Signals over Qualifiers « THE DREAM IN ACTION

October 13, 2009
Posted by Ryan Graves

Signals over Qualifiers

trafsignal

Last month I wrote a post called ‘Qualifiers’ about the importance benefit of grad school, specifically an MBA. I was exploring the idea that having an MBA as a qualifier of your success with my friend Daniel and he shared that a more accurate name for the concept I blogged about was ‘Signalling’. In fact apparently this concept won this dude a Nobel Prize.

In economics, more precisely in contract theory, signalling is the idea that one party (termed the agent) conveys some meaningful information about itself to another party (the principal). For example, in Michael Spence’s job-market signalling model, (potential) employees send a signal about their ability level to the employer by acquiring certain education credentials. The informational value of the credential comes from the fact that the employer assumes it is positively correlated with having greater ability.

I knew I was onto something :). I continue to believe that certain signals are needed in one’s career path. However, I now believe that in my career that signal does not necessarily have to be a graduate degree. That signal can and will come from many different places. I like how Wavell Watson put it in this blog comment:

“I’d say the best signals go in this order: strong references/network > specific experience > specific degrees > generic degrees > certifications > nothing .”

So, for now, I’m pulling back on my interest in an MBA program. If the situation, timing, and need presents itself in the future to prove that an MBA (or other grad degree) is the right move for me I may change my mind. But right now, I believe that specific experience, first, and specific strong references, second, will have a much better ROI for my career.

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Ryan Graves

Agreed Migs. Keep kickin ass with BookVim.

I'd say you start reaching out for solid advertisers, you have some
brilliant content already!

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Miguel

Congrats on thinking at Nobel prize level :)

This is a hot topic for many in our 20s Ryan.

I ponder on it myself too. And interestingly my conclusion is the same: if I do it it will be because it may be easier to raise funding from investors if you have an MBA, and because it puts you in an environment where you can make some solid connections. Not so much for the learning really.

Right now though, going back to school feels like slowing down the pace - not interested!

ryangraves

reecepacheco

Totally. Excellent quote.

Overheard from a professor in college, smart man. "When your heads in a book
you miss alot of what's going on around you."

Ha... I was at Berkeley yesterday and I stopped by the Haas business school on a whim. I looked through their materials and realized I'm already going so much of what their courses will teach. Sure, I may not have the solid academic approach they have, but I have experience they don't.

Additionally, I didn't see many MBA's featured in their materials that had started their own business.

Learn by doing.

THE DREAM IN ACTION

By Ryan Graves

Signals over Qualifiers

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