The Value of MBAs for Product Managers
Many people wonder whether a Master in Business Administration (MBA) degree will help their product management careers: whether it will help them break into their first PM role, or whether it will help them get promoted, or whether it will help them earn more total compensation.
The good news is that an MBA is almost always helpful and almost never harmful; the bad news is that “is an MBA helpful or not?” is the wrong question to ask.
The actual question we should be asking ourselves is this: “is an MBA the best investment of my time and resources for my particular situation, or is there a better alternative?”
If we lived in a perfect world where we had infinite time, money, and energy, then we could easily find that every skill, degree, and certification would be helpful in some way.
But, we don’t live in a world like that - we live in a world full of constraints.
When other people tell you that “it’d be great if you knew coding,” they’re probably not considering the time and energy that you would need to spend to learn how to code well. Similarly, when other people tell you that “an MBA is always a good idea” or “an MBA is always a bad idea,” they’re probably not considering the constraints that apply to you specifically.
Therefore, when we seek to invest in our careers, we need to pick the efforts that will give us the highest return on investment (ROI) for our specific contexts and goals. In other words, there’s no clear “yes” or “no” answer that applies across the board - we each need to make our own thoughtful decisions and tradeoffs.
That’s why we’ve written this guide to help you navigate your own decision on whether to pursue an MBA or not. We’ll break down the ROI case for product managers by analyzing both the benefits of an MBA and the costs of an MBA, so that you can make an informed decision based on your particular circumstances.
The ROI framework
Return on investment (ROI) is calculated as “benefits divided by costs.” A high ROI means that something is a good use of your time and resources, and a low ROI means that it wouldn’t be a good use of time and resources.
The key to career investments is to select the single highest ROI initiative that you can, because that initiative gives you the most bang for your buck. Once you complete that one, then you tackle the next-highest ROI, then the next-highest after that, etc.
As a hypothetical example: say you could receive a certification that would help you earn an extra $35,000 in annual salary. Is this a good investment or not?
Well, we can’t say right now, because we only know the benefit side of the equation - we don’t know the cost side yet.
If you had to pay $250,000 for the certification, then that probably wouldn’t be a good investment. Or, if you had to spend 15 years to get the certification, then that’s probably not a good investment either.
But if the certification was free, or if the certification only took 2 hours to complete, then that $35,000 increase in earning potential now looks quite attractive - especially when you compare it against other alternatives that could also help boost your earnings.
Therefore, to know whether we should invest in an MBA or not, we need to break down the value proposition of the MBA down into its components: its benefits and its costs.
As you read through these next sections, keep in mind that your personal valuation of benefits and costs only applies to you. You may value some benefits more than other people do, or you may feel a stronger burden in costs when comparing against other people’s preferences.
When you ask other people for advice, they will typically provide recommendations based on their own vantage point and their own assessment of ROI. When seeking advice, take any “universal recommendation” with a grain of salt, as it may not apply to your specific context or your future goals.
Let’s now dive into the benefits that you might expect to reap from an MBA.
Benefits of an MBA
Here’s a table that gives an at-a-glance view of the benefits from an MBA:
Overview of MBA benefits for product managers
I’ll discuss each benefit component to share how it might strengthen your product management career. I’ll then discuss amplifying factors that might increase the value of an MBA for your specific situation, and I’ll also discuss mitigating factors that might reduce the value that you might place on an MBA.
Business concepts
Every product needs to serve a business purpose, and therefore learning about key business concepts can be invaluable for your product career, especially if you currently have a non-business background (e.g. legal/compliance, civil engineering, healthcare, academia, etc.).
Business schools typically provide comprehensive coverage of business concepts, which then enables product managers to make better decisions on the job.
For example, understanding how investors analyze your business’s financial performance can help you make better prioritization decisions when deciding what to build next in your product. Understanding organizational behavior within your company helps you establish better working relationships with cross-functional stakeholders. And, understanding market forces can help you identify which customer segments to prioritize.
By knowing how to speak the language of salespeople, marketers, strategists, and accountants, you’ll have an easier time gaining their trust and communicating your priorities to them.
Case studies
Throughout the course of your graduate studies, your classes will cover a variety of business cases that you typically wouldn’t otherwise have access to, where you receive in-depth coverage of business decisions from the perspective of a business leader. These business cases bring frameworks and concepts to life, and you get a behind-the-scenes look into leading companies e.g. Apple, Google, Microsoft, etc.
By debating with fellow students about whether a business leader should have taken action A vs. action B, you’ll have a much stronger understanding of the kinds of decisions that your executive leaders are making within your company, which then enables you to position your product initiatives more effectively.
And, by learning from the mistakes of other companies and other leaders, you’re more likely to ensure that your own products succeed.
Professional network
As part of an MBA program, you’ll be surrounded by similarly-motivated professionals who are eager to learn and meet others.
Professional networks matter to PMs for multiple reasons. First, meeting people from other companies and other industries is a great way to gain insight into new strategies and tactics that you can use on the job. Second, having a wide network exposes you to job opportunities that you may otherwise not have access to. Third, as you mature in your product management career, you’ll want to start hiring talented people into your team, and your MBA network likely includes many talented candidates.
On top of that, many of your professors and lecturers will have deep networks of their own, given their backgrounds as C-suite executives. The right professor can connect you to high-potential roles and can share their own personal experiences to help accelerate your own professional development.
Student clubs
Many student clubs help their members prepare for product management recruiting.
Clubs might provide peer mock interviews, or they might provide peer resume reviews, or they might hold industry events for members to meet hiring managers.
On top of that, many clubs also compile “resume books” from their members, and they send these resume books to hiring organizations that are seeking product management talent.
Many of the top MBA programs in the United States work with external PM education firms to run workshops that help students succeed in securing PM job offers. As an example, we know that the following organizations work with external PM educators.
UPenn Wharton: Tech Club
UChicago Booth: Product Management Club
Berkeley Haas: Entrepreneurs Association
New grad programs
Some companies (especially large ones) specifically reserve product management openings for new graduates from business school. Taking advantage of these new grad programs can significantly accelerate the pace of your career as a PM.
As an example, let’s imagine two twins: Alice and Alexandra. Both of them are currently working at the same company as management consultants, with the same skills, the same titles, and the same responsibilities.
Imagine that Alice applies directly to a large tech company called XYZ Corp for a full-time product management role. XYZ Corp is probably not going to invite Alice to interview with them.
Why? Alice “feels risky” to the hiring team since she hasn’t worked as a product manager yet. They don’t have evidence that she will successfully transition from management consulting into product management.
Let’s imagine that Alexandra has enrolled in an MBA program, and Alice has not enrolled in one. XYZ Corp is offering PM summer internships exclusively to MBA students, because XYZ Corp can verify that MBA students have a strong foundation with business concepts.
Alexandra secures a PM internship with XYZ Corp and performs well during the internship. She receives a return offer for a full-time role as a senior product manager. Meanwhile, Alice is still not able to get a PM interview with XYZ Corp, even though Alice and Alexandra have the exact same set of working experiences and track records.
Is this a hiring bias? Yes. Is it fair? It depends on your perspective.
Every employer seeks to maximize upside and minimize risk, because they’re beholden to their investors to increase profits. Many employers perceive MBA candidates as less risky, because an educational institution has vouched for their abilities and their business knowledge.
Factors that amplify benefits
While each of the aforementioned benefits are broadly applicable for many kinds of PM candidates, the magnitude of the benefit differs significantly based on your specific context. So, let’s talk about some of the factors that might wind up increasing the value of the MBA.
Note that these factors are independent of one another - multiple factors might apply to you, and multiple factors might not apply.
First, if you’re aiming at large companies (e.g. Amazon, Google, Microsoft), MBA new grad programs can help you pivot into product management.
Second, if you don’t have a lot of day-to-day exposure to business concepts, MBA programs can help you learn much more quickly than attempting to learn on the job. For example, an architect who designs malls is probably not going to get a lot of exposure to business concepts, whereas a business analyst will probably get a lot more exposure to key business concepts.
Third, if you’re extroverted and you enjoy networking, an MBA program can help you quickly grow a high-value network. It can give you inspiration and energy as you meet many other motivated individuals.
Fourth, if you don’t currently have a PM mentor, an MBA program is potentially more valuable to you, because you’ll get to connect with many business school alumni. Some of those alumni are going to be product managers, and some of those product managers will be open to mentoring MBA students.
Factors that reduce benefits
Some factors will likely reduce the benefit that you’ll receive from an MBA degree. Again, these factors are independent of one another - some might apply to you, and some might not.
First, if you’re already a product manager, you probably already have a good sense of business concepts, e.g. monetization, profitability, conversion rates, value propositions, competitive analysis, etc. An MBA will broaden your horizon, but it likely won’t advance your PM-specific knowledge any more than you would have learned on the job.
Second, if you’re planning on applying to startups, then an MBA degree is less likely to help. Many startups are more interested in your prior track record and aren’t willing to pay more for MBA graduates, whereas large companies are typically more able to pay a premium for MBA candidates due to their larger revenue base.
Third, if you already have a prior business degree e.g. a bachelor’s in business administration, then you probably won’t learn much more academic knowledge from an MBA. You’ll still gain value from networking and student clubs, but many MBAs and bachelor’s degrees cover similar curricula.
Fourth, if you’re introverted, you probably won’t enjoy going to networking events as much, which means that the value of an MBA is probably not as high for you.
Fifth, if you already have PM mentors, you’ll probably get more targeted knowledge about “succeeding in product management” from your mentors than you’ll get from business school.
Keep in mind that business school is meant to serve as a launching point for many different kinds of careers, including strategy, consulting, finance, etc. Therefore, the knowledge that you learn in class is typically less targeted towards product management.
We now have a good sense about the kinds of benefits we can expect from an MBA. Let’s now talk about the cost side of the equation.
The Cost of Getting an MBA
While the benefits of an MBA are valuable, we know that they come with a cost. For some situations, the costs of an MBA might outweigh the potential benefits you'd receive.
Here’s a table that provides an overview of the costs you might incur:
Overview of MBA costs for product managers
Financial cost
In 2022, the total financial cost for an MBA ranges from $55k to $160k, depending on the school and program that you enroll in. These financial costs typically include tuition, room and board, supplies, and health insurance - and, they typically don’t include student club membership fees, group event fees, or travel.
While many schools offer financial aid, scholarships, and fellowships, financial aid is typically not guaranteed and is typically non-negotiable. And, many student loans are difficult to forgive if you run into financial hardship; that is, they may require you to work through extra steps for debt relief.
Energy cost
Whether you decide to pursue a full-time MBA (typically 2 years) or a part-time MBA (typically 3 years), you’ll need to invest significant mental energy and emotional energy into the endeavor.
As a student, you’re going to have to study, take tests, and work through assignments. You’ll jump into unfamiliar concepts, and you’ll likely have less free time to pursue other interests and hobbies during this period of time.
The academic student mindset and working schedule is quite different from the working professional mindset and working schedule. As an example, as a student you are incentivized to get something right the first time, and you’re disincentivized from pushing back against your professor’s assignments.
But, as a working professional, you always have the ability to reframe a task or a responsibility, and you’re typically encouraged to quickly ship a rough version and iterate rather than waiting to get to a perfect result.
Don’t underestimate the energy cost associated with changing your schedule, mindset, and identity away from being a working professional towards an academic student. Failing to account for energy costs upfront can lead to burnout, and can also lead to lasting damage to your relationships with loved ones if improperly handled.
Opportunity cost
Any investment of your time, money, and energy comes with an “opportunity cost” - that is, you could have been doing something else with your resources, and we need to consider what it means to give up those alternatives.
As an example, if you tackle a full-time MBA program, you won’t be working for two years. If you used those two years to continue working in your current job, you would have earned some income and made some progress towards a promotion.
Or, you could have used those two years to launch a business, or to travel around the world, or to volunteer to a cause you care about.
And, investing in a new network of connections typically means that you’ll pay less attention to your current networks. You may find that you drift away from current colleagues and current communities in favor of your new MBA cohort.
Whether these sacrifices are worth it to you or not depends on how much you value the status quo. The more you prefer your current situation, the more expensive the opportunity cost will be. The more you dislike your current situation, the less expensive the opportunity cost will be.
Competitive talent pool
Product management is one of the most attractive careers for MBAs right now. If you decide to embark on an MBA program, you will likely be competing with your classmates for the same set of PM openings.
And, because you all will have the same set of academic knowledge and school projects, you may have a more difficult time differentiating yourself. Keep in mind that the MBA degree is not a silver bullet - you cannot afford to overemphasize the MBA without also identifying your unique value proposition.
One of the most common recruiting mistakes I see from MBA PM candidates is a sense of entitlement based on their degree; this sense of entitlement is typically more severe for graduates who come from “more prestigious” business schools.
Remember, having an MBA can be valuable, but an MBA background does not automatically solve the pain points of hiring managers. A hiring manager seeks to maximize upside and minimize risks, and the MBA is best at minimizing risk. To bring upside to the table, remember to discuss your unique work achievements.
Factors that amplify costs
Let’s talk about some factors that can make the costs of an MBA feel heavier to you than they might feel to others.
First, if you’re the sole income source for your household, then the cost of an MBA is potentially prohibitive. Unless you’re able to find a replacement income source for your house while you’re studying, you may not be able to make this investment at this point in your life.
Similarly, if you have limited savings and/or have multiple dependents, an MBA might not make sense for you right now. General personal finance advice recommends that you save at least 3 months of household expenses in liquid cash as an emergency fund. Some of our coaching clients save 12+ months of living expenses, since PM job searches can sometimes take many months to complete.
If you’re operating in an uncertain job market, then the cost of an MBA may feel heavier than it otherwise would. Many hiring managers cut entry-level PM positions when markets are shaky, whereas they’ll leave roles for experienced PM hires open even during times of turbulence.
Factors that reduce costs
For a balanced perspective, let’s consider factors that can make the costs of an MBA feel lighter to you than they might feel to others.
If you happen to have additional income streams (e.g. side hustles, investments, other full-time workers in your household) or you happen to have significant liquid savings at the moment, then the cost of an MBA is unlikely to negatively impact your financial position over the long run.
If you were already planning to take time off from work (e.g. start a family, travel for multiple years), then an MBA could be a good way to use that time, as your opportunity costs will likely be lower.
Or, if you have the support to be able to take an MBA part-time, you’ll have fewer challenges with cash flows, and you’ll also be able to continue making progress towards a promotion at your current workplace.
Some employers support their employees with education costs, so check to see if your employer offers benefits like these. For example, certain employers pay for the MBA in full and guarantee that the employee can come back to work with them for multiple years. In cases like these, the financial cost of an MBA is significantly lower for your specific situation.
With our in-depth discussion of costs and benefits, you should now be well-equipped to calculate the personal benefits and personal costs of an MBA for your specific situation, which enables you to come up with an ROI calculation.
But, you still need to consider alternatives - after all, you should invest in the highest ROI initiative, which means that you need to check whether other initiatives might offer you higher ROI instead.
Alternatives to MBAs
Consider what your specific career goals are, and try to tease your goals apart into individual components. By doing so, you may find that leveraging a mix of alternative routes can provide you with more relevant benefits at lower costs.
Some common goals that I hear from people who are interested in getting an MBA:
Gaining hands-on PM experience
Strengthening technical skills
Ensuring accountability for professional development
Getting PM-specific skills
Achieving better results when recruiting for PM roles
If you’re specifically looking to gain product management experience, consider volunteering as a product manager. You could potentially gain PM experience more quickly by directly volunteering than by enrolling in an MBA and seeking a PM internship.
If you seek to strengthen your technical skills, you may not get targeted value out of an MBA. Instead, consider taking free coding classes and certifications through nonprofit programs like freeCodeCamp. While you’ll have to invest more of your personal time (as you won’t have access to live instructors), you’ll have a much more targeted focus on technical knowledge.
If you’re looking for accountability partners or accountability programs to drive your professional development, you don’t necessarily need to enroll in an MBA. You could always join a product management accelerator program like APM Canada, In The Lab, or the Inclusive Product Management Accelerator. Alternatively, you could find a PM mentor who can keep you on track.
If you’re looking to obtain and hone PM-specific skills to improve your performance on the job as a product manager, an MBA might not be the highest ROI way to do so. Consider taking targeted online courses to address the specific skills that you want to gain.
For example, you could check out the catalog of courses on LinkedIn Learning or on Coursera. Or, you could take our monthly PM upskilling classes, which were designed specifically for product managers to improve in their careers, and cover many topics that are not typically covered in MBA programs.
If you’re looking to optimize your results when recruiting for product management roles (e.g. resumes, cover letters, LinkedIn profiles, interviews), you don’t necessarily need an MBA to increase your success rate. You could always work with a PM coach - as an example, at Product Teacher we provide career services for resumes, cover letters, and more. Or, you could always take a targeted recruiting course, such as our PM resume course and our PM interview course.
After you vet your alternatives, weigh the ROI of each alternative vs. the ROI of the MBA.
If your personal ROI for taking an MBA is higher than all other alternatives, then you should definitely pursue an MBA. Conversely, if an alternative yields higher ROI than an MBA, pursue that alternative instead.
Closing thoughts
Product managers use a variety of frameworks to make product decisions, and we can use these same frameworks to decide whether to secure an MBA or not.
By considering the specific benefits that you could reap from an MBA and weighing them against the specific costs that you might have to incur, you’ll have a more informed view on the expected ROI of an MBA. From there, you can then identify whether this path yields the most value to you, or whether there are alternative paths that you should take instead.
And, your decision doesn’t have to be set in stone! Don’t be afraid to periodically revisit your MBA decision, as your perception of benefits and costs will change as you continue your journey through life. We generally recommend revisiting this key career decision every 3-5 years.
By taking the time to assess the value proposition of an MBA for your own career, you no longer need to worry about whether you're doing the right thing or not; the certainty and peace-of-mind that this exercise brings will save you time and energy for years to come.
Thank you to Pauli Bielewicz, Mary Paschentis, Goutham Budati, Markus Seebauer, Juliet Chuang, and Kendra Ritterhern for making this guide possible.
