SoylentNews is people
SoylentNews
Business schools like to boast about how many of their graduates have become CEOs—Harvard especially, since it has the most. But how do these people do as CEOs: are the skills needed to perform there the same as those that get them there?
MBA students enter the prestigious business schools smart, determined, and often aggressive. There, case studies teach them how to pronounce cleverly on situations they know little about, while analytic techniques give them the impression that they can tackle any problem—no in-depth experience required. With graduation comes the confidence of having been to a proper business school, not to mention the "old boys" network that can boost them to the "top." Then what?
[...] Joseph Lampel and I studied the post-1990 records of all 19. How did they do? In a word, badly. A majority, 10, seemed clearly to have failed, meaning that their company went bankrupt, they were forced out of the CEO chair, a major merger backfired, and so on. The performance of another 4 we found to be questionable. Some of these 14 CEOs built up or turned around businesses, prominently and dramatically, only to see them weaken or collapse just as dramatically.
[...] Both sets of companies declined in performance after those cover stories—Miller commented later that "it's hard to stay on top"—but the ones headed by MBAs declined more quickly. This "performance gap remained significant even 7 years after the cover story appeared." The authors found that "the MBA degree is associated with expedients to achieve growth via acquisitions...[which showed] up in the form of reduced cash flows and inferior return on assets." Yet the compensation of the MBA CEOs increased, indeed about 15% faster than the others! Apparently they had learned how to play the "self-serving" game, which Miller referred to in a later interview as "costly rapid growth."
[...] MBA programs do well in training for the business functions, such as finance and marketing, if not for management. So why do they persist in promoting this education for management, which, according to mounting evidence, produces so much mismanagement?
The answer is unfortunately obvious: with so many of their graduates getting to the "top", why change? But there is another answer that is also becoming obvious: because at this top, too many of their graduates are corrupting the economy.
MBAs are good for you personally, but bad for companies, bad for the economy, and bad for the country.
(Score: 1, Funny) by Anonymous Coward on Sunday April 02 2017, @02:43AM (5 children)
Where's that invisible hand at? Did it get drunk or something?
(Score: 3, Insightful) by Azuma Hazuki on Sunday April 02 2017, @06:39AM
It's whacking off the invisible cock of the top 0.01%, same as it ever was. Anyone who thinks such a thing as a "free market" can or does exist is a rube.
I am "that girl" your mother warned you about...
(Score: 1, Funny) by Anonymous Coward on Sunday April 02 2017, @10:38AM (1 child)
Where's that invisible hand at? Did it get drunk or something?
It's busy masturbating while thinking of all the money it can extract from these businesses.
(Score: -1, Troll) by Ethanol-fueled on Monday April 03 2017, @12:08AM
So that's why Jews are always rubbing their hands together!
(Score: 1) by khallow on Sunday April 02 2017, @03:35PM
Where's that invisible hand at? Did it get drunk or something?
The invisible hand works differently when its Other Peoples' Money at stake. I bet most of these companies were in large part owned by mutual and pension funds (like PIMCO, Vanguard, and CalPERS) where the managers didn't have a strong interest in improving the value of the investments they managed.
(Score: 2) by JoeMerchant on Sunday April 02 2017, @06:15PM
You should watch Marvel's Iron Fist - this is "The Hand" at work, sowing chaos in the corporate economy to give them more opportunity to grow, influence and control.
🌻🌻 [google.com]
(Score: 4, Insightful) by AthanasiusKircher on Sunday April 02 2017, @03:05AM (22 children)
I'm not going to defend MBA degrees, but to me this sounds more like the problems created by a culture around CEOs than a criticism of degrees. Basically, above average performance is rarely consistently possible, given the unpredictability of markets. But businesses frequently promote based on outliers -- people who have statistically improbable successes. CEOs are those who have had longer lucky streaks than most. Statistically, it is likely that most of them will indeed go on to underperform expectations (just reversion to the mean) which is what happens a lot with CEOs.
What do MBAs do? They provide a "fast track" that skips a few promotion steps, likely resulting in less practical experience with companies before taking the CEO chair. Hence their reversion to mean after whatever flukes got them promoted is likely faster and even more predictable. And a lot of MBA training is about teaching confidence, which is basically the most important qualification to be a CEO, I.e., act decisively, regardless of the merits of your decisions. That looks attractive when coupled with a few statistical flukes that win the market for a while, but in the end the element of luck at that level of business is very high. (And some studies have tried to qualify it...CEO prior reputation apparently contributes very, very little to corporate success according to a number of metrics).
(Score: 5, Interesting) by bzipitidoo on Sunday April 02 2017, @04:26AM (9 children)
We're bad at picking leaders. Just look at the current POTUS. Yet there have been worse.
The medieval monarchy method of passing leadership to the offspring of a good leader missed more than it hit. One huge problem was that the heirs' were often spoiled rotten by their upbringing in wealth and privilege. Corrections occurred quite frequently, with unqualified heirs suffering suspicious accidents, or being deposed in a civil war or an invasion that sometimes went as far as destroying the nation. Despite that poor record, and the democratic revolutions that ended the power of many monarchies over nations, corporations default to that model.
Luck plays a part, but I think you are overestimating that. There are so many CEOs making very obviously bad decisions that it would be easy to do better and beat them in a fair marketplace. If they were all highly and equally competent, then, yes, luck would play a bigger role, perhaps the deciding one.
This idea that people can be trained to make good decisions with little to no technical knowledge is rubbish. That's just not how good leadership works. The leader simply cannot know everything about everything. The best the leader can do is tap competent experts for each of the areas in which decisions must be made, then let them work, don't micromanage. The real skill is to pick good people, who themselves will need to pick more good people. And one of the first requirements of the leader is the humility to recognize that leadership is not absolute dictatorship.
We do a poor job of picking good lieutenants. Resorting to nepotism is almost always a mistake, and a blindingly obvious one at that. Over and over, we've seen nepotism at the root of major damage. After all, if the monarchy is so bad, why should nepotism be any better? Closely related is cronyism. Even when those stupid blunders are avoided, there's still major difficulty in identifying talent. There's the suspicion and resentment of the most talented people. There's mistaking the loudmouths who are full of bull for proactive go-getters. There are the schemers whose basic attitude is "it's good to be the king", and who spend their time intriguing and politicking to get that exalted position that they can't handle. If they get it, then they milk the situation for all it's worth, taking all the wealth they can before the inevitable collapse. I've seen that happen.
There are all kinds of odd ideas about the qualities that make for a good lieutenant or leader that are simply not backed by scientific study, yet the leaders have the arrogance to think they know better. I keep on wondering, what in the world are they teaching students in management school?
(Score: 2) by takyon on Sunday April 02 2017, @04:50AM
http://freakonomics.com/2011/06/03/the-church-of-scionology-full-transcript/ [freakonomics.com]
Fun read/listen. Especially the part about Busch.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 3, Interesting) by AthanasiusKircher on Sunday April 02 2017, @04:50AM
I don't disagree, but I think these can be complementary explanations. There's certainly a significant element of nepotism/cronyism/old boys club/whatever to success. And some CEOs clearly end up there ONLY because of such factors. But I'd guess those people feel less of a need to get the MBA, if their connections are so great. The people who get MBAs are often folks who want a boost, and that paired with some lucky performance can allow them to climb the ladder more easily.
I'm certainly not saying it's all luck. I just think our modern "continuous growth" Wall Street ideal encourages selection of outliers who seemingly can promise greater returns. Except that selection model will privilege candidates with showy successes that may be flukes, rather than the "steady progress" workers who are more consistent but likely also more cautious. It's a recipe for greater volatility, as is the royal heir lottery (which you rightly note).
(Score: 5, Insightful) by Runaway1956 on Sunday April 02 2017, @05:35AM (2 children)
"recognize that leadership is not absolute dictatorship."
True, and false. I learned leadership in the Navy. Among other courses, I took the LMET class, developed jointly by Princeton and the Navy. There are different styles of leadership, and a couple of those styles lend themselves to dictatorship. The difference between a good and a bad leader is, a good leader knows when to use one style, and not another - whereas a bad leader only KNOWS one style of leadership. There is a time to rely on coercion, even for a good leader. Many bad leaders only know coercion. Other bad leaders only know authoritarianism.
Don't misunderstand, even a good leader may prefer coercion or authoritarianism, but those aren't the only "tools" in his toolbox. He also understands and can use coaching, teaching, rewards systems, and he can mix and match as conditions require. Or, rather, as his PEOPLE require.
Leadership can be a dictatorship, as we've seen so many time in history. That sort of leadership can, and does, last a lifetime. But, most often, the dictator comes to a brutal end, to match his brutal regime.
I would much rather be shot to death by a jealous husband at the age of 100 or so, than to be dragged through the streets like Omar Khadaffy, or any number of other SOB's who met similar ends.
Bad at picking leaders? Yeah, that too. Leadership is partly psychological. People respond to self assurance, a moderately loud, firm voice, men, and especially men over six feet tall. People respond less well to a timid person, or a low voiced person, to females, to shorter people. And, none of those qualities has ANY DAMNED THING to do with how good a leader that person is. And, don't forget the silver tongued devil, who makes crazy assed promises, and allows fools to convince themselves that the world will be a better place for following him/her. Those silver tongued devils have over populated the United States, in this day and age.
It only takes a little critical thinking to understand that MOST wannabe leaders in the US will NEVER deliver on even half of their promises. Yet, we keep voting for the bastards. The past presidential election is a good example. The US probably made the best possible choice out of the field of - what was it? 16 or 17 potentials? And, it was still a bad choice.
(Score: 2) by bzipitidoo on Sunday April 02 2017, @07:28AM (1 child)
True, some find security and comfort in not having to think for themselves much, not having to make hard decisions, and like following someone who does a seemingly decent job of making those hard choices.
But I was getting at whether a hierarchy with one person on top is appropriate for complicated and highly technical situations. Or would some sort of democracy or swarm intelligence do better? The military trains and organizes to win battles and wars. One thing about battles and emergencies is there's very little time for deliberation. The fastest way to get decisions is to have one person in charge. But most organized activity is not an emergency, and for those the rigid hierarchy may not be the best way to organize.
Glad you mentioned the instinct to look to taller people just because they are taller. I'd like to add that a lot of people use wealth as a mental shortcut to figure who best to follow.
(Score: 2) by Runaway1956 on Sunday April 02 2017, @09:11AM
I think that human nature *almost* requires that someone be "in charge". There are some notable exceptions, where a cooperative atmosphere prevailed, and no one was really "in charge". But, for the most part, people require a leader.
In a development or technical atmosphere, I think a coach type leader is probably best. Maybe a 80% coach, with some authoritarian, would be best. That kind of person is quite unlikely to give anyone an order, but with a little bit of authoritarian in his make up, he CAN make a decision when it's necessary. The people going about the business of solving technical problems are relieved of the burden of being responsible, and they can get on with their work without the boss looking over their shoulders.
And, to a large extent, most people don't WANT to be responsible. They would rather have someone "in charge" to blame things on, just in case it all goes to crap. (this is related to some other things as well, such as a willingness to rely on government in both emergency and non-emergency situations)
And, yeah, wealth as a measurement of a person's leadership ability. It's real, despite the fact that we can all look around and find rich people that we detest. Well, most of us can, unless wealth is the god that we worship . . . .
(Score: 2, Insightful) by Anonymous Coward on Sunday April 02 2017, @05:52AM (3 children)
POTUS was a choice between a crook and a businessman. Hard choice.. Once Sanders were eliminated by fraud the outcome was quite clear.
(Score: 4, Insightful) by Anonymous Coward on Monday April 03 2017, @12:27AM
FTFY.
(Score: 3, Insightful) by fido_dogstoyevsky on Monday April 03 2017, @01:41AM (1 child)
POTUS was a choice between a crook, a businessman and several other people.
FTFY
It's NOT a conspiracy... it's a plot.
(Score: 0) by Anonymous Coward on Monday April 03 2017, @11:15PM
POTUS was a choice between a space cadet socialist, a crooked career politician, a sleazy used car salesman, and a bunch of barely sentient briskets.
(Score: 2) by c0lo on Sunday April 02 2017, @06:20AM (8 children)
The mantra of an army officer seemed to be "it matters if the decision is good or bad, as long as there is one when is needed".
Maybe CEO(fficer) is not a misnomer as I thought?
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 2) by Runaway1956 on Sunday April 02 2017, @09:17AM (7 children)
Mmmmmmmmm - there is some truth to that. "Do something, right or wrong!" I've heard that all my life, even before I joined the military. But . . . let a junior officer really bungle things with a crap decision, and he'll never see another promotion. Unless, of course, he was a politically assigned officer to start with. Watch that movei about the fire aboard the USS Forrestal again, bearing in mind that the pilot who started all the shit was a young man named John McCain. Officers with political connections are pretty much untouchable.
(Score: 0) by Anonymous Coward on Sunday April 02 2017, @10:23AM (1 child)
https://en.wikipedia.org/wiki/USS_Forrestal_fire [wikipedia.org]
Sounds fake. Care to change your answer?
(Score: 1, Flamebait) by jmorris on Sunday April 02 2017, @05:07PM
It is #FakeNews. I hate John McCain, do not think he is a much of a "hero" (suspect his prisoner nickname of "songbird" is probably apt) and his constant need for affirmation by his nominal foes and urge to betray his nominal allies is pure Stockholm Syndrome acquired as a result of surviving being a POW; thus is is unfit for public office. He doesn't believe in the 1st Amendment and is generally a menace to our form of goverment. But the rumor that he somehow caused that Kaboom! doesn't pass the smell test. It isn't like we had a lot of carriers operating in that war, a good percentage of our naval aviators would have been on Forrestal.
(Score: 2) by c0lo on Sunday April 02 2017, @11:08AM
(achhh... it should have been "it matters less if the decision is good or bad")
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 1) by khallow on Sunday April 02 2017, @12:27PM (3 children)
The day before the accident (28 July), Forrestal was resupplied with ordnance from the ammunition ship USS Diamond Head. The load included sixteen 1000-lb AN/M65A1 "fat boy" bombs (so nicknamed because of their short, rotund shape), which Diamond Head had picked up from the Naval Base Subic Bay and were intended for the next day's second bombing sortie. Some of the batch of AN-M65A1s Forrestal received were more than a decade old, having spent a portion of that exposed to the heat and humidity of Okinawa or Guam,[7] eventually being improperly stored in open-air Quonset huts at a disused ammunition dump on the periphery of Subic Bay Naval Base. Unlike the thick-cased Mark 83 bombs filled with Composition H6, the AN/M65A1 bombs were thin-skinned and filled with Composition B, an older explosive with greater shock and heat sensitivity. Composition B also had the dangerous tendency to become more powerful (up to 50% by weight) and more sensitive if it was old or improperly stored. Forrestal's ordnance handlers had never even seen an AN/M65A1 before, and to their shock, the bombs delivered from Diamond Head were in terrible condition; coated with "decades of accumulated rust and grime" and still in their original packing crates (now moldy and rotten); some were stamped with production dates as early as 1953. Most dangerous of all, several bombs were seen to be leaking liquid paraffin phlegmatizing agent from their seams, an unmistakable sign that the bomb's explosive filler had degenerated with excessive age, and exposure to heat and moisture.[8]
According to Lieutenant R.R. "Rocky" Pratt, a Naval Aviator attached to VA-106,[9] the concern felt by Forrestal's ordnance handlers was striking, with many afraid to even handle the bombs; one officer wondered out loud if they would survive the shock of a catapult assisted launch without spontaneously detonating, and others suggested they immediately jettison them.[10] Since no one wanted to be responsible for scrubbing the next day's missions, Forrestal's ordnance officers reported the situation up the chain of command to the ship's commanding officer, Captain John Beling, and informed him the bombs were, in their assessment, an imminent danger to the ship and should not be kept on board.
Faced with this, but still needing 1000-lb bombs for the next day's missions, Beling demanded Diamond Head take the AN-M65A1s back in exchange for new Mark 83s,[11] but was told by Diamond Head that they had none to give him. The AN-M65A1 bombs had been returned to service specifically because there were not enough Mark 83s to go around. According to one crew member on Diamond Head, when they had arrived at Subic Bay to pick up their load of ordnance for the carriers, the base personnel who had prepared the AN-M65A1 bombs for transfer assumed Diamond Head had been ordered to dump them at sea on the way back to Yankee Station. When notified that the bombs were actually destined for active service in the carrier fleet, the commanding officer of the naval ordnance detachment at Subic Bay was so shocked that he initially refused the transfer, believing a paperwork mistake had been made. At the risk of delaying Diamond Head's departure, he refused to sign the transfer forms until receiving written orders from CINCPAC on the teleprinter, explicitly absolving his detachment of responsibility for the bombs' terrible condition.
With orders to conduct strike missions over North Vietnam the next day, and with no replacement bombs available, Captain Beling reluctantly concluded that he had no choice but to accept the AN-M65A1 bombs in their current condition. In one concession to the demands of the ordnance handlers, Beling agreed to store all 16 bombs alone on deck in the "bomb farm" area between the starboard rail and the carrier's island until they were loaded for the next day's missions. Standard procedure was to store them in the ship's magazine with the rest of the air wing's ordnance; had they been stored as standard, an accidental detonation could easily have destroyed the ship.[12]
I guess some bad decisions are worse than making no decision at all.
(Score: 2) by Runaway1956 on Sunday April 02 2017, @02:05PM (2 children)
Watch the first few minutes of the video. There is a jet that guns it's engines, only moments before that first weapon leaves it's cradle, and lands on the deck. That wash of fire is what starts the whole thing going. And, McCain is sitting in that pilot's seat.
There is a lot of truth in the article you quote, of course. But, ultimately, the hotshot who guns his engines is the person "most responsible" for starting that fire.
A little more insight into those bombs you talk about here: http://sonorannews.com/new/2016/10/05/uss-forrestal-july-29-1967-worst-accident-aboard-us-navy-surface-vessel-since-wwii/ [sonorannews.com]
(Score: 1) by khallow on Sunday April 02 2017, @02:41PM (1 child)
Watch the first few minutes of the video.
I watched several such videos including one that claimed a "wet start" (jet gunning its engine). I did not see the alleged act or its consequences. Further, from your linked story:
WMR has been informed that crewmen aboard the Forrestal have provided additional information about the Forrestal incident. It is believed by many crewmen and those who have investigated the case that McCain deliberately “wet-started” his A-4E to shake up the guy in the plane behind his A-4. “Wet-starts”, done either deliberately or accidentally, shoot a large flame from the tail of the aircraft.
In McCain’s case, the “wet-start” apparently “cooked off” and launched the Zuni rocket from the rear F-4 that touched off the explosions and massive fire. The F-4 pilot was reportedly killed in the conflagration. “Wet starting” was apparently a common practice among young “hot-dog” pilots.
Crew rumor has been elevated to fact. There's no mention of the fact that the Zuni rocket shouldn't have launched under that condition. Wikipedia had this to say about that:
At about 10:50 (local time) on 29 July, while preparing for the second strike of the day, an unguided 5.0 in (127.0 mm) Mk-32 "Zuni" rocket, one of four contained in an LAU-10 underwing rocket pod mounted on an F-4B Phantom II (believed to be aircraft No. 110 from VF-11[1]), accidentally fired due to an electrical power surge during the switch from external to internal power. The surge, and a missing rocket safety pin, which would have prevented the fail surge, as well as a decision to plug in the "pigtail" system early to increase the number of takeoffs from the carrier, allowed the rocket to launch.
The rocket flew across the flight deck, striking a wing-mounted external fuel tank on an A-4E Skyhawk awaiting launch,[1] aircraft No. 405 from VA-46, piloted by Lieutenant Commander Fred D. White.[2][13] The Zuni rocket's warhead safety mechanism prevented it from detonating, but the impact tore the tank off the wing and ignited the resulting spray of escaping JP-5 fuel, causing an instantaneous conflagration. Within seconds, other external fuel tanks on White's aircraft overheated and ruptured, releasing more jet fuel to feed the flames, which began spreading along the flight deck.
Even more damning (or rather the lack thereof), is this diagram [wikipedia.org] of the planes which shows that McCain's plane #416 was oriented so that the rear of the plane pointed seaward rather than towards plane #110. How would a "wet start" cook off the missile when the jet was oriented in almost the opposite direction to do so?
More likely is that McCain wet start shortly before the accident, some of the surviving crew blamed him for the accident as a result of the timing, and he got transferred to keep the peace. Maybe he was a real dick too and this was an opportunity to get rid of him. But again, there's evidence to indicate he didn't cause the accident.
(Score: 2) by Runaway1956 on Sunday April 02 2017, @06:28PM
https://www.youtube.com/watch?v=AVgocdvcG0A [youtube.com] At 3:30 the Zuni takes off. The narrator says, "There, somehow a Zuni rocket has been ignited" which is bullshit, because everyone knows how the rocket was ignited. Unfortunately, this is a public release version, and it fails to show the wet start. Let me look some more - I may have to pull up one of the veteran's groups to find those critical few seconds . . .
Sorry, can't find those critical seconds. I've watched that wet start, and then watched the Zuni launch after being washed by the wet start flames. Yet - there are multiple videos on Youtube that suggest that the Zuni was launched by an electrical signal because someone failed to position a safety correctly. Those videos make no mention of the wet start at all. Was there a signal sent to the missile? Maybe, maybe not - but the fact is, that missile was washed in flames from the wet start. Occam's razor says that if you bathe a high performance rocket engine in flames, there is no need to search for some mysterious electrical cause for that rocket to ignite . . . .
Watched another video that really kills me. Some self important person is busy explaining how and why the fire was started, but he places that damned Zuni on the wrong part of the flight deck. More public consumption video, full of disinformation. The Zuni flies from port side amidships, toward starboard side, aft, but this guy places all of the Zuni-armed aircraft starboard and aft. FFS - disinformation out the ass.
This reminds me of the attack on the Liberty, and all of that disinformation. Oh yeah - McCain's daddy was in overall charge of that fiasco, as well. But don't mind me, I'm just another conspiracy nut.
(Score: 5, Insightful) by NCommander on Sunday April 02 2017, @12:23PM (1 child)
I think you're oversimplifying this a bit too much. I'm not formally educated (college dropout), and having operated as both an engineer and as a manager (both here at SN, and in other places) I think gives me a fairly unique insight into the problem. In my role here at SN, I primarily operate as a manager/leader nowadays, with some devops.
The fundamental issue twofold. The first is a lot of people simply can't lead. We ran into this on the first set of management here at SN; the team couldn't operate because we got stalled by decisions coming up and at the end of the day, no one could successfully make a decision because in a lot of cases, you risk pissing off and alienating people when you do. A lot of people can't deal with that. Ask TMB and paul, I felt like an ass doing so, but I had to put the brakes on their first version of the comment revamp before I'd even let it go out on production. I felt horrid doing it because of the amount of work they had put into it at that point, and fortunately, they took it in stride, and while we (the community) had some teething pain on it, it ultimately worked out. Had I not put my personal issues aside, I think we would have seen the Soycott :/.
Making decisions is hard, especially if both sides have a point. Here's a second clear example, from our early days, when we brought up the site, we were split on the choice of operating system, CentOS, or Ubuntu. I favored Ubuntu because I knew the platform inside and out, and I had bad field experience with CentOS (the development system at the time was also Ubuntu based). Others wanted CentOS. Ulitmately, no one could say what we were doing so we split the difference. Web services boxes got Ubuntu, everything else got CentOS. That decision continues to haunt us since we're now having pain due to beryllium running much of the secondary services on CentOS so we often have to do the same work twice to get it inline with reality. That's an ongoing technical debt that will only go away when we finally format and reinstall it, which is not a small undertaking.
The second part is you need to sometimes overrule what you think it right in the sense of the product. This frequently means you get fast acquainted with the concept of eating crow. This is very much slippery slope territory. I had wanted to take SN in a different direction than where it went ultimately because the community (which you could say is the SN product) decided they didn't want to go that way. For those who where here for our first proposed business idea of subscriptions, I *seriously* had the sense that I had eaten crow after the community feedback (the taglines at the time were my feeling on the subject). After which, I had a decision, I could have charged ahead anyway with what I thought was right, or go with what people wanted. People won, and we're still here three years later.
This is incidentally why engineers tend to make poor managers. Engineers, by definition, make decisions. We're good at them, we know our work, and what will and won't work. On the whole, a lot of engineers are rather introspective, they know who they are, and have a firm grasp on reality. What we suck at is eating crow in the name of objectives, especially if we don't immediately see the point, or believe that the client is wrong. We also tend to be conversation on what we promise and what we'll deliver because experience has taught us you always have a safety margin. This doesn't make investors happy.
On the specific topic of MBAs, here is my two cents: being a good student is almost the opposite of a leader because you accept what's given, and have to operate within the rules and structure of said program; this is part of the reason I left. You frequently see this problem with recent college grads when you work as a hiring engineer. They might know their stuff, but they're too submissive out of the box, and generally require a fair bit of work to actually get them to the point they can actually function in a development team in anything beyond a bugfixer/grunt without significant handholding. Add in the fact that, at least in the case of Havard, you either need lots of money, or lots of connections to get in for the most part, an environment that teaches you that you're always right, and a belief that an MBA means you're always right (which creates yes-men and echo chambers), and you got an A+ environment for disaster.
Maybe it's my internal biases coming to the surface, but when I see a CV that lists lots of education degrees, especially if they're near the top or very prominent, it's a very big warning sign, and I frequently end up grilling those applicants alive. What I've done is give them a scenario that seems it has an obvious solution, and a subtle loophole, and then challenge them on that point repetitively. It does wonders from separating the wheat from the chaft. I had one rather memorial guy explode on me saying that I was wrong, and his solution was perfect, then call me an idiot to my face.
Needless to say, he didn't get the job, but I got a great watercolor and SoylentNews post out of it :)
Still always moving
(Score: 2) by AthanasiusKircher on Sunday April 02 2017, @05:54PM
Thanks so much for your perspective on this. Just to be clear -- I wasn't claiming that my ideas explain ALL of the crap that happens with MBAs and CEOs, just noting a sometimes underappreciated issue in corporate structuring these days.
Maybe it's my internal biases coming to the surface, but when I see a CV that lists lots of education degrees, especially if they're near the top or very prominent, it's a very big warning sign, and I frequently end up grilling those applicants alive.
Good education is only a beginning, and you're absolutely right that some places are more about the credentials/money to get in in the first place, rather than what students actually learn. Or, to clarify (as someone who has actually taught some courses at some top-tier colleges): I think some students are extremely motivated at those places and really are the smartest kids you'll meet, and they'll do good work. There's also a lot of people who kinda coast a bit after they gain entrance.
But one thing I absolutely agree with you about is that experience always trumps "education." If somebody is trying to sell themselves to you just on the basis of their fancy degrees, it's either because they're really young (and inexperienced, so they only have the "theory" and "book learning," though still might be brilliant enough to learn skills quickly if they're actually smart and motivated, or they might be an idiot in the actual workplace... it's tough to tell) or because they're older but haven't done much since they got admitted to that fancy school (in which case, you're probably right to grill them about what they've been doing lately).
(Score: 2) by JoeMerchant on Sunday April 02 2017, @09:53PM
"I'm Buzz Lightyear! I'm always sure!"
🌻🌻 [google.com]
(Score: 2, Informative) by Anonymous Coward on Sunday April 02 2017, @03:05AM (6 children)
John Clifford "Cliff" Baxter (September 27, 1958 – January 25, 2002, suicide) Enron executive
MBA Columbia 1987
Richard Alan Causey (9 January 1960-) Enron Executive Vice President and Chief Accounting Officer
MBA University of Texas at Austin
wire fraud and conspiracy, Federal Correctional Institution 2 Jan 2007-14 Oct 2011
Jon Stevens Corzine, chairman and CEO of MF Global. Bankruptcy Oct 2011 after losing $1.6B of customer's money. One of the ten biggest bankruptcies in U.S. history. Not wearing seat belt in 90 MPH crash; broken bones, including an open fracture of the left femur, 11 broken ribs, a broken sternum, a broken collarbone, a fractured lower vertebra, and a facial cut that required plastic surgery. Paid $46 ticket. "Not always amenable to suggestion."
MBA University of Chicago 1973
Andrew Stuart Fastow (22 December 1961-) CFO, Enron
MBA Northwestern
Robert Hanssen, FBI agent turned commie spy, "the worst intelligence disaster in U.S. history" at the time
MBA Northwestern 1971
Frederick H. "Fred" Joseph (1937—2009) President and CEO of Drexel Burnham Lambert
Harvard (undergraduate degree) 1959, MBA Harvard Business School in 1963.
SEC 1993: barred from serving as president, chairman or CEO of a securities firm for life.
In 2009, Portfolio.com and CNBC named Joseph the seventh-worst CEO in American business history.
Mathew Martoma, insider trading for SAC Capital Advisors, not cooperating with SEC investigation.
MBA Stanford
Faisal Shahzad (30 June 1979-) May 1, 2010 Times Square car bombing attempt. Life in prison.
MBA University of Bridgeport 2005
Jeffrey Keith "Jeff" Skilling (25 November 1953-) President/CEO of Enron Corporation
convicted felon (securities fraud and insider trading)
MBA Harvard 1979
(Score: 3, Interesting) by takyon on Sunday April 02 2017, @03:43AM (5 children)
1. What does an MBA have to do with committing terrorism or becoming a turncoat?
2. Are MBAs bad because they create financial criminals, or because they create financial criminals that get caught?
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 5, Insightful) by sjames on Sunday April 02 2017, @04:19AM (3 children)
1. Potentially, training to do whatever it takes to get ahead, setting aside ethical concerns is a pretty good start for making a terrorist or a turncoat.
(Score: 2) by jimtheowl on Sunday April 02 2017, @07:30AM (2 children)
(Score: 2) by sjames on Sunday April 02 2017, @12:49PM (1 child)
Employing mass violence to achieve a goal is a lot more likely if you feel no ethical duty to the random people you will hurt or kill.
(Score: 2) by jimtheowl on Monday April 03 2017, @05:16AM
I suppose its good enough if you really want to say "terrorism".
(Score: 2) by kaszz on Sunday April 02 2017, @04:25AM
Attracting certain kind of personalities ?
(Score: 5, Insightful) by Nerdfest on Sunday April 02 2017, @03:18AM (4 children)
They seem to only be taught how to manage for the next quarter, to make the stockholders happy in the short term. There seems to be a near complete lack of long-term planning. or vision. Of course, I guess the CEOs figure they'll be moving along to their next gig in a year or two max, so even if they know their actions will tank the company long-term, why bring it up.
People are both greedy and stupid. I call it "Death by MBA", the collapse of the western economy.
(Score: 1, Insightful) by Anonymous Coward on Sunday April 02 2017, @03:51AM (3 children)
Suppose a decision has a 50% chance of killing the company, a 40% chance of little change, and a 10% chance of a big win. Take the initial value of the company to be V.
The simple and wrong way: 0*V*.50 + 1*V*.40 + 6*V*.10 comes out equal to V, so the required "big win" is a factor of 6. If the company would be worth more than 6x what it started as, the decision is good.
Many things mess with this ideal.
A big one is the fact that we're assuming a dead company should have a value of 0 and will in fact get a value of 0. The reality is that bad decisions can mean that a company should have a value below zero, perhaps from lawsuit liabilities or other unpaid debt, but bankruptcy prevents negative values. The upside is unlimited, but the downside is never worse than 0. Large employers and other important companies get an even better deal. They can essentially blackmail congress into a bailout. This means that there is little if any downside. One can take the risk with only trivial consequences. If the risk works out OK, keep all of the win.
Another issue is CEO compensation. This works in a similar way: big payout if the stock price goes up, but no punishment if it goes down. The CEO can be boring and not get paid, or he can take crazy risks and maybe get paid. It's like a lottery ticket with a purchase price of 0.
(Score: 2) by jimtheowl on Sunday April 02 2017, @07:21AM
Those statistics risk being slanted to reflect wishful thinking, self serving greed and serve the MBA far more than the "company".
(Score: 2) by jmorris on Sunday April 02 2017, @05:55PM (1 child)
I think you are close to the truth here, that it is, at the root, a math problem with the publicly traded corporation model. You can have a negative net worth, a company can have a negative net worth, a corporation can't. If you buy a thousand shares of [evil corp] it doesn't matter what they do, you aren't responsible for anything but the money you spent on those shares. If they are caught engaging in human trafficking, mulching puppies, intentionally polluting the Mississippi River, whatever, there is no penalty that can be applied to them that will cost you more than the initial investment. It doesn't matter if what they are doing is something that "everybody knew about" and that you should have known when you bought the stock. Worst case is bankruptcy, wiping out the shareholders and selling off any viable assets to someone else. This socializes loss and privatizes profit and that incentive structure ends up driving pretty much every decision a corporation makes.
Now examine how a CEO is compensated. He gets big bonuses if the stock value goes up, usually gets a bonus if the accountants can be convinced to report a profit. But he gets a big base pay even if the news is bad. So risk isn't punished much and reward is lavishly rewarded. So CEOs take risks because they are smart enough to realize the system was designed to encourage them to. Now go back to the previous paragraph and realize that just as the shareholder is isolated from liability, so long as the CEO takes a few precautions to maintain plausible deniability they too can be pretty lawless in the pursuit of short term gain and even if they happen to still be CEO when the news hits the front page they have a good chance of escaping jail and at worst lose any stock that was part of their compensation if the corporation goes full Enron. So not only is the shareholder not responsible, the management isn't either.
Those structural flaws have existed since the first Corporation was chartered. Remember, corporations are ALL government creations and nothing in the inherent nature of Capitalism requires them. We could either totally eliminate them or scale them back to short term entities to finance large capital investments, as they were originally intended to serve.
Now we get the modern problem. Most of the MBA types we all have in mind when we are discussing how incompetent, idiotic and short sighted they are tend to come from Harvard and Yale. Unless you have been hiding under a rock the last hundred years you know those institutions are the source of the infection the world suffers from. The School of Business might have resisted the infection a little better than the rest but those institutions are Communist in everything but name and increasingly they aren't even ashamed to fly the red flag. So when you see a CEO doing some idiotic thing so destructive to shareholder value that it makes you wonder whether he even understands Capitalism, realize the answer is no. He was taught Marxist economics and believes it. It brought ruin to the Soviets and is bring ruin to us, ruin is all it can ever bring. The only difference is that there wasn't a lot of ruin left in Russia when the Communists took over while there is a LOT of stored up wealth (economic and social capital) in the West so it is taking longer.
Why do you think SJW type social initiatives find such fertile ground in the corporate world? Those future corporate leaders didn't just read Marx's Capital, they were taught Cultural Marxism as well. Which is of course another reason why most corporations are failing economically, the Impossibility of Social Justice Convergence. It is an existential threat to our entire civilization and nobody really wants to even think about it and nobody has proposed any sort of solution with a snowballs chance in Hell of working, even if it could be implemented.
(Score: 2) by rondon on Monday April 03 2017, @03:05PM
I was going to mod this insightful, because I think jmorris makes a fine point in the first few 'graphs. But then we have to throw around our SJW's and Cultural Marxisms... so I have to qualify my support for your post, j.
If I may suggest, you made two different points in the post. The second point, relating to the "Impossibility of Social Justice Convergence," should probably be its own post. Also, what does that even mean?
(Score: 1, Insightful) by Anonymous Coward on Sunday April 02 2017, @03:19AM (3 children)
A sample size of 19 ain't enough to draw any conclusions.
And then saying things like, "case studies teach them how to pronounce cleverly on situations they know little about" make the bias evident.
I've got no idea if MBAs are good or bad, but this article ain't very good.
(Score: 2) by Runaway1956 on Sunday April 02 2017, @05:44AM
To be fair, the title doesn't really suggest any conclusions are to be drawn. The title says "some troubling evidence". The same author might publish a similar story tomorrow, which might add more evidence, or refute his evidence, or might even draw conclusions from this and more evidence.
Personally, I'm assured that MBA's are to far up the food chain. They all need to be knocked down a couple pegs, and made to answer to the boards, the investors, the courts, and even the public. They have to much free reign today, which is why they can do so much damage to a company.
(Score: 3, Informative) by Anonymous Coward on Sunday April 02 2017, @11:17AM
The editor just did a terrible job of presenting the article. In the original post linked, the 4th paragraph onwards talks about study of the 444 executives who appeared on the cover of Fortune and Forbes over a 38 year period. It then talks about a study of 5004 executives which shows the same correlation. The 19 also weren't randomly chosen, they were the CEOs specifically mentioned in the book "The Harvard Business School" as examples of successful graduates of the school.
(Score: 0) by Anonymous Coward on Sunday April 02 2017, @03:19PM
So you missed the larger study mentioned in the article?
(Score: 2) by NotSanguine on Sunday April 02 2017, @03:36AM
MBAs are good for you personally, but bad for companies, bad for the economy, and bad for the country.
In other, just as surprising, news, water is wet.
No, no, you're not thinking; you're just being logical. --Niels Bohr
(Score: 2, Interesting) by rickatech on Sunday April 02 2017, @04:18AM
(Score: 5, Insightful) by bradley13 on Sunday April 02 2017, @05:57AM (9 children)
There are two troubling aspects to having MBA-types as leaders. Obviously the plural of anecdote is not evidence, but these anecdotes I have seen:
- Spreadsheets are not reality. People just will not behave the way that cell in your beautiful business model says they should. The answer isn't building another model, it's getting that MBA ass out of that CEO chair, going out and managing people, instead of spreadsheet cells.
- Experience in the field counts. It isn't "just business" at the CEO level. You still have to understand your product; this enables you to understand your market, the customers who buy your product, and the employees who build the product. Having a CEO with little or no experience in the company's field is not a recipe for success.
I can see an MBA as a supplemental education for someone who "came up the ranks", and has a deep knowledge of the company's products and methods. An MBA can give him a useful set of skills on top of that. However, an MBA in and of itself qualifies you to be a clerk.
Everyone is somebody else's weirdo.
(Score: 3, Funny) by c0lo on Sunday April 02 2017, @06:25AM (8 children)
You're an engineer, aren't you?
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 5, Touché) by Azuma Hazuki on Sunday April 02 2017, @06:42AM (7 children)
I'd rather have an engineer running things than an MBA. Engineers have to be almost frighteningly realistic, practical, and grounded.
I am "that girl" your mother warned you about...
(Score: 2) by c0lo on Sunday April 02 2017, @08:18AM (3 children)
Me too.
But they tend to underpromise. Which doesn't look good for the shareholders.
Well... maybe the shareholders need to learn the lesson.
The trouble is... my superannuation pension fund is a shareholder: will it learn it in time to stay away from blatant over-promising?
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 0) by Anonymous Coward on Sunday April 02 2017, @10:29AM (1 child)
Is your superannuation pension fund run by an MBA?
(Score: 2) by c0lo on Sunday April 02 2017, @11:04AM
Beat me if I know. But, as whatever other fund, it invests in different corps, some which may be ran by MBA-s.
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 1, Insightful) by Anonymous Coward on Sunday April 02 2017, @06:34PM
I do not understand how it is that if an engineer does something wrong, perhaps due to overpromising, he is terminated.
But if a different person, such as sales or marketing, deliberately lies and then tosses the promise to engineering, sales or marketing is rewarded for having closed a sale and it's engineerings fault for not meeting the deliverable.
This is the case time and again.
Engineers do not overpromise because they are held liable for the result. Few others are held to that kind of regard. The buck may stop at the CEO, but not before the layoffs take place, of redundant people like engineers.
(Score: 2) by goody on Sunday April 02 2017, @11:29AM (2 children)
But you need the right kind of engineer. Most engineers and technical people don't make great managers as they tend to focus on technical and more interesting tasks at the expense of critical management functions like team building, setting and communicating vision, establishing corporate culture, etc.
(Score: 2) by Azuma Hazuki on Monday April 03 2017, @02:39AM (1 child)
This much is true. I'm one of those "screw people, people are dumb, check out this shell script" types and wouldn't do well as a manager. But on the other hand the whole premise of this article is managers don't do too well as managers either, so...
I am "that girl" your mother warned you about...
(Score: 2) by MostCynical on Wednesday April 05 2017, @02:38AM
anyone who *wants* to be a manager shouldn't be allowed near the job.
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: -1, Troll) by Anonymous Coward on Sunday April 02 2017, @07:45AM (6 children)
FTFY, a sample size of 19 is not evidence so much as anecdote.
(Score: 1) by qzm on Sunday April 02 2017, @08:11AM (3 children)
Actually no, because there 19 were selected based on MBAs who achieved high positions and were showing good results initially, then the outcomes were bad.
It is selection bias in the opposite direction to the findings, which actually greatly strengthens the findings.
Of course you are probably an MBA, hence actual statistics mean nothing to you.
The factors are of course in play here. One is the MBA 'path to success' training, and what it actually means, which is primarily being questioned.
Two is the idea of putting people in charge of a business who are experts in 'management', not experts in the field.
It doesnt take much critical thinking to see the obvious flaws in both, at least for the long term success of the company.
(Score: 0) by Anonymous Coward on Sunday April 02 2017, @11:20AM (1 child)
Whereas you think that a group of 19 picked by some "insider" from a single school in 1990 has statistical significance.
And they may also face more stress, more pressure to produce results, inflated ego from being the upper crust and on this list, have more enemies and con artists engaging with them, or any number of unknown factors. They may have taken risks that worked in the short term but not the long term.
(Score: 1) by khallow on Sunday April 02 2017, @12:39PM
(Score: 0) by Anonymous Coward on Sunday April 02 2017, @03:36PM
It's still drawing conclusions about the general case "MBAs", from 19 hand picked specific cases and calling it evidence.
There was no attempt to follow up on the group of MBAs as a whole, no attempt to look at broader group, no attempt to examine causes of failure, no attempt to compare vs other business in the same time frame.
What you really have here is several stories of eventual business failure from a group comprised of solely of Ivy League MBA Grads and then blaming the degree?
The number of factors they didn't bother to consider here is absolutely staggering.
Why only Ivy League, why not a random sampling?
What was the failure rate of businesses headed by Ivy League MBAs vs non Ivy League MBAs vs non MBA?
What was the failure rate of business overall during that time period?
What was the failure rate of comparable business historically?
What was the race and gender of the selectees?
What was the race and gender of those excluded?
How many businesses were a family or closely held concern and what were there failure rates vs the mean during the same period of time?
What was the failure rate of businesses that were started by MBAs instead of just headed by them?
Until you include a broader group with a larger sample size it doesn't matter if you select for grads with "conditions that ought to favor them".
It's a fallacy to think that favorable initial starting conditions are a significant benefit to long term success in business. In fact if anything it's probably going to be a hindrance.
If you don't have to fight for it, you don't value it nearly as much and therefore won't fight as hard to keep it.
I have a feeling this study was put on by someone with a poor grasp of how to conduct a rigorous scientific study.
OP is right, this isn't a study.
It's just 19 anecdotes.
(Score: 2) by maxwell demon on Sunday April 02 2017, @01:20PM (1 child)
But a sample size of more than 5000 is. [soylentnews.org]
The Tao of math: The numbers you can count are not the real numbers.
(Score: 2) by HiThere on Sunday April 02 2017, @03:17PM
Thank you. My first thought was "the sample size is too small to mean anything", this even though I thought there were reasonable grounds to believe the conclusions correct.
N.B.: Even 5000 is really too small a sample, but there *aren't* that many CEOs, which poses a problem for a statistical study. (I.e. "Is it really a statistical study if you study everyone in the group?".) A proper design would require studying a collection of CEOs and then predicting which were also MBAs without prior knowledge, and then comparing the predictions with the result. But there are all sorts of problems with trying to do that study, e.g. "It increases costs markedly, but who would fund it?".
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 0) by Anonymous Coward on Sunday April 02 2017, @01:46PM
Winterkorn, the ex-CEO, has a technical PhD and started his career as an engineer. Maybe and MBA would have been useful. Harvard Business school does require "Leadership and Corporate Accountability" nowadays.