Develop a Business Mindset to Maximize Your ROI on the GMAT
What is the GMAT really testing?
The GMAT is not an academic test. I know it feels like it, but you dont take the GMAT to get into a math Ph.D. program (or even a literature or writing program).
Business schools want to know how good you are at analyzing data, asking questions, thinking flexibly, and making decisions about potential opportunities. In other words, the GMAT is really testing your business skills (what learning scientists call executive reasoning skills).
That time pressure the test writers put you under? Theyre doing that on purpose. You literally cannot do it all, no matter how much you study; theyll just keep making the test harder and harder. They want to see how you react to a situation that is forcing you to make hard decisions. Try to do it all, and youll failas a business person would in real life.
Just as you have limited time and mental energy on the GMAT, an investor has only so much money. How do you decide which opportunities to fund and which ones to kill off?
Scenario: the bad investor
Imagine an investor who will give money to anyone who asks. This investor never says no to a request for money.
He invests more money upon hearing that the company has spent all of the previously-invested money and its prototype doesnt work (or similarly disastrous: the product is obsolete; a competitor produces a better product for half the price; etc.).
Do you want this guy running your portfolio?
Old School vs. No School
Of course not. Its obvious, right?
But that may be how youre approaching the GMAT. On an academic test (Old School), you start the test assuming that you are going to try everything and you are going to try to answer as much as possible correctly. (And, at least at first, this is how almost everyone approaches the GMAT.)
But youd never go into an investment situation assuming that you are going to hand over your money unless you discover a good reason not to invest. Quite the opposite! You assume that youll give the opportunity a good, hard look but that the company in question has to earn your investment. Unless you give me a really good reason, I am not opening up my checkbook. (No School! Just common sense.)
When a new question pops up on the screen on the GMAT, assume the same thing: youre on the fence. Youre willing to listen to the pitch but you havent already decided to move forward; instead, youre looking for clues to help you decide which way to jump off of that fence.
How do I know which way to jump?
For the first 30-60 seconds (roughly), youre evaluating the pitch. Do I understand what this guy is talking about? Is there a good plan to move forward? If soin other words, if I think theres a good chance I can do this problem with a reasonable expenditure of time and mental energythen Im in. Heres my investment of another minute or so (depending on problem type, of course).
If, on the other hand, I discover that its something I hate (combinatorics, ugh) or something that is too annoying (a roman numeral inference question on the hardest paragraph of the RC passage), Im not about to waste my precious time and energy on that investment. It has terrible potential.
Lets say that I do understand the question and that I do have what I think is a decent plan to get to the answer. I execute my plan.
Things dont pan out, unfortunately: the plan doesnt work the way that I thought it would. It doesnt matter why. It doesnt matter that I just studied another problem like this last week, if I could just remember I should be able to figure this out! All that matters is that my plan isnt panning out right now, while the clock is ticking.
The Takeaway
Okay, so I should invest more money in this dying company, right? I mean, I know their first product totally failed, but theyre telling me that they think they should be able to figure it out if Ill just give them another million
Yeah, I didnt think youd fall for that. :) So dont fall for it on the GMAT, either.
If you dont understand the problem or dont have a good plan, stop.
If you do understand and youve tried your plan but it didnt work, stop. Dont try to come up with a second plan. Apple has already moved in and taken over this market. Cut your losses and get out now.
If theres a way to make an educated guess (a way that wont take all that long), feel free. But make your guess and move on before very much longer.
Make this mindset switch from Old School to No School. Dont do a question just because the GMAT tosses it in front of you. Youre in charge: you decide what is and is not worth your precious time. Maximize your ROI by taking advantage of the good opportunities and dropping the bad ones.
Want to read more about executive reasoning and how to master the business mindset? There you go.
Good luck and happy studying!