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Have American Businesses Been Stranded By the MBAs?
theodp writes "In his new book, Car Guys vs. Bean Counters: The Battle for the Soul of American Business, legendary car-guy Bob Lutz says to get the U.S. economy growing again, we need to fire the MBAs and let engineers run the show. The auto industry, writes TIME's Rana Foroohar, is actually a terrific proxy for a trend toward short-term, myopically balance-sheet-driven management that has infected American business. In the first half of the 20th century, industrial giants like Ford, GE, AT&T and others used new technologies to create the best possible products and services with the idea that if you build it better, the customers will come. But by the late '70s, if-you-can-measure-it-you-can-manage-it MBAs were flourishing, and engineers were relegated to the geek back rooms. 'Shoemakers should be run by shoe guys,' argues Lutz, 'and software firms by software guys.' Learning that China plans to open 40 new graduate schools of business in the next few years, Lutz quipped, 'That's the best news I've heard in years.'"
Its going to be very hard for the US, UK etc to be competitive. Even if you could build a factory in Europe or America and sustain a strong business (using Henry Ford principles lets say) bankers would not give you the money, you'd have to build in china to get the funding. Andrew Grove former Intel exec and John L. Hennessy, MIPS chip inventor, said the same thing. Economists are also turning against the way modern business is outsourcing to developing countries for a short term gain, Paul Craig Roberts and Michael Hudson to name but a few. Outsource to Asia, you'll impoverish us all, we'll in turn have less purchasing power, and not be able to buy the goods produced. No ones listening there is only attention paid to shareholder value, not even the customer, and who are the largest shareholders in a publicly listed company the BANKS. The MBA's may have the same problem that the economists profession, if we can call it that, has. That is to say a corrupted syllabus, designed to serve the needs of a few moneyed interests.
HP is a great example of a company founded by engineers and later ran in to the ground by MBAs.
Reading this piece, I can comfortably say that the author is right on the money with regards to how a focus on being "data driven" is actually slowly running companies into the ground.
I started off my career writing really low level network stack drivers. I got pretty familiar with the windows kernel, became a star in my office and got put on an MBA track because I had demonstrated some aptitude with customers and sales. Fast forward a few years and I've got an MBA under my belt and work for what was formerly a very large provider of consumer SaaS that is now trying to win in what can be loosely described as the call center space.
My days are now spent trying to determine strategic initiatives on the basis of consumer behaviour as represented in a slew of really badly coded Cognos reports. This wouldn't be so bad except for the fact that analytics and data driven decision making is anything but in most companies. Data is used to validate a hypothesis instead of being explored to reveal patterns, associations and trends. Every executive asking a question about customer behviour is secretly asking for validation of their own theory on the business and wants to gloat about it come performance review time. Obviously, in this kind of operating model, data is bastardized to lead to really bad decisions.
I'm all for scientific approaches to management, however they need to be undertaken following a method that is in line with the scientific method to be labelled as such. When I leave this job (which is ridiculously well paying but completely unfulfilling compared to my career in engineering) and run off to create my startup, I will probably hire an MBA at some point. However, I won't hire them to be a bean counter.
What many companies fail to realize is that the key to having a great leader is equal focus on product and market. The MBA that I would hire would be chosen because they've demonstrated an ability to be highly technically proficient but decided to expand their horizons and take on "soft-problems" as well.
That's precisely what the problem is.
Engineering firms should be run by someone with engineering experience who then gets an MBA or similar training.
Software firms, likewise - take a coder and give them MBA or equivalent training.
Don't do it that way? You get what we have today. Everyone* with an MBA is a fucking PHB moron.
*By "Everyone" I mean "with 99.9% certainty