Is the MBA over-priced and over subscribed?
I’m getting a lot of questions about whether IT Masters (incl. software engineering / data science) are as good for a consulting career than traditional business/MBA routes.
There is no doubt that outside the top 50 Universities in the world, the MBA no longer has the cachet that it once did. It has become increasingly expensive in comparison to its effect on earnings (from 1:4 to 1:2), and, as more MBAs are granted each year (from 20k in 1970 to nearly 500k now), students are increasingly looking elsewhere.
Traditionally, it has been the MSc in Finance that has been the competitor to the MBA: cheaper, often shorter, and with nearly the same uplift in salary. But, unless you want to go into banking (or financial consulting), the MBA has been the safer bet for the consulting industry.
However, there is a new(ish) kid on the block. The MSc Information Technology (or Data Science or Computer Science) traditionally loved by geeks as a route into software engineering has increasingly been considered by business graduates as a way of adding an extra string to their bow in applying for management consulting jobs.
Should I consider an MSc IT for Management Consulting?
My answer is yes. A strong graduate with powerful data or development skills can earn more than $150k within five years of graduating. The top 1% can earn $£500k. The top 0.1% can eventually expect to earn $2m.
But, some graduates might retort, I don’t want to be a techie. I like sunlight. Dammit, I even like people. I want to be a consultant! This, of course, is fair enough. However, whatever your specialism, a strong understanding of (if not capability for) IT puts you ahead of th e competition. Traditional roles in strategy, HR, marketing, finance and operations have been transformed by IT and having a competence in this area will put you ahead of the competition.
Think of IT like accounting. Having a good understanding of finance is so helpful in most managerial roles now. This doesn’t mean that you need to be ACCA qualified, but that having experience of expertise in management accounting will put you at a huge advantage. Thus, a management consulting candidate doesn’t need to be able to code in Python, but should be able to understand the potential and constraints of IT as it relates to business: new technology, data science, SaaS and systems development.
Take a $5m revenue bricks-and-mortar chain for example. COVID hits, so you want to sell your wares virtually. Do you set up your own website? Do you integrate with Amazon Marketplace or ZShops and sell there? Can you use data analytics to improve your pricing? Can you rebrand your products to achieve a better match with commonly searched phrases? Should you use Facebook or TikTok advertising? Can you use supplier and sales data to reduce your inventory?
Two things are important in understanding the trends here. First, pretty much every traditional function in business (marketing, strategy, operations etc) can be made faster, cheaper or better by IT. Second, client CEOs that have a business, marketing or finance background (i.e. 80% of them) do not understand IT and will outsource the decision and work to consultancies.
Thus, for the applicant to management consulting, having some IT capability (e.g. data science, information management, coding, computing) is invaluable in putting you ahead of the competition as it improves your value to the firm and their clients. Certainly, if you have experience or training in the ‘hot topics’ of consultancy (e.g. AI, ETL, Cloud, machine learning, data analytics, cyber security) you can add much more value (and be SEEN to add much more value) than if you’d just done traditional management topics, but remember that for the majority of clients, basic data analytics and software development is sufficient.
On becoming a Unicorn
The great thing for a business person or graduate with IT skills is that they sit between the IT geek who can’t communicate with the business, and the fluffy marketeer who has no idea what the constraints of technology really are. The best of each skill set seeks to understand and more clearly communicate with the other. The Unicorn for top consulting firms (and indeed FAANG – or Big Tech) is the recruit that understands data and code, but has strong communication and interpersonal skills (note, this is VERY different to ‘thinks they have strong communication skills…’).
If you are a top business student/person able to get on a top 50 MBA programme then it is still undoubtedly worth it. But if you are not, then why try to compete with the 300,000 MBAs that are churned out each year, when you could be a unicorn?
PS – One last thing to say is that if I were a good IT specialist (i.e. the bottom two rows of the table) I would choose FAANG (or even start-ups) over consulting any day of the week. The pay is better (AND you can get equity without being a partner), the hours are fewer, the culture more innovative and autonomous, and the technology is generally better. Unlike Big Tech, most clients don’t NEED cutting edge IT solutions, just solid tried and tested basics. If you’re a great software engineer and enjoy it, you are rare. Why bother competing against the tens of thousands of MBAs that are churned out every year if you don’t want to sell (the crucial competence of senior consultants)?
(As ever, any amendments / comments much appreciated).