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Former GM exec, Bob Lutz: Fire the MBAs and let the engineers run the show
- vrikhter 15y agoWhat are the odds that this happens over the next decade? I'm only asking because I'm not sure where those engineers are going to come from unless we fix immigration laws.
- pagekalisedown 15y agoNot having enough engineers is not a new problem. They'll come from wherever they're coming from now. Note: I'm not saying immigration is any less broken.
- vrikhter 15y agoAnd where will the MBAs go?
- pagekalisedown 15y agoEngineering school if I could have it my way. ;)
- itg 15y agoDoubt half of them could pass the classes.
- yuhong 15y agoGood question. I was thinking they should go to finance when I first thought of this issue.
- yuhong 15y agoYea, I am more interested in the sense of the question of when board of directors are going to stop hiring these "legacy" MBAs as CEOs.
- VladRussian 15y agoand who are sitting on these boards of directors?
- blackguardx 15y agoEngineers aren't making doctor or lawyer salaries yet, so what makes you think we don't have enough engineers?
- jayzee 15y agoFor the past quarter-century, the American Medical Association and other industry groups have predicted a glut of doctors and worked to limit the number of new physicians. [1] The problem is that the supply for doctors is artificially constrained leading to better salaries for them. If anything let's have more doctors so that the salaries are in parity with engineers. [1]http://en.wikipedia.org/wiki/American_Medical_Association http://en.wikipedia.org/wiki/American_Medical_Association
- yuhong 15y agoA bit of history: http://articles.mercola.com/sites/articles/archive/2008/05/03/how-the-american-medical-association-got-rich.aspx http://articles.mercola.com/sites/articles/archive/2008/05/0...
- slavak 15y agoAll due respect, you could've chosen a better source for your bit of history than an article that uses a book by the name "The Homeopathic Revolution: Why Famous People and Cultural Heroes Choose Homeopathy" as its only source.
- vrikhter 15y agoWhen taking into consideration how much time an engineer has to spend educating himself and the salary he gets, it would take a while to match that from a doctor's perspective. For example, 4 yrs of undergrad and a starting job at Google can see you making close to over $100K in 3-4 years. As a medical student you have 4 yrs of undergrad and 4 yrs of medical school (that can be a tremendous amount of loans). Then throw in anywhere from 3-7 years of residency making $40K. Depending on the specialty you choose and how hard you wish to work the median salary can range from $120K to $450K. They may not be equal, but I know developers pulling in $200K that are just turning 30. Not to mention their lifestyle is a lot less stressful. I imagine that not a lot of people know what you can make as an engineer and too many people still don't give engineers the credit they deserve.
- thinkcomp 15y agoThe notion of firing the MBAs overlaps substantially with my thinking, except I don't think there should be any MBAs in the first place. http://www.quora.com/Aaron-Greenspan/Shut-Down-the-Business-Schools http://www.quora.com/Aaron-Greenspan/Shut-Down-the-Business-... Also, anyone who thinks the FedEx network is "ultra-efficient" (as the article claims) hasn't shipped anything FedEx lately. More than ten years ago, FedEx bought RPS for FedEx Ground but never bothered integrating any of the systems. There are still two types of tracking numbers. Shipping something overnight from San Francisco to Los Angeles via FedEx Express routes the package through Nashville, while it could be sent just as quickly over FedEx Ground at lower cost and without using jet fuel. Also, their web site is just about the biggest piece of junk Oracle has ever produced. When you deal with their executive support team, as I unfortunately have, they give you FedEx coupons that the FedEx Office (formerly Kinko's) cashiers have absolutely no idea how to scan. I think what they need is engineers.
- yuhong 15y agoPersonally I only disagree in that shutting down the business school is the only solution. In fact, I have known many of the problems of "legacy" MBAs for a while now. Of course, even if the business schools were fixed, older graduates will still exist with the problems you mentioned, which is IMO the hard problem.
- yuhong 15y agoAnd of course such older graduates are what I refer to when I talk about the "legacy" MBA, as opposed to "modern".
- aurelianito 15y agoI think that MBAs should prove their worth by running their own businesses. The tricky situation is that they claim to be able to run any business using the same rules, but most of them choose to run other people's business instead of their own. If MBAs were good. They would make their own businesses and win. Is it the case or not?
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- damoncali 15y agoAt the risk of sounding overly snarky, I don't think that GM's leadership is in any position to make recommendations on how to run a car company. And to get to his point, it's fluff. Which engineers, exactly, will run the show? The ones with the marketing skills, the social influence, and business knowledge to get the job done. I wonder if he knows that about 1/3 of MBA's are engineers.
- roc 15y agoYet I think GM's leadership is in an ideal position to point out what they tried and failed with. And to note the exceptions to that approach that birthed their few successes.
- ccc3 15y agoAt the risk of sounding overly snarky, I don't think that GM's leadership is in any position to make recommendations on how to run a car company Despite the general level of incompetence among GM's leadership there were a few smart people there. Lutz was one of them. He has a strong track record of developing successful products and has never been shy about criticizing his bosses. And to get to his point, it's fluff It's not fluff. Perhaps this synopsis of his book didn't provide sufficient detail, but his point is broadly acknowledged as one of the major problems with the US auto industry. If you look at a US made car from the early 2000's, the level of cost optimization at the expense of all other factors is embarrassing. It's indisputable that as MBAs have gained prominence in the US auto industry, the products have become less compelling. Lutz is simply advocating that the people who love the product be the ones who have the final say. (Disclosure: I'm an automotive engineer)
- bane 15y ago"It's indisputable that as MBAs have gained prominence in the US auto industry, the products have become less compelling." While I don't entirely disagree with your premise. Correlation does not equal causation. http://farm1.static.flickr.com/54/139092366_ce5b410228_o.jpg http://farm1.static.flickr.com/54/139092366_ce5b410228_o.jpg
- rdtsc 15y agoOur company has been in business for 20+ years and our main policy is to never hire any MBAs. Has worked out great so far.
- deleted 15y ago[deleted]
- vanessa98 15y ago"The company off Highway 101 that best illustrates this point is, of course, Apple." There's three numbers the author got wrong.
- pbreit 15y agoMBAs have their place: big multi-nationals in middle and upper middle management. Not at the top, not in tech and not in startups.
- bobthebee 15y agoPointless generalization. Engineers have their place: as individual contributors without customer facing roles. Not at the top or any management position.
- samyzee 15y ago"customer facing roles" and "management positions" sound like the shitty corporate bureaucracies which engineers want to stay from. The corporate culture of exploiting engineers will soon come to an end.
- orborde 15y ago> The corporate culture of exploiting engineers will soon come to an end. That seems exceedingly unlikely. Care to elaborate?
- Helianthus 15y agocorporations will be the first against the wall when the revolution comes. if you believe the revolution is coming, that statement is therefore straightforward.
- pbreit 15y agoWhy would you generalize about engineers administrating business?
- VladRussian 15y agofrom his wikipage it seems that he isn't an engineer, he is a professional manager and salesman. If he were following his own advice, he wouldn't had been running the show himself in the first place. Of course, as a result nobody would care today what some old man going by the name of Bob Lutz is thinking.
- uvdiv 15y agoLogically, they should fire the engineers and let lobbyists run the show. GM is in the business of government rent collecting, not cars.
- deleted 15y ago[deleted]
- lcargill99 15y agoBingo. We have a winner, folks. Once an organization is forced into, or drifts into that line of work, it's like a dog that's tasted human blood....
- samyzee 15y agoIt gets me so angry when I see complete idiots getting free corporate trips to europe to "present to customers" stuff that me and my fellow engineers built working late on weekdays,sacrificing our weekends...while these douchebags were at the bar talking to women about their exciting "work".
- aphexairlines 15y agoThat's a sign that you should look around for an employment situation (another team, another company, or yourself) that values/needs your work.
- samyzee 15y agom on it sir!!
- quanticle 15y agoIn the first half of the 20th century, industrial giants like Ford, General Electric, AT&T and many others were extremely consumer-focused I couldn't really read any more of the article after seeing this outright lie. In the first half of the 20th century, At&T wouldn't even let you plug in a third party telephone. How is that customer focused in any way?
- yuhong 15y agoYes, but AT&T was a special organization in many ways in these days. So it is only the AT&T example that is bad.
- kwantam 15y agoIt's customer focused because it allowed them to enforce strict standards[1] with regard to how devices on the telephone network behaves, which in turn let them provide high quality telephone service to a huge number of people. The Bell telephone network of the first half of the 20th century was a marvel by the standards of the day. Anyway, there honestly wasn't much of a problem with doing things that way from most customers' point of view: Bell owned the telephone equipment, but that was a good thing because it was expensive stuff, and they would maintain it for you. Moreover, there just wasn't much opportunity for differentiation in CPEs (customer premise equipment, the stuff in your house): battery technology wasn't at the point where wireless handsets made sense, commodity answering machines were a long way off, et cetera. In total, in terms of Bell's ability to roll out the network quickly, it was probably a net win with regard to the technology that they kept the whole thing closed. Now, obviously it also gave them the opportunity to act pretty anti-competitively, and obviously that was not good for customers. But it's often been observed that huge infrastructure buildouts are much more efficiently done under central control, and given the choice between the Federal government doing it and Ma Bell doing it, I'll take the latter. [1] I've read and implemented most of the Bellcore standards; in the past I worked on a team doing integrated telephone line control circuits (SLICs), and if you think fifteen years of web standards turns into a rats nest, try implementing 100 years of standards plus working around well-known cases that break those standards but are too widespread to ignore. The telephony equivalent of IE6 is the Casio Phonemate answering machine. That single piece of equipment is, I shit you not, singlehandedly responsible for about a 10% bloat in the cost of telephony equipment because it sold so many units and yet so badly breaks the ringing standard.
- westajay 15y agoA counter argument to this was Carlos Ghosn's experience with Nissan. He said that one of Nissan's problems was engineers making cars for engineers, but that people did not want to buy. In reality creating, marketing and being successful with a product requires diverse perspectives. I think engineers beating up on MBA's is no different from MBA's beating up on "propellerheads." It's counter productive. And just because you have an MBA, should you then be typecast by engineers? Why does having an MBA reduce someone's potential to be a passionate product person, or to have productive relationships with the makers?
- yuhong 15y agoThe problem is that the old business school courses taught a lot of flawed stuff, including stuff from Jack Welch like cutting costs by treating engineers etc as disposable.
- westajay 15y agoThat's a good point, and poor cost accounting practices.. I have a friend (an engineer) who is doing his MBA right now. At his school he said there is a big focus on ethics and ethical behaviour. Based on what I've witnessed in business, I wish some of that was maintained once people entered the work world!
- cultureulterior 15y agoIn high school there is a big focus on abstinence and staying away from alcohol, for much the same reason.
- cal5k 15y agoJack Welch was an engineer before he ever ran GE...
- ajays 15y agoI would say that especially in fast-moving companies, like in the "Web" space (generalize as you see fit), MBAs have no role. But they do have a role in established companies (like Intel, IBM, etc.) where "processes" have to be followed and nobody wants to rock the boat.
- ilamont 15y agoThe only time Apple ever lost the plot was when it put the M.B.A.s in charge. Tim Cook runs Apple's operations, is widely credited as a supply chain genius, and has been acting CEO of the company since Jobs started his latest medical leave. He received an MBA from Duke.
- goalieca 15y agoOperations might be a good place for someone with certain business talents. But also, apple has lately received a lot of flack for their off-shoring and the types of workers and working conditions.
- goalieca 15y agoOperations might be a good place for someone with certain business talents. But also, apple has lately received a lot of flack for their off-shoring and the types of workers and working conditions.
- ig1 15y agoGM didn't fail because of product, that failed because of lack of management talent. GM had vastly higher costs than it competitors due to a heavily unionized workforce, long term dealership contracts that were losing them money, and a huge pension deficit (roughly $1500 from every GM car sold goes to paying pensions). It didn't matter how great their products were, they'd never be able to compete with new or foreign car manufacturers.
- bane 15y agoIt also didn't help that, by and large, their products were absolute rubbish.
- razzmataz 15y agoIn the past decade, product really seemed to matter. I knew a few Saturn owners who loved the car, but the sedans that were being sold in the last five years of Saturn's life did not appeal to them, and that shows in the sales figures too.
- sunstone 15y agoTo state the obvious, many MBA's also have engineering degrees. What should be done with these guys?
- digikata 15y agoMake them the CEO? An engineering undergrad degree is the most prevalent degree among CEOs (at least with a sample of S&P 500 companies). http://engineering.curiouscatblog.net/2007/06/05/sp-500-ceos-again-engineering-graduates-lead/ http://engineering.curiouscatblog.net/2007/06/05/sp-500-ceos... I think there is a problem in business school focus on short-term optimization. There's data showing the while businesses have fatter profit margins than ever, total profit growth has been much weaker than in past decades. Hmm I think I saw that data in a Umair Haique presentation.
- cal5k 15y agoHas anyone considered that there just might be room for more than one particular set of talents inside a company?
- pramit 15y agoI have covered this 'MBA - good or bad' quite often in the past. http://thesuccessmanual.bighow.com http://thesuccessmanual.bighow.com