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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, 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).