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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: 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.