clear goal is very important in deciding to apply to business school. On the other hand, when I started business school with nearly 4 years of work experience, I had a very fuzzy vision of what I wanted to do compared to the 20 year-olds my friend interviewed. And let’s not forget that the CEO of Facebook, Mark Zuckerman, is 23 years old. There are more and more Mark Zuckermans on the way, and business schools need to embrace them and the value the experience they’ve already had.

Some schools are taking steps to acknowledge the accomplishments and ambitions of a younger demographic: Stanford plans to make 100 college visits this year, and the percentage of students admitted to Wharton straight from undergrad has risen to 3%. These schools have recognized that people are developing the acumen it takes to succeed in business school at a younger age, and that they have the ambition to go along with it.

I hate group travel. The thought of being on a tour bus or following a guide holding an umbrella makes me shudder. So during my first year of business school to help organize a spring break “study trip” to Brazil for 100 of my fellow students, I wondered if I’d finally lost it.

First of all, who goes to Brazil to study over spring break? No one, as it turns out. Our group had a full schedule of company visits and lunches with CEOs, but they were all optional. Second, going everywhere in a herd of 100 people is not my idea of a good time. But the fact is that since people on the trip signed up to visit a specific destination, I automatically already had something in common with them: we were all excited to visit a developing country and interested in Latin culture. And having a large group made it possible to have some experiences we wouldn’t have otherwise; like taking over a whole VIP section of the Sao Paolo soccer stadium, or reserving an entire chuhascarria for dinner.

The group outings and dinners turned out to be a lot of fun, and gave me the chance to mingle with everyone and start to get to know them better. As the week went on, attendance to company visits and presentations declined. People made friends and made plans to head to the beach instead of corporate headquarters. Smaller groups started to form based on specific interests: laying on beach, adventure sports, shopping, drinking, etc. It was a great way to find out who you had a lot in common with. And nothing makes you bond with people faster than having to figure out together how to say “which way to the hang gliding school” in a foreign language.

I made great friends on my trip to Brazil and ended up traveling with a smaller group of the same people the following year. You may think that group travel isn’t for you, and in an ordinary situation maybe it’s not. But business school isn’t the ordinary, so I recommend giving it a try.

The other day I had lunch and caught up with a good friend from business school. We talked about the paths we’ve taken in the nearly years since graduation. I first took a job in structured finance with a large investment bank. I hated it and switched jobs, but that’s another story. My friend, on the other hand, didn’t get any offers right away and was still looking for a job when we graduated. He landed at a financial services company where he has been working ever since. “You know,” he told me over lunch, “the job you had out of business school was my dream job.”

“Your dream job involved a cubicle and spreadsheets?” I asked.

“No, I mean it was the job I wrote my business school essays about—structured finance.”

It turns out that he did, indeed, write his essays about wanting to go to business school to get a job in structured finance. And he had a great case, because before school he worked for a mortgage company that was often on the other side of those deals. In contrast, I had no case for getting the job—I had no finance experience and before business school, having worked for an international non-profit where my most important job skill was knowing what time it was anywhere in the world. If companies hired people based on résumés alone he would have gotten the job. But since they do something called an interview, I got it. This is also why I got two other job offers and why I was called back to the final round of interviews for every job I applied for in business school. I interview well. I can talk to anyone about anything. I rarely get nervous, or if I do I don’t show it. My friend is one of the smartest people I’ve ever met. He made all the hard finance classes in school look easy. He is fun and interesting and has a great résumé. But I have a feeling he doesn’t interview well.

In business school you spend a lot of time working on your résumé and honing your technical expertise for interviews. An interview, though, is just a conversation—and sometimes we forget how to converse. We forget how to be engaging and interesting and how to connect with people. At the end of the day you have to make people want to hire you--not just because of your experience or your technical skills, but because when they imagine spending 10 hours a day with you every day for weeks on end, it’s not so bad. They have to like you to hire you--more than everyone else they interview. At top business schools it’s very competitive because everyone is smart and accomplished and has a great résumé. So the ones who get the jobs are not only smart and accomplished, but they’re the ones you want to take out for a beer later.

I’m not claiming to being Miss Popularity because I got a job, but when I was job hunting I knew what I was working with. I didn’t have the skills or experience that others had, but I knew how to connect with people. It’s a skill that shouldn’t be overlooked. So when you’re in the midst of trying to cram Porter’s Five Forces or a discounted cash flow model into your head for interviews, take a break and go have a beer and shoot the breeze with friends for a while. It could just get you a job.

I wanted this to be an optimistic post. I searched website after website, trying to find some upbeat data in the midst of all the doom and gloom projections. Then when all I could find was scary, discouraging data, I tried to think of a hopeful twist I could give it. But then I remembered that this blog is called The Naked MBA, and that I promised to tell the bare truth about what to expect from business school. And the bare truth is that sometimes—like right now--the job market stinks. And another unfortunate truth is that the job market into which you graduate affects you for many years to come. A recent study finds that the setback in earnings for college students who graduate in a recession stays with them for the next 10 years!

So I’m not going to try to paint a pretty picture of something we all know is really ugly. But I can offer some suggestions for the best ways to smooth your path and avoid total career derailment.

Flexibility is key.
Normally I don’t recommend the “back-door” route, since where you start has a lot of influence on where you end up. In a bad job market, though, you have to adjust your scope and expectations. If you get a job offer that isn’t quite what you’re looking for, but you can chart a clear path from that position to the one you want, then go for it. Also, think small (in terms of market cap). Sure you might be graduating from a top business school, but you still don’t know anything. At least that’s what Goldman Sachs, Citigroup, Morgan Stanley etc. think. To them you are just a really expensive clean slate that they have to put a lot of money into training. And with the multi-billion dollar losses they’ve been experiencing, there’s not a lot of that money to go around anymore. Expand your scope to include smaller companies and you may have more options.

Be open to relocating
If the job market is bad in New York, that doesn’t necessarily mean it is in Chicago or Dallas.

If you get a job, be prepared to lose it
Unfortunately the “first-in, first-out” theory often holds. You have a job now but if the market continues to tank, you may not in 6 months. After living like a student for two years (or not) it’s tempting to start spending like a CEO when you emerge into the working world. Before you develop a Dom Perignon and caviar habit, however, concentrate on developing a budget and building up an emergency fund.

Negotiate the best possible situation
When you land a job, negotiate the best possible salary for yourself. This is always important, but even more so in a bad job market when people will try to underpay you. You may have to accept a lower starting salary than you would in a good market, but it shouldn’t be significantly lower. Companies often try to entice new hires into accepting a lower base salary by promising a larger bonus. You’ll have to do the math, but remember that you base salary is your starting point when you negotiate a raise, or switch jobs and negotiate your new salary. If your employer-to-be can’t raise the starting salary, ask for a better title—your title is also something that will affect what you can negotiate later on.

Jump ship as soon as you can
If you get a job but not the job you want, jump ship as soon as something better comes along. The same study that found that the setback in earnings for students who graduate in a recession stays with them for the next 10 years, also found that the recession graduates who actually do catch up tend to be the ones who forget about rising up the ladder and, instead, jump ship to other employers.

Get lucky
I wanted to tell you that the job you have after graduation doesn’t matter that much. But the unfortunately all the research says that it does. So try really hard to get lucky and land the job you want. Buy a rabbit’s foot, improve you karma by helping little old ladies cross the street—whatever it takes to get yourself on the right path from the very beginning.

The assignment is familiar (or will be very soon if you’re about to start business school): Company X is facing a challenge—be it losing market share to a competitor, trying to decide whether to introduce a new technology, or facing a financial crisis--and it’s up to you to find a solution. You’re provided with a thick, heavy binder of information (that the bookstore makes a killing off of), including a complete background on the company and its competitors, an overview of the industry, market share and segmentation numbers, financial analysis going back 5 years, and bios of all the major players. There is also nice little storybook that walks you through the dilemma you have to address. In this storybook there is a hero, a villain, a plot and usually even some dialogue.

You’ve been hit with a case study. The case study is standard fare in business school, and is supposed to simulate real-world issues in order to teach you how to make the kinds of decisions that you’ll face once you’re working. But the truth is, case studies don’t prepare you for much.

You probably won’t have time to start reading your case study assignment until the night before it’s due, which is similar to the timeline in the real world, where sometimes you only have a few hours to analyze the situation and make a decision. But that is where the similarities between a case study and the real world end. In the real world you will never have all the information at your fingertips that you need to make a decision--complete with indexed page numbers. The majority of decisions have to be made with incomplete information—information that has to be dug up quickly and analyzed on the fly. Case studies do encourage analytical thinking and the application of theories to real problems. But what companies increasingly say they look for in their MBA hires is the ability to frame the problem, to quickly assess what information they need to solve it, and to know how to get that information.

In an attempt to address this gap between the training that business schools provide and what companies expect of their new hires, Columbia Business School created the Decision Brief. A Decision Brief provides less information than a case study, with the goal of training students to be comfortable making decisions out of uncertainty. They’ve put out six of these briefs so far on current business challenges, such as outsourcing.

While I don’t think case studies are going to disappear from business schools any time soon, I hope that other top schools will take note of Columbia’s new curriculum. If schools really do want to prepare students for the workplace—as they say they do--then case studies with pre-cooked information aren’t the answer. They best thing business schools can do is prepare students for the only thing that’s certain in the real word: uncertainty.