Have American Businesses Been Stranded By the MBAs? 487
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.'"
You need different kinds of people (Score:1, Insightful)
People work best together. You mix the best attributes from several different kinds of people. Hell, if you want a good geeky example look at different classes in multiplayer games. No one can do or master everything. That's why it's best to do what you know yourself and let other people handle the other parts.
Lutz is dead wrong (Score:5, Insightful)
Most engineers know next to nothing about marketing and sales... to the degree that they actually despise interacting with customers. You can have the best product in the world, but if no one knows about it, your business will fail. Consistently in this world, inferior products with better marketing win over superior products. You have to know how to get your name out there, and how to get people to buy your stuff.
Lutz is partially wrong (Score:5, Insightful)
I agree your average engineer has zero business skills, but moving them to the back room and having MBAs run the show is still bad.
Get rid of the MBAs and let the engineers have business input, but not run front office.
Oh, and get rid of the lawyers, they are even worse than an MBA.
Re:You need different kinds of people (Score:5, Insightful)
The problem appears when the managers don't understand what the geeks are doing and give orders based on unrealistic (or completely wrong) understanding of what's happening downstairs.
A percentage of geeks have people skills, they should be the ones in charge.
Different skills are needed. MBAs have no skills. (Score:3, Insightful)
Indeed, people with different beneficial skills are essential in any organization. The key idea there isn't "different", however; it's "beneficial skills".
MBAs typically have absolutely no helpful skills or abilities. They are often people who tried engineering, but couldn't cut it. They are people who tried accounting or finance, but couldn't cut it. They are people who tried marketing, but couldn't cut it. They are, in essence, the rejects of the business world.
For many of them, their only "skill" (if we can even call it that) is forcing bullshit down the throats of productive, useful people. They do this by holding wasteful meetings, by putting in place absolutely stupid and counterproductive workplace policies, by making decisions about stuff they know absolutely nothing about, and by hiring in a way that protects them from any negative repercussions.
They've been successful at this, and that's why America is as economically and socially fucked as it is today. The rejects are leading the operation, and it shows. Thankfully, it's only a temporary "success". It inherently can't be sustained. It's a so-called "race to the bottom", and the bottom is going to be met very quickly. "Free trade", off-shoring, outsourcing and other popular MBA techniques are the best way to destroy not only individual companies, but entire economies.
I don't think that anyone is suggesting that a software business, for example, should consist only of software developers. Rather, it should merely be led by people who understand how to properly build and provide on-time, on-budget, functioning software systems, rather than by some MBA who can spew out this month's buzzwords in order to fool some other idiot MBA at some other company into buying a shitty software system. Different kinds of people will still be needed, of course, but they should be useful workers, not MBAs.
Re:Lutz is dead wrong (Score:5, Insightful)
Most engineers know next to nothing about marketing and sales...
Conversely, most marketing types know next to nothing about proper engineering design.
And this book isn't about a 'Marketing vs. Engineering' conflict in the first place. It's about the bean counters who wedge themselves in the middle of everything.
It's about 'cost reduction engineering' which is where purchasing gets involved in product engineering. Mature products exist, but 'cost can be driven out of them' by degrading the materials used for their construction.
To an MBA, the fact that a product lasts on average 2 years beyond it's warranty period is a problem to be solved.
It's also all about Taylorism taken to it's furthest degree. In the vision of the MBA dudes, everybody within a company is an expendable plug-in component. Company policy is that Work Instructions must be written, and followed for each task. Once the complete set of work instructions has been captured, the whole 'Employee Expertise' of the company is captured into a file cabinet. They can then put the cabinet on a skid and move it anywhere in the world. That's how those people think. High performing employees with unique skills are a problem, a company liability, to that form of management.
Re:You need different kinds of people (Score:5, Insightful)
The problem are pure business guys who understand everything the MBA tought them, but don't have a true appreciation for the type if business they are running.
Re:Lutz is dead wrong (Score:4, Insightful)
Agree. Putting the engineers in charge would just lead to gold-plating, as the reward for engineers is a "job well done" rather than maximizing profits.
The problem with MBA's isn't that they maximize profits, it's that they maximize next quarter's profits. And that isn't the MBA's fault -- it's usually the fault of being a publicly traded corporation, which leads to separation of ownership and control [findlaw.com].
Just as anti-corporatists bemoan the immortality and geographical reach of corporations, to add to that it is worth considering limiting the number of owners of a corporation and perhaps also setting a minimum period of ownership.
You must be an MBA. (Score:2, Insightful)
Only an MBA could be as ignorant as you are, and publicly display so much blatant misunderstanding of reality.
Engineers and technicians are often the best at dealing with customers. Hell, many of them enjoy it, too. They just don't like to bullshit the customers, though. They want to provide them with the best service and the best products. True, this may not be in the best short-term interests of the company, but it often works much better for everyone in the long run.
Engineers and technicians are good at thinking for the long term. They can think beyond the next quarter's results. They realize that maybe they can't please the customer today with the current offerings, but they'll be able to provide the customer with what the customer needs in the future. Sure, the company could sell them some shit today and make a little bit of money now, or we could be truthful with them and make a far bigger and more significant sale in the future.
When this happens on a large scale, the whole economy benefits. Resources end up being allocated far better, and the resulting systems actually do help improve productivity. Contrast this to America today, however. With MBAs running the show, we end up with trickery being used to sell useless products that don't provide any tangible benefits. That's why we see the daily Slashdot stories of some software system implementation project being millions upon millions of dollars over budget, and then often just discarded in the end. This misuse of resources harms the entire economy, and is what allows third-world nations like India and China to pull ahead of America.
Re:Lutz is dead wrong (Score:5, Insightful)
It's about the bean counters who wedge themselves in the middle of everything.
The word to google for here is intermediation. The opposite, disintermediation, has a tolerable wikipedia article.
http://en.wikipedia.org/wiki/Disintermediation [wikipedia.org]
The problem is people understand what it means WRT obscure corners of the banking industry or supply chain, but do not realize it is a general business management topic, applicable to almost all organizations and systems.
Re:You need different kinds of people (Score:4, Insightful)
Re:Lutz is dead wrong (Score:4, Insightful)
Most engineers know next to nothing about marketing and sales... to the degree that they actually despise interacting with customers. You can have the best product in the world, but if no one knows about it, your business will fail. Consistently in this world, inferior products with better marketing win over superior products. You have to know how to get your name out there, and how to get people to buy your stuff.
You're absolutely correct. Most engineers want to focus on ... well, engineering. Once in a while, you get an engineer with good business skills, and there's your industry leader.
Stocks, politics, money, marketing, sales... those are all critical things in any business. The argument isn't that an engineer should be put in charge of all of those; it's that the priorities, direction, and approach a technical company makes should be entirely governed by a (suitable) technologist. They will obviously delegate to specialists as-needed.
Re:Lutz is dead wrong (Score:5, Insightful)
You know, I get uncomfortable when people make assertions using words like "most". I've worked with engineers (both brilliant and mediocre) who are the worst of the worst when it comes to social skills, and I've worked with some who made it through engineering school with a paltry 3.0 and are a blast as people. Some of the most well compensated engineers I know of are sales engineers working in areas like biomedical equipment and robotics (before anybody trounces out the IT stereotype). There *are* people who can do both; I know a lot of them. I know one kid in aerospace is who very gregarious, walked into a new job, solved a vibration problem on a jet engine within his first year, and ended up with his masters (aerospace engineering) paid for by the company. He worked as an engineer for five more years, they sent him back for an MBA, and now he runs a department. Bottom line is, he's geeky, smart on both interpersonal and quantitative matters, has walked the walk, and will be CEO material by the time he's 40.
In my line of work (yes, one of the legions of software drones) I'm a generalist who writes code and takes care of some other technical issues. When my organization needs to send out a technical liaison they send me, because I can grok the tech stuff (oh noes, he knows what Big-O is and can profile! LOL), but I know how to look good in a suit (not a good looking lad, but keeping yourself in shape along with a trip to a tailor makes all the difference), can speak publicly without issue, and I know how to generally not piss people off. There are scads of people here on Slashdot (and a few where I work) who can code rings around me, and that's fine. At the end of the day I can play both sides of the card.
The bottom line is: there are people with both skill sets, and it's my hypothesis that they're actively excluded by MBA types from managerial roles in many cases because they are a threat. In addition, boards want profit, so those that show quarter-to-quarter myopia get the nod.
This whole thing reminds me of a video I saw once of a smokin' hot female Phd who said "you know, I can make this widget last four times as long if they'd let me add 10% to the price".. of course that didn't happen. Said company has a mediocre reputation in its sector as a result.
Re:Hewlett Packard (Score:5, Insightful)
Agreed. They had a great model, "The HP Way", which was based on the way the founders like to treat people and be treated. Bill and Dave were both engineers and built the company up to be a major international by encouraging everyone in the company to both co-operate and work for self-improvement - exactly as they had done themselves. They recognised the importance of their management in knowing the product field they were involved in and understanding the culture of creativity and job security needed for long term success. The company's slide began when they started to appoint to senior positions from outside the company - and outside the engineering field - resulting in the dilution of the HP ethic and outsourcing the engineering and manufacturing functions which had driven their innovation and growth historically. Sadly this has happened with so many western companies that we have a deficit of home-grown talent in anything other than managerialism (of which we have a surfeit). Sadly, "management" has been the real growth business of the last 30 years. The Chinese are welcome to all the MBA graduates they want.
Re:You need different kinds of people (Score:4, Insightful)
The problem has very little to do with people skills. As a manager at a larger company, you don't need people skills. You aren't doing most of the negotiating etc yourself, you're just steering the company.
In order to STEER you need to know where you are and where you're going. This is the problem with MBAs. They generally have zero skills related to the field they are managing and end up not knowing where there are and then with a flawed understanding of where they are they can't possibly know where they are going.
MBAs are for sales managers and marketing. The problem is they've made it into the real management branches as well.
THis is why I have said to break up the auto man. (Score:4, Insightful)
How Many Times Have You... (Score:5, Insightful)
said, "Charge me a buck more and make this part out of metal instead of fucking plastic" or words to that effect?
Pick the product, I mean it doesn't matter what it is anything thing from your car, house, cell phone, kids bicycle, toilet paper, laptop pick the damn product.
THAT is the MBA / Bean Counter Problem.
They don't think in terms of high customer satisfaction they think in terms of "I can shave 0.0001 dollars per unit" and "I can predict that we will only increase our returns and warranty repair by 0.0001% and we will increase profit by .5 %".
Huge pet peeve... I like gauges I like to see actual oil pressure in my car, actual engine temperature but these days those are rare things in cars. I know the cost difference might be 2 dollars per car and frankly I will happily pay 30 times that since 60 bucks on the cost of a new car is nothing.
Plastic gears in assemblies... My wife drives a Mercedes C320 and there is a plastic gear someplace under the dash that is attached to a vacuum servo of some kind that has something to do with the air handling. The damn thing has some teeth missing and it chatters now and the sound is really annoying. The replacement part costs 40.00 bucks. But it will cost close to 1000.00 bucks in labor to get at the damn thing since you have to basically dis-assemble the dash to get at it.
The above reasons are why they need to be yacked out of the chain of command.
Re:Lutz is dead right (Score:4, Insightful)
Most engineers know next to nothing about marketing and sales... to the degree that they actually despise interacting with customers. You can have the best product in the world, but if no one knows about it, your business will fail.
Which is true and important and entirely beside the point. MBAs aren't about marketing. They hire people for that. MBAs are all about managing, not marketing. MBAs are the guys who export American manufacturing jobs to the Third World, the guys who cook the books to pump up their employer's apparent profitability enough to raise the stock price again this quarter, the guys who, with apologies to Oscar Wilde, "know the price of everything and the value of nothing." They're the guys who have spent the last 30 years or so systematically dismantling America's industrial base while simultaneously enriching themselves. They nearly destroyed the world's economy three years ago, and yet, mysteriously enough, they're still in charge of basically everything today.
They are the people to whom Santayana was referring, when he warned about repeating the past's mistakes. They are our leaders.
May Chthulu have mercy on our souls.
Re:You need different kinds of people (Score:4, Insightful)
ask what the manager *really* wanted
you dont have a lot of experience dealing with business/management requirements, do you?
Re:You need different kinds of people (Score:5, Insightful)
My father was a management accountant, and worked in a fairly diverse set of businesses. While his job was more or less the same one in each business, he always made an effort to understand the rudiments and fundamentals of the business in his spare time. For example when working for glass company, he familiarised himself with how glass was made, the major companies in the industry, and the types and uses of glass. He would never have as much expertise as someone who worked in that industry their whole lives, but he would have enough understanding to acknowledge and even foresee problems when they came to his attention.
I seriously doubt that MBA managers make these kinds of efforts when they take charge of companies. The dominant ethos of that profession appears to be to run a company by the numbers just long enough to move on to a higher paid position. Most that I have met have little to no underlying understanding of the businesses they are being paid handsomely to operate.
So we have a situation where NASA managers literally do not know how rockets work, and yet will pride themselves on that fact, even as their shuttles and rockets explode after take-off. Our banks are being run by "fairly dim former [sports] players", who couldn't even perform a compound interest calculation without assistance. And above all the senior decision making levels of government, the civil service, and private industry are saturated with people who are literally incapable of understanding even why they are making their decisions, let alone which they should make.
The quintessential manifestation of this pervasive dysfunction in western management was the US President George W. Bush. The man ran everything he ever managed into the ground, and stayed true to form while in office. People may moan about old families, money, and influence, but a large portion of the blame lies in a culture which sees fit to appoint unqualified, unknowledgeable, sweet talkers to positions of responsibility, and moreover to even deny those positions to competent candidates.
This isn't about choosing between inarticulate geek savants and networkers. This is about choosing between experienced professionals who can communicate effectively if dryly, and people with the training, mentality, and ethics of used car salesmen. The analogy is exact.
Re:You need different kinds of people (Score:1, Insightful)
The problem isn't with MBAs, it's with MBA programs. Our schools are producing graduates who believe that the side effects of doing the best job possible are the actual goals rather than the natural consequence of pursuing what really makes sense.
By way of illustration, I had the opportunity, a few years back, to accompany a business school trip to Japan to meet with various business leaders. One of the meetings we went to was with the head of a family-owned saki brewer that started in the early 1600s. The Q&A session was almost comical to me and must have been incredibly frustrating or disheartening to the man who was answering the questions. Basically, he was peppered with questions about what he was doing to grow his business...was he looking to borrow money so that he could run advertisements overseas to increase his presence outside of Japan? Was he going to introduce new products in Japan that would appeal to the younger generation of Japanese people who tend to prefer beer over saki? There must have been 10 questions regarding what was he doing about the fact that his company was not enjoying double-digit growth figures. His answer, each and every time, was some variation on, "My goal is to make the best saki possible. It's what my family has done for 400 years and it allows me and my family to live a very comfortable life." It was a refreshing perspective that I could identify with but almost no one else was able to comprehend. It was so contrary to what they've all been taught is the way to run a business that they just couldn't let it drop.
For me, it was a great realization that, almost without exception, the MBA students couldn't understand why someone wouldn't see double-digit growth and share price as goals in and of themselves. It's like they've been so conditioned to be taught to pursue those goals that they never stop to think why they're pursing them or if it's the right move. The simple fact that an idea as simple as striving primarily to create the best product possible and being ok with limited, sustainable growth was so foreign to them made me somewhat frightened that they're so often in charge of our country.
Re:You need different kinds of people (Score:5, Insightful)
And at every opportunity, he boasted of being a "C" student, rubbing his "greater position" in the faces of those who'd spent their lives hitting the books.
Re:Lutz is dead wrong (Score:4, Insightful)
By "looking good" I meant having enough social intelligence to know how to dress and when, and maybe enough self-respect to slog out a couple of km on the treadmill whilst denying yourself Cheetohs. If you're managing people you need to have credibility on multiple fronts, and if you can't keep your own shit together then you have none. That's why I love the USMC: poseurs need not apply (wished I'd have served with them instead of the army).
If you're that disconnected with respect to professional dress, go the cheap route and run over to Brooks Brothers and find one of their people on the floor and say "Help! I'm a great engineer but walking-talking business fashion faux-pas!" and they'll generally hook you up. I know engineers who are incredibly talented but yet "can't be bothered" with tying a tie. Guess what: not all of us are geeks, and the people with the purse strings often take note.
In addition, I take it you've never been to Europe or Japan. Try not dressing the part over there as a manager and see where that gets you.
Re:You need different kinds of people (Score:4, Insightful)
Fact is he got reelected, so he "passed". If Obama doesn't get reelected then Obama fails.
If the person that gets reelected was doing a bad job, then the voters and/or the voting system fails.
Way too broad a brush (Score:3, Insightful)
I seriously doubt that MBA managers make these kinds of efforts when they take charge of companies.
That's an AWFULLY broad brush you are painting with there. A MBA is a college degree. Nothing more. People with MBAs go into finance, accounting, marketing, sales, engineering (yes, engineering), and of course management. Having a MBA is not an automatic ticket to management either. At best it might get you some interviews you might not get without the degree much like an engineering degree can open a few doors. After that it is up to the talent of the individual. Futhermore, lots of people get MBA degrees AFTER they already are in charge (see executive MBA programs) because they seek to do their job better. Management has a skillset much like engineering, and many (though not remotely all) of those skills can be learned in school.
The dominant ethos of that profession appears to be to run a company by the numbers just long enough to move on to a higher paid position.
A MBA is a college degree, not a profession. There are good managers with MBA degrees and bad managers with MBA degrees. The degree is just training. It is in no way, shape or form a profession.
Most that I have met have little to no underlying understanding of the businesses they are being paid handsomely to operate.
That would be true of many people regardless of whether they possess a degree in business administration.
Re:Lutz is dead wrong (Score:4, Insightful)
In addition, I take it you've never been to Europe or Japan. Try not dressing the part over there as a manager and see where that gets you.
So true. An acquintance of mine went to Japan and had to get new businesscards, because even though he was very senior, it didn't show on the businesscard. He never thought his title was very important - after all, everyone knew him, right? Well, the Japanese managers were insulted that his department had chosen to send someone with apparently medior rank to meet with senior management. Until he showed his new cards and said there had been a misunderstanding, then it was fine.
In Europe, if you don't dress smartly (and that's not with a Hawaiian shirt and sneakers) you get laughed at. Mostly behind your back, but in Holland, probably right in your face. You won't get taken as serious as someone with a suit. Which is exactly the reason why as a freelancer, I make a point of wearing a nice suit and a tie. I've experimented with this a bit - going to meetings for the same company with a suit, then later without one. Makes a big difference in how people regard your opinions. Oh, and this was with technical people - with marketing/manager types the reaction is more subtle but still there.
So yes: appearances matter. An a-social geek (like I was, when younger) would say that others should adapt and gets ignored, even when what he says is the best option. A wise geek just wears a tie and gets his results he wants.
Re:How Many Times Have You... (Score:4, Insightful)
Pick up an android anything. Pick up an iAnything.
"Nobody will buy a $900 phone."
The irony being a lot of these MBA types wear $3000 watches. Stupid.