15 ms·

MBAs as CEOs

199 points by allengeorge 10y ago

pcurve 10y ago
Below is the article in a nutshell. Conclusion is not vry satisfying. "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.7"
simonsarris 10y ago
I know its popular to hate on Peter Thiel here but I think he's been right about this cohort for a long time, and that its not really surprising. Emphasis mine: > I think one challenge a lot of the business schools have is they end up attracting students who are very extroverted and have very low conviction, and they put them in this hot house environment for a few years — at the end of which, a large number of people go into whatever was the last trendy thing to do. They’ve done studies at Harvard Business School where they’ve found that the largest cohort always went into the wrong field. So in 1989, they all went to work for Michael Milken, a year or two before he went to jail. They were never interested in Silicon Valley except for 1999, 2000. The last decade their interest was housing and private equity. > So there is something about the way in which business school is decoupled from anything really substantive that I’d want to rethink. From this article: https://www.washingtonpost.com/news/on-leadership/wp/2014/10/10/peter-thiel-on-what-works-at-work/ https://www.washingtonpost.com/news/on-leadership/wp/2014/10... (but I heard him express this in a talk on Youtube that I can't find, and not in that article.) There seems to be something that's almost by definition generic about MBA types that's built in to the network of people (paraphrasing Thiel and others, who decides to go to business school, unless they simply have no other ideas and its the "thing to do"?) or the education itself. They are probably still excellent for lots of businesses, but they may be the businesses that Warren buffet calls "a business that's doing so well an idiot could run it." They may not be businesses that need to pivot in any meaningful way.
- demonshalo 10y ago
  It IS popular to hate on Thiel but it is also very hard to dispute most of the stuff that he says. Granted, everyone is wrong about something, but in this case, I think he nails it pretty darn well!
- deleted 10y ago
  [deleted]
- maxxxxx 10y ago
  "very extroverted and have very low conviction" I see that a lot in middle management in my company. There is this whole layer of people who are really good at going along with trends but can't make up their mind when hard decisions have to be made. As soon as someone else makes that decision they jump on the bandwagon again and take credit. It seems a really good way to climb the corporate ladder.
  - ajmurmann 10y ago
    I wouldn't necessarily explain this by properties of the individual middle manager. Middle management frequently had very little decision making power and it's their job to represent "the company's" decisions to their reports. In many organizations they are also heavily discouraged from taking any risks and frequently function as scape goats for bad decisions higher ups made. So even if someone in middle management seems bad at making decisions it might not be because they don't have a strong opinion but because they aren't sure if it clashes with what their boss wants and are unsure how far they can push it. They also might be turn to maybe do what they think is the wrong thing because they know it will be accepted by the organization. They also might seem to be slow or hesitant making decisions when it's in fact someone above them they are waiting for. Middle management is easily blamed, but they are also the ones who get to feel most when an organization is dysfunctional because they sit between the people who make the real decisions and between the people who are doing the ground work.
    - maxxxxx 10y ago
      There are middle managers who take a position and tell you. They may not always get their way but at least you know where they are at. But I also see a lot people who take no position, call meetings all day, don't contribute anything concrete but in the end still manage to get credit.
ziszis 10y ago
Google CEO Sundar Pichai has an MBA. Microsoft CEO Satya Nadella has an MBA. AWS CEO Andrew Jassy has an MBA, etc. It is easy to undervalue marketing, sales, financial and other non-technical skills. There are definitely terrible MBAs, but also amazing ones.
- aviraldg 10y ago
  But they have that in addition to an engineering degree.
  - ziszis 10y ago
    No True Scotsman? [0] What is Andy Jassy's engineering degree? What is Sheryl Sandberg's engineering degree? The reality is that people aren't one-dimensional. If you have overly simple rules: no MBAs, must have University degree, must have Ivy league, Uber people are unethical etc, you make worse decisions. [0] https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman
    - benchaney 10y ago
      "No True Scotsman?" Nope.
- Chris2048 10y ago
  You don't look at what successful people have an MBA, you see which MBAs are successful. There are many factors to success, you could just as easily conclude that people managed to succeed, despite wasting time on an MBA...
- based_log 10y ago
  Jeff Bezos is also an MBA, though I do concur with they guy who said all those people have MBAs in addition to engineering training.
  - arjunnarayan 10y ago
    False. Bezos was EECS at Princeton, and then went to work in finance for ~8 years before starting Amazon.com
rdtsc 10y ago
Company I worked for had an explicit policy to never hire MBAs. We had people from all walks of life but no MBAs. The reason is owners have worked in a large company under clueless MBAs who were neither good managers nor good engineers, and just repeated the latest corporate-speak buzzwords over and over, while drawing sizable salaries.
- basseq 10y ago
  This seems like throwing the baby out with the bathwater. "I worked with some bad MBAs, so anyone who holds that degree must be bad."
  - rdtsc 10y ago
    > This seems like throwing the baby out with the bathwater. Maybe. It did end up working out very well for them. Whether it was because they never hired MBAs or other reasons, they'll always credit that policy as being a part of their success.
  - Chris2048 10y ago
    Doesn't need to be that "anyone who holds that degree mu[st] be bad" - just that there's so much chaff a lot more time is wasted distinguishing the good ones. Consider that qualifications are themselves means of efficient filtering / signalling competence. What it's saying is, the qualifications doesn't add distinction to a candidate without.
    - basseq 10y ago
      Yes, but not in a binary fashion. Someone with a MBA doesn't signal incompetence, just the way that a lack of a MBA means I should immediately promote them to CEO. Likewise, a CS degree from Stanford is good, but some scrappy coder from a flyover state with no college education might be just as good when you dig in. Broad "filters" tend to have a lot of false positives.
  - Chaebixi 10y ago
    If MBAs often come with a particular ideology and attitude that you want to avoid, then it makes sense to not bother trying to find the good ones. A successful miner wants to focus on the rich ore.
api 10y ago
I strongly agree with Thiel on lots of things about business and innovation. I just don't think I agree with him on politics or social issues to the extent that I can figure out what he actually thinks on these issues. The latter can be challenging since he seems to keep those cards face down.
- arcanus 10y ago
  > The latter can be challenging since he seems to keep those cards face down Agreed. I think a variety of his actions are driven by pragmatic expediency as well. Trump was essentially a five million dollar contrarian put option, from that perspective.
  - gragas 10y ago
    > Trump was essentially a five million dollar contrarian put option See, this is what distinguishes the SV circle jerk bubble from Peter Thiel. Trump was not, in fact, a contrarian put option. Many companies are extremely hopeful about a future under Trump rather than Hillary; this is reflected in the extremely bullish market since Trump's election. Everyone in SV flounders around thinking "how could Trump be a good thing? how could anyone ever bet on him? he's a sexist/racist/xenophobe!" Perhaps SV is right that Trump is truly [X|Y|Z], but they are wrong in thinking that it has so much weight on the economy. It is clearly not the case that the consensus is a Trump presidency will ravage the economy---good sentiment about a future under him is literally baked into the price of the S&P 500. Peter Thiel's bet on Trump was only contrarian in places like Sillicon Valley.
    - igk 10y ago
      What's your analysis on why this is? Because the assumption is he will bring back the robber baron times, which were good for established businesses? This is the only interpretation that makes sense to me, since everything I've seen so far looks like selling the long term future for short term gain. But I'm leftwing and humanist for European standards, so i have an obvious bias.
- dang 10y ago
basseq 10y ago
Is there a causation factor here? Meaning: are MBA CEOs hired by companies who are in "trouble", or Boards who want to "achieve growth via acquisitions" instead of more organic ways? In other words, does this reflect companies who are more likely to hire MBA-types as their CEOs rather than the individuals themselves?
- zach417 10y ago
  When you lack vision, you ask yourself, "How do I do great business?", which is a question that never leads to the actual answer. It does, however, lead you to hire people who are trained in the art of doing "great business": MBAs.
alphonsegaston 10y ago
I think it's more useful to think of MBAs as ordination into something like the Jesuits of American Corporatism. Late Capitalism in the US has evolved in such an obviously unequal and environmentally dangerous way that the only recourse we have is to a kind of "mystical" rhetoric. In this kind of system, being some kind of guru is just as important, if not more, than one's actual business acumen. Hence all the TED talks, CEO aphorisms, and hollow simulations of benevolence. In this context, an MBA takes the form of acceptance into this quasi-religious order. It's either a readymade set of sacraments and oaths one can apply to any business to achieve magical effects. Or it's a kind of born-again incorporation, where people who have achieved something outside this system can be integrated back inside (why you see already successful business people going back to pursue these credentials).
- aaron-lebo 10y ago
  That's spot on and incredibly unsettling. I come from a conservative religious background and I'm genuinely creeped out by the mythologies that surround companies. I think there are a ton of parallels between today's business leaders and megachurch pastors. There's similarities in the way they build brands, the way followers reverently speak of them, assume they do no wrong, are willing to defend them, and the cognitive dissonance used to justify what they are doing. I assume they must be following a shared playbook, but I don't know who borrowed from what.
  - levelist_com 10y ago
    This probably isn't the best link but what you said reminded me of an article I read a number of years back. http://www.cnn.com/2011/TECH/gaming.gadgets/05/19/apple.religion/ http://www.cnn.com/2011/TECH/gaming.gadgets/05/19/apple.reli...
  - alphonsegaston 10y ago
    Look into Amway - that's where a lot of this ideology was first cultivated. They literally took American Christianity, substituted an ambiguous notion of "business" with God, and pyramid schemed their way to immense wealth and political power. They also pioneered selling business sermons (in the form of cassette tape sets) long before this whole social media deluge of similar nonsense.
acconrad 10y ago
> o 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. So 70% failed, 30% succeeded. Wasn't the average that 90% of businesses (perhaps more specifically startups) fail within the first 3 years? So if anything, wouldn't this show that Harvard MBA grads do better than the average CEO?
- Chris2048 10y ago
  Yep. motherfuckers act like they forgot about Bayes.
- sacheendra 10y ago
  I think the 2 datapoints are different. More than 90% of startups fail, yes. But, in the above scenario, these people ran established companies into the ground.
- hyperpape 10y ago
  I had the same concern about not having a clear comparison to non-MBA results, but the second study mentioned did have a clear comparison.
- bluGill 10y ago
  These were successful companies at one time. What is the percentage of Fortune 500 companies three years ago that have failed - I don't know, but it isn't 90% (it probably isn't hard to look this up if someone wants to fact check me - for extra credit find other measures companies of different sizes that are not startups). Of course bankruptcy is only part of failure. So really it is what percentages of Fortune 500 (or other measure of successful companies) have "their company went bankrupt, they were forced out of the CEO chair, a major merger backfired, and so on" Startups are in fact the wrong measure. A startup has nothing to lose, and often is trying something that will not succeed. Large companies often fund startups to limit their potential loss if it fails (if things seem not be going well they pull out without having to lay off all the people working for the startup which looks bad), and they buy the company if things go well.
thegoldenchild 10y ago
I'm aware that HN is a pro-engineering, anti-MBA group of folks, but hopefully my perspective helps add a bit of color from the other side. I got a BS and MS in Computer Science and ended up working as a software engineer for a number of years. After a while, I was left wanting more, so I enrolled in an MBA program. IMO, 50-60% of classes in business school are fluff leadership rah-rah self-development bullshit. But the other 40% is valuable. Why? Because Sundar Pichai isn't losing sleep at night over which tech stack the Gmail team is using. Satya Nadella doesn't give a fuck about a 5% latency reduction on the Bing landing page. The higher you climb in the ladder, the more you focus on non-technical topics like scaling, budgeting, revenue growth, recruiting, etc etc etc. In the bubble of Silicon Valley, it's easy to generalize every incompetent MBA you meet into a group that you classify as being useless in an organization. Just remember: a handful of tech CEOs have MBAs. HBS will always produce leaders, regardless of whether or not they succeed once they're in the CEO role. McKinsey churns out more CEOs than any other company in human history. The business skill set may seem trivial, but playing the political game usually gets your further than raw skill alone.
- GlennS 10y ago
  Could you summarise some of the 40% that was useful? Might be interesting to hear.
  - thegoldenchild 10y ago
    Finance I, II, III. Accounting I, II, III. Corporate Strategy. Emerging Markets. Micro/Macro Economics. Business Acting. Marketing Strategy. Ops Research.
    - jczhang 10y ago
      Ok so why not just take those classes online or something and save yourself the huge cost of MBA?
      - st3v3r 10y ago
inputcoffee 10y ago
The first study shows that MBA CEOs do poorly but there is no control. i.e. it may just be the case that capitalism is competitive and that most companies do poorly. The second study which compares MBA v Non-MBA on the covers of magazines is the more interesting study. Firstly, 25% of the 444 CEOs had MBAs. I will assume that is statistically significant. There are three questions that I would ask: 1. The difference was statistically significant, but what was the effect size? If you've squeezed out a 0.01% significance at 95% confidence, then that isn't impressive. 2. Was the effect driven by one or two CEOs? If Steve Jobs, Bill Gates, Jeff Bezos and Larry Page were in there, that alone may have accounted for the difference. 3. Is there another reason that magazine covers would lend themselves to a difference?
Mitchhhs 10y ago
Startups is the new thing for MBAs, our research report showed that now close to 10% of MBA classes go to work for startups and its beginning to eclipse investment banking (might be a good time to be a banker :) ). If you want to see the full report on these trends for MBAs going to startups, including their average compensation, here it is: https://gallery.mailchimp.com/570b962c65552f112714db835/files/7987f3c5-3ad9-41c6-aea9-a2b39259a1d6/MBA_Startup_Recruiting_Guide_TransparentCareer_1_.pdf https://gallery.mailchimp.com/570b962c65552f112714db835/file...
- Mitchhhs 10y ago
  Also if you're interested in checking out detailed MBA compensation across roles check this out: https://app.transparentcareer.com/explore https://app.transparentcareer.com/explore
fanzhang 10y ago
Are bankruptcies the right metric to measure a CEO? For example, startup founders as a cohort probably lead a lot more companies to bankruptcy (or disbandment) than laundromat owners. Yet probably the average startup owner is producing companies of higher value than laundromat owners (adjust for the right startup cohort to prove this point, like YC startups). Wouldn't you want to run a fair horserace like: - Randomly select MBA CEOs and non-MBA CEOs in a vintage year like 2000. - See the average earnings growth during their tenure, or stock price appreciation, or employee satisfaction, etc. He does cite two academic articles, but the first looks only at CEOs that have been featured on the cover of magazines, and in neither studies are the output variables the ultimate metrics that matter. (E.g. earnings management is fine if there are enough other positive qualities to redeem the CEO -- like getting long run growth for example).
amorphid 10y ago
I got an MBA. Going into the program, I was super excited about it. Coming out, I was pretty frustrated. I felt like it gave me a lot to think about without teaching me how to do any of it. I was not an master of administering a business.
- caminante 10y ago
  I don't think that's the purpose of the MBA -- i.e. to become trained for a specific role (though I assume you had opportunities for internships.) You're now (hopefully) more aware of how to structure decisions for a firm and can leverage your awareness to get better results more efficiently.
  - amorphid 10y ago
    An MBA might have been better if a worked for a company that paid for it, and wanted MBAs. I didn't follow that path. Live and learn...
    - caminante 10y ago
      Happens... Certain roles match well with "general" MBA learning experiences. However, I see many fail by not specializing with their MBA experiences. Each year something like 100K new MBAs join the workforce.
11thEarlOfMar 10y ago
An MBA doesn't make a CEO. CEOs are born, but their rise can be accelerated with an MBA. Successful CEOs have a particular perspective and mindset that allow them to understand both the underlying value of their company, and, the business strategies that enable the value to be realized. The MBA program cannot instill this perspective and mindset. But it can fill in the gaps of knowledge that is used to realize value. An engineering degree, coupled with product development experience, goes a long way towards developing the sense of what is valuable in a tech firm. In order for an engineer to rise to CEO and be successful, they would need to understand: - A P&L - A Balance Sheet - The liability of different hiring/firing approaches - The standard terms of different partnership and marketing contracts. - I.e., the basic functional operation of the Legal, Financial, HR, manufacturing ops, facilities, and, importantly, Marketing & Sales. You can learn a lot of that in business school, but I believe you can learn it well enough just by getting involved in those functions in some way and seeing how it all works together. For me, I view it like any system: functional blocks and interfaces that interact to cause profit and growth. Engineers who become successful CEOs can more or less naturally assimilate this and make solid plans and strategies.
- Blackstone4 10y ago
  > CEOs are born I feel that this statement is too strong. Maybe something along the lines of "CEOs are formed"... Some people also believe entrepreneurs are born entrepreneurs .... is that what you meant? I always come back to the fact that the brain is a muscle and we can change our thinking and improve our abilities
id122015 10y ago
When people chase the money they end up becoming doctors and then chopping off men's masculinity organ. Search and you will find that. Nothing new. Downvoting should be illegal, I know..
marze 10y ago
What can you say? They suck. On the other hand, it might make a nice long term investment strategy, and alternative to the S&P 500 index fund. Buy stock in 200 non-MBA led firms and hold for 15 years.
- Nicholas_C 10y ago
  Would be an interesting study to calculate the performance of companies share price and compare based on the leadership's educational background.
throws_away 10y ago
MBA programs are definitely about networking. It's certainly not about the quality of classes. Some time ago I worked at a top business school in the UK and what I saw changed how I view b-schools. At the place I worked at, students would need to take out a small mortgage just to pay tuition. Yet, the quality of teaching was shockingly low on the list of priorities of faculty. The administration was more concerned about growing the program (i.e. revenues) than it was about maintaining quality of teaching or research. The big expenditure that I saw was to maintain and develop ties with the big consultancies. The more students that could get lucrative consulting gigs after graduation meant that the average salary of graduates was higher. This in turn meant that the program received higher rankings from the FT... and so more MBAs wanted to attend. In terms of research and teaching, I think the main goal was to appear to be doing good work rather than to actually be doing it. Keeping up appearances / being part of the club of top schools meant a lot to everyone I met. The research can be multi-disciplinary and I suppose that is good. However, b-schools like to keep up the pretense that they are technocratic (or value free). I saw a lack of any real research that could be considered critical of the status quo. (In one case, a major project was funded by a major consulting company. They also had a hand in the research to develop their own white papers. It was a farce.) In short, for academia it's a lucrative gig for all involved. Why be a poorly paid sociologist when you can be a "strategy expert"? The trade-off is simply that you don't ask some questions. In return you get a really, really nice place to work, great perks (free food, drinks in the quad, fancy dinners, etc.) I don't blame any individual for making that choice. But I don't believe for a second that it's anything but a scam for most middle class students who will carry that debt for years. I suppose it is no wonder than MBA students are looking out for themselves when they graduate.
acalderaro 10y ago
One question I asked that turned me off from pursuing an MBA was "what happens when the MBA pool becomes as saturated as the <liberal arts degree> pool?" What other degree can one get besides an MBA to demonstrate success at business? How can one manage a social network that large at the minimum level required to get referrals to jobs. What will happen to wages? When I started thinking long term, I realized that people everything an MBA teaches you can be learned online and through a few books. Excel modeling, financial analysis, case studies, it's all readily available. And I came to the unfortunate conclusion that one doesn't need an education to teach you how to be a good manager. Good managers are competent in both the technical skills required of their subordinates and also in the interpersonal skills required to communicate and understand their subordinates. So the question for me became how do I learn technical skills? And the solution was to study technical fields. We're at the start of a transition period, where companies no longer outsource their leadership to individuals with alphabet soup after their name. As innovation and expansion occur more rapidly, people left asking "is it better to be the technical or the non-technical co-founder" will lose to technical founders with a desire to lead.
- no_wave 10y ago
  When people use the phrase MBA on HN they usually mean MBA from one of the top 20 or so programs, which answers your first question.
- nradov 10y ago
  In theory you can learn everything that an MBA program teaches through self study. In practice it's tough to get more than a superficial understanding of the subjects without actively participating in class discussions, working together with other students on group projects, and taking exams to really measure your knowledge. Autodidacts are often overconfident and missing key knowledge because no one ever really challenged them. The size of the MBA pool is somewhat self limiting because the coursework is kind of a grind. None of it requires any real genius but there's a lot of it.
awl130 10y ago
This article requires further data to corroborate it's claim. For example, there needs to be a delineation between companies run by founders and non-founders. MBAs are almost never founders, they are hired. Therefore, their analysis should control for founder-run companies. By the time you hire a MBA as CEO, most of the growth has already occurred, the original management team has left to cash out their equity, etc. In fact, oftentimes, MBAs are hired to solve a major problem, usually of growth. Why else would the founder leave? What founder leaves in the middle of a growth spurt? Often it's when the founder has reached the limits of their abilities that a MBA is called in.
tlb 10y ago
I'm not a big fan of MBAs as CEOs, but I think the evidence in the article is weak. There's never been a randomized study of installing different kinds of CEOs, so all they can measure is what happens to the kind of companies that hire MBAs fresh out of school as their new CEOs. What kind of company offers the biggest pay package to an MBA fresh out of school? Large ones where the board believes the company needs a major turnaround. If they didn't have serious management failures, they'd promote from within. It's the same phenomenon as discovering that the most famous cardiologists have the most patients dying.
bobbington 10y ago
College is a business, complete with a marketing department and lobbyists who work to grant them exclusive monopolies over industries. I don't think they are nearly so helpful as they claim.
m23khan 10y ago
All Fortune 500 CEO's either have MBAs or surround themselves with army of smart MBAs. Best we accept the value a person gets out of such a cut-throat, aggressive top MBA school and embrace it - afterall, we IT folks are famous for embracing all the advantages presented to us. Disclaimer: I don't have a MBA nor do I plan on getting one.
Paul-ish 10y ago
Is there any controlling for the the type of person that would go to these schools? ie Is it the school or is it the person?
Pica_soO 10y ago
Can you please deliver the following numbers and correlate them? X: Reliance of the manager on numerical only input. Y: Short-term improvement, usually gained by burning a non-measurable resource (brand-trust of the consumers, etc.) T: Time from Promotion to a different Department till Disaster Impact F: Time from Consequence Impact to arrival of capable fire-brigade CEO, basically reverting disastrous changes and recruiting back the personal that left. If you put these in a formula, you should be able to derive the approximate bonus a MBA can have on a department, lets that from now on approximate with the sinus.
- metaphorm 10y ago
  F(T) = AX^2 + BY^(1/T) where coefficient A is the current retail price of this season's latest best-seller on quantitative management fads, and coefficient B is absolute value of the difference between the manager's real shoe size and shoe size claimed on their OK-Cupid profile.
aaronchall 10y ago
> 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. The MBA is a graduate degree that is the highest compensated of the Masters degrees that you can get from business schools. Here's why I think that is: How do you put together economics, finance, accounting, organizational behavior, marketing, and operations, in a way that makes sense? A lot of people have trouble thinking of these things both holistically and distinctly. The MBA is both a high-level overview of these subjects, and a sustained study on putting them all together in an aligned way. The degree says the owner has studied that specific body of knowledge rigorously and at length. It does not mean the owner has studied each component as in-depth as someone with a degree in any of these individual subjects. I have a generalist MBA myself. But I supplemented my studies with a lot of time in the library studying books and journals on finance, statistics, computer science, and management. I tried to lock down my learning by logging each article and book, and I believe I had 400 items in my bibliographic database when I graduated - I understand the rest of my cohort used the bibliography tools built into Microsoft Word. I didn't get any networking value from the degree - I got it from a half-decent state school in Florida - most of my cohort was civil service, local accountants, and a couple of engineers and housewives. I used R for my statistics project. The rest of my cohort used Excel. For the capstone project, a business competition, I tracked my competition in spreadsheets for simple charting (every turn took about an hour of data input manually from pdf) - I don't believe the rest of my cohort did anything of the sort. I was able to do a lot more than my cohort with the same education as my cohort. The business school was accredited by the same standards body as Harvard. I don't know if I'm qualified to be a CEO yet. I like to say that I want to be qualified to run technology at a hedge fund. I'm continuing my education by signing up for the CFA, and I take my first test in December. Wish me luck. But to answer Mintzberg's question - why keep promoting this education for management, which, according to mounting evidence, produces so much mismanagement? - This is the wrong question. The course material is correct. The problem is selection bias. Those looking for the fastest route to career acceleration go for their MBAs - thus being, at least on paper, the best qualified to run firms. We need to get this education in the hands of the right people. We can also address the problem on the CEO side by better aligning their compensation to long-term performance instead of short-term performance measures. But shareholders are fairly impatient, and boards of directors seem to like the idea of juicing short-term performance.
HillaryBriss 10y ago
George W. Bush is the only US president to have earned an MBA. He got it from Harvard. https://en.wikipedia.org/wiki/George_W._Bush#Education https://en.wikipedia.org/wiki/George_W._Bush#Education
anjc 10y ago
I wish that people who rail against MBAs, as if they're a cult that should be demonised, would take 3 minutes to look at the classes and topics that you cover in a typical programme. You'll quickly see that they aren't programmes that you go into to exchange business cards and smoke cigars, and go off to do a few fun team building exercises and projects while casually reading Ries and Thiel and other pop-business bullshit...they're generally highly academic and very difficult to do well in. An MBA is to business what Computer Science is to coding as a junior web dev. You'll probably never use 90% of what you learn, but you'll get a high level overview of several important fields which lots of important academics (e.g. Mintzberg) have explored over the last century, and you'll be a better worker for it.
- tingbadimalo 10y ago
  "An MBA is to business what Computer Science is to coding as a junior web dev" great analogy. I think the additional challenge is that coding has a clear feedback loop. Management and business does not and therefore most people remain 'junior web devs' and make mistakes throughout their careers.
YZF 10y ago
I'm probably going to misquote him but Amos Michelson who was the CEO of the billion dollar company Creo, and a Stanford MBA, used to say that you can teach someone intelligent the useful bits from the MBA program in a week. He tried to get every Creo employee to know those useful bits so they can make the best decisions for the company.
contingencies 10y ago
I am an experienced entrepreneur in that I have both run and been a part of a few (mostly successful!) small businesses, one in which I was second-tier management on the tech side (hiring, personal and team execution, partnerships/integrations) sold for USD$48.5M. Another at which I was first employee I just sold my shares in at a still higher valuation. Currently I am running another, which I believe without a doubt will be the most successful by a significant margin, as I have multiple offers for a large portion of that capital on the table already. I'm considering a well regarded MBA program (HKUST), in go-slow part time mode. The (ex-KPMG) head of a VC firm interested in leading our subsequent round encouraged me not to do it, suggesting it would take too much time and a mentor would be superior, despite the schedule being essentially weekend-oriented and specifically designed for people already in industry. I believe, despite the VC's concerns, that it may be useful to me at this point in my life, though maybe for different reasons than most. 1. I've spent a lot of my career working remotely or as a fly-in short term worker in different cultures (UK, US, Korea, etc.), or running my own businesses in a foreign culture (China), I haven't been in the formal business environment very much. While I have made successful VC presentations and been part of critical meetings with all sectors, I do feel I can up my game in terms of professionalism. Spending time amongst a motivated peer group from industry with similar focus and goals will no doubt do wonders. 2. By understanding the scope and depth of a leading MBA course (some of which I will have already encountered) I can better grok others I encounter in the business landscape in terms of their probable levels of education and thinking on various issues. 3. I dropped out of my undergraduate degree (though with excellent marks, multiple scholarships, and glowing head-of-department references) so having something formal and tertiary may make more of a difference later. 4. Students reside on campus with an eastward morning view of the ocean in Hong Kong, which will provide a nice sporadic (every two weekends) physical, mental and social break from urban Shenzhen, where I am currently relocating with my company http://8-food.com/ http://8-food.com/ and family. While I understand the VC's concern - "run the business! don't prepare to run someone else's business later!", as well as harboring the same concerns outlined below, and do have the Thiel quote on MBAs in my fortune database - https://github.com/globalcitizen/taoup https://github.com/globalcitizen/taoup - I am frankly leaning towards doing it anyway... if they'll take me. ;) I'll let you know in a few years!
- 10y ago

199 points by allengeorge 10y ago

Below is the article in a nutshell. Conclusion is not vry satisfying. "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.7"

simonsarris 10y ago

I know its popular to hate on Peter Thiel here but I think he's been right about this cohort for a long time, and that its not really surprising. Emphasis mine: > I think one challenge a lot of the business schools have is they end up attracting students who are very extroverted and have very low conviction, and they put them in this hot house environment for a few years — at the end of which, a large number of people go into whatever was the last trendy thing to do. They’ve done studies at Harvard Business School where they’ve found that the largest cohort always went into the wrong field. So in 1989, they all went to work for Michael Milken, a year or two before he went to jail. They were never interested in Silicon Valley except for 1999, 2000. The last decade their interest was housing and private equity. > So there is something about the way in which business school is decoupled from anything really substantive that I’d want to rethink. From this article: https://www.washingtonpost.com/news/on-leadership/wp/2014/10/10/peter-thiel-on-what-works-at-work/ https://www.washingtonpost.com/news/on-leadership/wp/2014/10... (but I heard him express this in a talk on Youtube that I can't find, and not in that article.) There seems to be something that's almost by definition generic about MBA types that's built in to the network of people (paraphrasing Thiel and others, who decides to go to business school, unless they simply have no other ideas and its the "thing to do"?) or the education itself. They are probably still excellent for lots of businesses, but they may be the businesses that Warren buffet calls "a business that's doing so well an idiot could run it." They may not be businesses that need to pivot in any meaningful way.

demonshalo 10y ago
It IS popular to hate on Thiel but it is also very hard to dispute most of the stuff that he says. Granted, everyone is wrong about something, but in this case, I think he nails it pretty darn well!
deleted 10y ago
[deleted]
maxxxxx 10y ago
"very extroverted and have very low conviction" I see that a lot in middle management in my company. There is this whole layer of people who are really good at going along with trends but can't make up their mind when hard decisions have to be made. As soon as someone else makes that decision they jump on the bandwagon again and take credit. It seems a really good way to climb the corporate ladder.
- ajmurmann 10y ago
  I wouldn't necessarily explain this by properties of the individual middle manager. Middle management frequently had very little decision making power and it's their job to represent "the company's" decisions to their reports. In many organizations they are also heavily discouraged from taking any risks and frequently function as scape goats for bad decisions higher ups made. So even if someone in middle management seems bad at making decisions it might not be because they don't have a strong opinion but because they aren't sure if it clashes with what their boss wants and are unsure how far they can push it. They also might be turn to maybe do what they think is the wrong thing because they know it will be accepted by the organization. They also might seem to be slow or hesitant making decisions when it's in fact someone above them they are waiting for. Middle management is easily blamed, but they are also the ones who get to feel most when an organization is dysfunctional because they sit between the people who make the real decisions and between the people who are doing the ground work.
  - maxxxxx 10y ago
    There are middle managers who take a position and tell you. They may not always get their way but at least you know where they are at. But I also see a lot people who take no position, call meetings all day, don't contribute anything concrete but in the end still manage to get credit.

ziszis 10y ago

Google CEO Sundar Pichai has an MBA. Microsoft CEO Satya Nadella has an MBA. AWS CEO Andrew Jassy has an MBA, etc. It is easy to undervalue marketing, sales, financial and other non-technical skills. There are definitely terrible MBAs, but also amazing ones.

aviraldg 10y ago
But they have that in addition to an engineering degree.
- ziszis 10y ago
  No True Scotsman? [0] What is Andy Jassy's engineering degree? What is Sheryl Sandberg's engineering degree? The reality is that people aren't one-dimensional. If you have overly simple rules: no MBAs, must have University degree, must have Ivy league, Uber people are unethical etc, you make worse decisions. [0] https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman
  - benchaney 10y ago
    "No True Scotsman?" Nope.
Chris2048 10y ago
You don't look at what successful people have an MBA, you see which MBAs are successful. There are many factors to success, you could just as easily conclude that people managed to succeed, despite wasting time on an MBA...
based_log 10y ago
Jeff Bezos is also an MBA, though I do concur with they guy who said all those people have MBAs in addition to engineering training.
- arjunnarayan 10y ago
  False. Bezos was EECS at Princeton, and then went to work in finance for ~8 years before starting Amazon.com

rdtsc 10y ago

Company I worked for had an explicit policy to never hire MBAs. We had people from all walks of life but no MBAs. The reason is owners have worked in a large company under clueless MBAs who were neither good managers nor good engineers, and just repeated the latest corporate-speak buzzwords over and over, while drawing sizable salaries.

basseq 10y ago
This seems like throwing the baby out with the bathwater. "I worked with some bad MBAs, so anyone who holds that degree must be bad."
- rdtsc 10y ago
  > This seems like throwing the baby out with the bathwater. Maybe. It did end up working out very well for them. Whether it was because they never hired MBAs or other reasons, they'll always credit that policy as being a part of their success.
- Chris2048 10y ago
  Doesn't need to be that "anyone who holds that degree mu[st] be bad" - just that there's so much chaff a lot more time is wasted distinguishing the good ones. Consider that qualifications are themselves means of efficient filtering / signalling competence. What it's saying is, the qualifications doesn't add distinction to a candidate without.
  - basseq 10y ago
    Yes, but not in a binary fashion. Someone with a MBA doesn't signal incompetence, just the way that a lack of a MBA means I should immediately promote them to CEO. Likewise, a CS degree from Stanford is good, but some scrappy coder from a flyover state with no college education might be just as good when you dig in. Broad "filters" tend to have a lot of false positives.
- Chaebixi 10y ago
  If MBAs often come with a particular ideology and attitude that you want to avoid, then it makes sense to not bother trying to find the good ones. A successful miner wants to focus on the rich ore.

api 10y ago

I strongly agree with Thiel on lots of things about business and innovation. I just don't think I agree with him on politics or social issues to the extent that I can figure out what he actually thinks on these issues. The latter can be challenging since he seems to keep those cards face down.

arcanus 10y ago
> The latter can be challenging since he seems to keep those cards face down Agreed. I think a variety of his actions are driven by pragmatic expediency as well. Trump was essentially a five million dollar contrarian put option, from that perspective.
- gragas 10y ago
  > Trump was essentially a five million dollar contrarian put option See, this is what distinguishes the SV circle jerk bubble from Peter Thiel. Trump was not, in fact, a contrarian put option. Many companies are extremely hopeful about a future under Trump rather than Hillary; this is reflected in the extremely bullish market since Trump's election. Everyone in SV flounders around thinking "how could Trump be a good thing? how could anyone ever bet on him? he's a sexist/racist/xenophobe!" Perhaps SV is right that Trump is truly [X|Y|Z], but they are wrong in thinking that it has so much weight on the economy. It is clearly not the case that the consensus is a Trump presidency will ravage the economy---good sentiment about a future under him is literally baked into the price of the S&P 500. Peter Thiel's bet on Trump was only contrarian in places like Sillicon Valley.
  - igk 10y ago
    What's your analysis on why this is? Because the assumption is he will bring back the robber baron times, which were good for established businesses? This is the only interpretation that makes sense to me, since everything I've seen so far looks like selling the long term future for short term gain. But I'm leftwing and humanist for European standards, so i have an obvious bias.
dang 10y ago

basseq 10y ago

Is there a causation factor here? Meaning: are MBA CEOs hired by companies who are in "trouble", or Boards who want to "achieve growth via acquisitions" instead of more organic ways? In other words, does this reflect companies who are more likely to hire MBA-types as their CEOs rather than the individuals themselves?

zach417 10y ago
When you lack vision, you ask yourself, "How do I do great business?", which is a question that never leads to the actual answer. It does, however, lead you to hire people who are trained in the art of doing "great business": MBAs.

alphonsegaston 10y ago

I think it's more useful to think of MBAs as ordination into something like the Jesuits of American Corporatism. Late Capitalism in the US has evolved in such an obviously unequal and environmentally dangerous way that the only recourse we have is to a kind of "mystical" rhetoric. In this kind of system, being some kind of guru is just as important, if not more, than one's actual business acumen. Hence all the TED talks, CEO aphorisms, and hollow simulations of benevolence. In this context, an MBA takes the form of acceptance into this quasi-religious order. It's either a readymade set of sacraments and oaths one can apply to any business to achieve magical effects. Or it's a kind of born-again incorporation, where people who have achieved something outside this system can be integrated back inside (why you see already successful business people going back to pursue these credentials).

aaron-lebo 10y ago
That's spot on and incredibly unsettling. I come from a conservative religious background and I'm genuinely creeped out by the mythologies that surround companies. I think there are a ton of parallels between today's business leaders and megachurch pastors. There's similarities in the way they build brands, the way followers reverently speak of them, assume they do no wrong, are willing to defend them, and the cognitive dissonance used to justify what they are doing. I assume they must be following a shared playbook, but I don't know who borrowed from what.
- levelist_com 10y ago
  This probably isn't the best link but what you said reminded me of an article I read a number of years back. http://www.cnn.com/2011/TECH/gaming.gadgets/05/19/apple.religion/ http://www.cnn.com/2011/TECH/gaming.gadgets/05/19/apple.reli...
- alphonsegaston 10y ago
  Look into Amway - that's where a lot of this ideology was first cultivated. They literally took American Christianity, substituted an ambiguous notion of "business" with God, and pyramid schemed their way to immense wealth and political power. They also pioneered selling business sermons (in the form of cassette tape sets) long before this whole social media deluge of similar nonsense.

acconrad 10y ago

> o 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. So 70% failed, 30% succeeded. Wasn't the average that 90% of businesses (perhaps more specifically startups) fail within the first 3 years? So if anything, wouldn't this show that Harvard MBA grads do better than the average CEO?

Chris2048 10y ago
Yep. motherfuckers act like they forgot about Bayes.
sacheendra 10y ago
I think the 2 datapoints are different. More than 90% of startups fail, yes. But, in the above scenario, these people ran established companies into the ground.
hyperpape 10y ago
I had the same concern about not having a clear comparison to non-MBA results, but the second study mentioned did have a clear comparison.
bluGill 10y ago
These were successful companies at one time. What is the percentage of Fortune 500 companies three years ago that have failed - I don't know, but it isn't 90% (it probably isn't hard to look this up if someone wants to fact check me - for extra credit find other measures companies of different sizes that are not startups). Of course bankruptcy is only part of failure. So really it is what percentages of Fortune 500 (or other measure of successful companies) have "their company went bankrupt, they were forced out of the CEO chair, a major merger backfired, and so on" Startups are in fact the wrong measure. A startup has nothing to lose, and often is trying something that will not succeed. Large companies often fund startups to limit their potential loss if it fails (if things seem not be going well they pull out without having to lay off all the people working for the startup which looks bad), and they buy the company if things go well.

thegoldenchild 10y ago

I'm aware that HN is a pro-engineering, anti-MBA group of folks, but hopefully my perspective helps add a bit of color from the other side. I got a BS and MS in Computer Science and ended up working as a software engineer for a number of years. After a while, I was left wanting more, so I enrolled in an MBA program. IMO, 50-60% of classes in business school are fluff leadership rah-rah self-development bullshit. But the other 40% is valuable. Why? Because Sundar Pichai isn't losing sleep at night over which tech stack the Gmail team is using. Satya Nadella doesn't give a fuck about a 5% latency reduction on the Bing landing page. The higher you climb in the ladder, the more you focus on non-technical topics like scaling, budgeting, revenue growth, recruiting, etc etc etc. In the bubble of Silicon Valley, it's easy to generalize every incompetent MBA you meet into a group that you classify as being useless in an organization. Just remember: a handful of tech CEOs have MBAs. HBS will always produce leaders, regardless of whether or not they succeed once they're in the CEO role. McKinsey churns out more CEOs than any other company in human history. The business skill set may seem trivial, but playing the political game usually gets your further than raw skill alone.

GlennS 10y ago
Could you summarise some of the 40% that was useful? Might be interesting to hear.
- thegoldenchild 10y ago
  Finance I, II, III. Accounting I, II, III. Corporate Strategy. Emerging Markets. Micro/Macro Economics. Business Acting. Marketing Strategy. Ops Research.
  - jczhang 10y ago
    Ok so why not just take those classes online or something and save yourself the huge cost of MBA?
    - st3v3r 10y ago

inputcoffee 10y ago

The first study shows that MBA CEOs do poorly but there is no control. i.e. it may just be the case that capitalism is competitive and that most companies do poorly. The second study which compares MBA v Non-MBA on the covers of magazines is the more interesting study. Firstly, 25% of the 444 CEOs had MBAs. I will assume that is statistically significant. There are three questions that I would ask: 1. The difference was statistically significant, but what was the effect size? If you've squeezed out a 0.01% significance at 95% confidence, then that isn't impressive. 2. Was the effect driven by one or two CEOs? If Steve Jobs, Bill Gates, Jeff Bezos and Larry Page were in there, that alone may have accounted for the difference. 3. Is there another reason that magazine covers would lend themselves to a difference?

Mitchhhs 10y ago

Startups is the new thing for MBAs, our research report showed that now close to 10% of MBA classes go to work for startups and its beginning to eclipse investment banking (might be a good time to be a banker :) ). If you want to see the full report on these trends for MBAs going to startups, including their average compensation, here it is: https://gallery.mailchimp.com/570b962c65552f112714db835/files/7987f3c5-3ad9-41c6-aea9-a2b39259a1d6/MBA_Startup_Recruiting_Guide_TransparentCareer_1_.pdf https://gallery.mailchimp.com/570b962c65552f112714db835/file...

Mitchhhs 10y ago
Also if you're interested in checking out detailed MBA compensation across roles check this out: https://app.transparentcareer.com/explore https://app.transparentcareer.com/explore

fanzhang 10y ago

Are bankruptcies the right metric to measure a CEO? For example, startup founders as a cohort probably lead a lot more companies to bankruptcy (or disbandment) than laundromat owners. Yet probably the average startup owner is producing companies of higher value than laundromat owners (adjust for the right startup cohort to prove this point, like YC startups). Wouldn't you want to run a fair horserace like: - Randomly select MBA CEOs and non-MBA CEOs in a vintage year like 2000. - See the average earnings growth during their tenure, or stock price appreciation, or employee satisfaction, etc. He does cite two academic articles, but the first looks only at CEOs that have been featured on the cover of magazines, and in neither studies are the output variables the ultimate metrics that matter. (E.g. earnings management is fine if there are enough other positive qualities to redeem the CEO -- like getting long run growth for example).

amorphid 10y ago

I got an MBA. Going into the program, I was super excited about it. Coming out, I was pretty frustrated. I felt like it gave me a lot to think about without teaching me how to do any of it. I was not an master of administering a business.

caminante 10y ago
I don't think that's the purpose of the MBA -- i.e. to become trained for a specific role (though I assume you had opportunities for internships.) You're now (hopefully) more aware of how to structure decisions for a firm and can leverage your awareness to get better results more efficiently.
- amorphid 10y ago
  An MBA might have been better if a worked for a company that paid for it, and wanted MBAs. I didn't follow that path. Live and learn...
  - caminante 10y ago
    Happens... Certain roles match well with "general" MBA learning experiences. However, I see many fail by not specializing with their MBA experiences. Each year something like 100K new MBAs join the workforce.

11thEarlOfMar 10y ago

An MBA doesn't make a CEO. CEOs are born, but their rise can be accelerated with an MBA. Successful CEOs have a particular perspective and mindset that allow them to understand both the underlying value of their company, and, the business strategies that enable the value to be realized. The MBA program cannot instill this perspective and mindset. But it can fill in the gaps of knowledge that is used to realize value. An engineering degree, coupled with product development experience, goes a long way towards developing the sense of what is valuable in a tech firm. In order for an engineer to rise to CEO and be successful, they would need to understand: - A P&L - A Balance Sheet - The liability of different hiring/firing approaches - The standard terms of different partnership and marketing contracts. - I.e., the basic functional operation of the Legal, Financial, HR, manufacturing ops, facilities, and, importantly, Marketing & Sales. You can learn a lot of that in business school, but I believe you can learn it well enough just by getting involved in those functions in some way and seeing how it all works together. For me, I view it like any system: functional blocks and interfaces that interact to cause profit and growth. Engineers who become successful CEOs can more or less naturally assimilate this and make solid plans and strategies.

Blackstone4 10y ago
> CEOs are born I feel that this statement is too strong. Maybe something along the lines of "CEOs are formed"... Some people also believe entrepreneurs are born entrepreneurs .... is that what you meant? I always come back to the fact that the brain is a muscle and we can change our thinking and improve our abilities

id122015 10y ago

When people chase the money they end up becoming doctors and then chopping off men's masculinity organ. Search and you will find that. Nothing new. Downvoting should be illegal, I know..

marze 10y ago

What can you say? They suck. On the other hand, it might make a nice long term investment strategy, and alternative to the S&P 500 index fund. Buy stock in 200 non-MBA led firms and hold for 15 years.

Nicholas_C 10y ago
Would be an interesting study to calculate the performance of companies share price and compare based on the leadership's educational background.

throws_away 10y ago

MBA programs are definitely about networking. It's certainly not about the quality of classes. Some time ago I worked at a top business school in the UK and what I saw changed how I view b-schools. At the place I worked at, students would need to take out a small mortgage just to pay tuition. Yet, the quality of teaching was shockingly low on the list of priorities of faculty. The administration was more concerned about growing the program (i.e. revenues) than it was about maintaining quality of teaching or research. The big expenditure that I saw was to maintain and develop ties with the big consultancies. The more students that could get lucrative consulting gigs after graduation meant that the average salary of graduates was higher. This in turn meant that the program received higher rankings from the FT... and so more MBAs wanted to attend. In terms of research and teaching, I think the main goal was to appear to be doing good work rather than to actually be doing it. Keeping up appearances / being part of the club of top schools meant a lot to everyone I met. The research can be multi-disciplinary and I suppose that is good. However, b-schools like to keep up the pretense that they are technocratic (or value free). I saw a lack of any real research that could be considered critical of the status quo. (In one case, a major project was funded by a major consulting company. They also had a hand in the research to develop their own white papers. It was a farce.) In short, for academia it's a lucrative gig for all involved. Why be a poorly paid sociologist when you can be a "strategy expert"? The trade-off is simply that you don't ask some questions. In return you get a really, really nice place to work, great perks (free food, drinks in the quad, fancy dinners, etc.) I don't blame any individual for making that choice. But I don't believe for a second that it's anything but a scam for most middle class students who will carry that debt for years. I suppose it is no wonder than MBA students are looking out for themselves when they graduate.

acalderaro 10y ago

One question I asked that turned me off from pursuing an MBA was "what happens when the MBA pool becomes as saturated as the <liberal arts degree> pool?" What other degree can one get besides an MBA to demonstrate success at business? How can one manage a social network that large at the minimum level required to get referrals to jobs. What will happen to wages? When I started thinking long term, I realized that people everything an MBA teaches you can be learned online and through a few books. Excel modeling, financial analysis, case studies, it's all readily available. And I came to the unfortunate conclusion that one doesn't need an education to teach you how to be a good manager. Good managers are competent in both the technical skills required of their subordinates and also in the interpersonal skills required to communicate and understand their subordinates. So the question for me became how do I learn technical skills? And the solution was to study technical fields. We're at the start of a transition period, where companies no longer outsource their leadership to individuals with alphabet soup after their name. As innovation and expansion occur more rapidly, people left asking "is it better to be the technical or the non-technical co-founder" will lose to technical founders with a desire to lead.

no_wave 10y ago
When people use the phrase MBA on HN they usually mean MBA from one of the top 20 or so programs, which answers your first question.
nradov 10y ago
In theory you can learn everything that an MBA program teaches through self study. In practice it's tough to get more than a superficial understanding of the subjects without actively participating in class discussions, working together with other students on group projects, and taking exams to really measure your knowledge. Autodidacts are often overconfident and missing key knowledge because no one ever really challenged them. The size of the MBA pool is somewhat self limiting because the coursework is kind of a grind. None of it requires any real genius but there's a lot of it.

awl130 10y ago

This article requires further data to corroborate it's claim. For example, there needs to be a delineation between companies run by founders and non-founders. MBAs are almost never founders, they are hired. Therefore, their analysis should control for founder-run companies. By the time you hire a MBA as CEO, most of the growth has already occurred, the original management team has left to cash out their equity, etc. In fact, oftentimes, MBAs are hired to solve a major problem, usually of growth. Why else would the founder leave? What founder leaves in the middle of a growth spurt? Often it's when the founder has reached the limits of their abilities that a MBA is called in.

tlb 10y ago

I'm not a big fan of MBAs as CEOs, but I think the evidence in the article is weak. There's never been a randomized study of installing different kinds of CEOs, so all they can measure is what happens to the kind of companies that hire MBAs fresh out of school as their new CEOs. What kind of company offers the biggest pay package to an MBA fresh out of school? Large ones where the board believes the company needs a major turnaround. If they didn't have serious management failures, they'd promote from within. It's the same phenomenon as discovering that the most famous cardiologists have the most patients dying.

bobbington 10y ago

College is a business, complete with a marketing department and lobbyists who work to grant them exclusive monopolies over industries. I don't think they are nearly so helpful as they claim.

m23khan 10y ago

All Fortune 500 CEO's either have MBAs or surround themselves with army of smart MBAs. Best we accept the value a person gets out of such a cut-throat, aggressive top MBA school and embrace it - afterall, we IT folks are famous for embracing all the advantages presented to us. Disclaimer: I don't have a MBA nor do I plan on getting one.

Paul-ish 10y ago

Is there any controlling for the the type of person that would go to these schools? ie Is it the school or is it the person?

Pica_soO 10y ago

Can you please deliver the following numbers and correlate them? X: Reliance of the manager on numerical only input. Y: Short-term improvement, usually gained by burning a non-measurable resource (brand-trust of the consumers, etc.) T: Time from Promotion to a different Department till Disaster Impact F: Time from Consequence Impact to arrival of capable fire-brigade CEO, basically reverting disastrous changes and recruiting back the personal that left. If you put these in a formula, you should be able to derive the approximate bonus a MBA can have on a department, lets that from now on approximate with the sinus.

metaphorm 10y ago
F(T) = AX^2 + BY^(1/T) where coefficient A is the current retail price of this season's latest best-seller on quantitative management fads, and coefficient B is absolute value of the difference between the manager's real shoe size and shoe size claimed on their OK-Cupid profile.

aaronchall 10y ago

> 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. The MBA is a graduate degree that is the highest compensated of the Masters degrees that you can get from business schools. Here's why I think that is: How do you put together economics, finance, accounting, organizational behavior, marketing, and operations, in a way that makes sense? A lot of people have trouble thinking of these things both holistically and distinctly. The MBA is both a high-level overview of these subjects, and a sustained study on putting them all together in an aligned way. The degree says the owner has studied that specific body of knowledge rigorously and at length. It does not mean the owner has studied each component as in-depth as someone with a degree in any of these individual subjects. I have a generalist MBA myself. But I supplemented my studies with a lot of time in the library studying books and journals on finance, statistics, computer science, and management. I tried to lock down my learning by logging each article and book, and I believe I had 400 items in my bibliographic database when I graduated - I understand the rest of my cohort used the bibliography tools built into Microsoft Word. I didn't get any networking value from the degree - I got it from a half-decent state school in Florida - most of my cohort was civil service, local accountants, and a couple of engineers and housewives. I used R for my statistics project. The rest of my cohort used Excel. For the capstone project, a business competition, I tracked my competition in spreadsheets for simple charting (every turn took about an hour of data input manually from pdf) - I don't believe the rest of my cohort did anything of the sort. I was able to do a lot more than my cohort with the same education as my cohort. The business school was accredited by the same standards body as Harvard. I don't know if I'm qualified to be a CEO yet. I like to say that I want to be qualified to run technology at a hedge fund. I'm continuing my education by signing up for the CFA, and I take my first test in December. Wish me luck. But to answer Mintzberg's question - why keep promoting this education for management, which, according to mounting evidence, produces so much mismanagement? - This is the wrong question. The course material is correct. The problem is selection bias. Those looking for the fastest route to career acceleration go for their MBAs - thus being, at least on paper, the best qualified to run firms. We need to get this education in the hands of the right people. We can also address the problem on the CEO side by better aligning their compensation to long-term performance instead of short-term performance measures. But shareholders are fairly impatient, and boards of directors seem to like the idea of juicing short-term performance.

HillaryBriss 10y ago

George W. Bush is the only US president to have earned an MBA. He got it from Harvard. https://en.wikipedia.org/wiki/George_W._Bush#Education https://en.wikipedia.org/wiki/George_W._Bush#Education

anjc 10y ago

I wish that people who rail against MBAs, as if they're a cult that should be demonised, would take 3 minutes to look at the classes and topics that you cover in a typical programme. You'll quickly see that they aren't programmes that you go into to exchange business cards and smoke cigars, and go off to do a few fun team building exercises and projects while casually reading Ries and Thiel and other pop-business bullshit...they're generally highly academic and very difficult to do well in. An MBA is to business what Computer Science is to coding as a junior web dev. You'll probably never use 90% of what you learn, but you'll get a high level overview of several important fields which lots of important academics (e.g. Mintzberg) have explored over the last century, and you'll be a better worker for it.

tingbadimalo 10y ago
"An MBA is to business what Computer Science is to coding as a junior web dev" great analogy. I think the additional challenge is that coding has a clear feedback loop. Management and business does not and therefore most people remain 'junior web devs' and make mistakes throughout their careers.

YZF 10y ago

I'm probably going to misquote him but Amos Michelson who was the CEO of the billion dollar company Creo, and a Stanford MBA, used to say that you can teach someone intelligent the useful bits from the MBA program in a week. He tried to get every Creo employee to know those useful bits so they can make the best decisions for the company.

contingencies 10y ago

I am an experienced entrepreneur in that I have both run and been a part of a few (mostly successful!) small businesses, one in which I was second-tier management on the tech side (hiring, personal and team execution, partnerships/integrations) sold for USD$48.5M. Another at which I was first employee I just sold my shares in at a still higher valuation. Currently I am running another, which I believe without a doubt will be the most successful by a significant margin, as I have multiple offers for a large portion of that capital on the table already. I'm considering a well regarded MBA program (HKUST), in go-slow part time mode. The (ex-KPMG) head of a VC firm interested in leading our subsequent round encouraged me not to do it, suggesting it would take too much time and a mentor would be superior, despite the schedule being essentially weekend-oriented and specifically designed for people already in industry. I believe, despite the VC's concerns, that it may be useful to me at this point in my life, though maybe for different reasons than most. 1. I've spent a lot of my career working remotely or as a fly-in short term worker in different cultures (UK, US, Korea, etc.), or running my own businesses in a foreign culture (China), I haven't been in the formal business environment very much. While I have made successful VC presentations and been part of critical meetings with all sectors, I do feel I can up my game in terms of professionalism. Spending time amongst a motivated peer group from industry with similar focus and goals will no doubt do wonders. 2. By understanding the scope and depth of a leading MBA course (some of which I will have already encountered) I can better grok others I encounter in the business landscape in terms of their probable levels of education and thinking on various issues. 3. I dropped out of my undergraduate degree (though with excellent marks, multiple scholarships, and glowing head-of-department references) so having something formal and tertiary may make more of a difference later. 4. Students reside on campus with an eastward morning view of the ocean in Hong Kong, which will provide a nice sporadic (every two weekends) physical, mental and social break from urban Shenzhen, where I am currently relocating with my company http://8-food.com/ http://8-food.com/ and family. While I understand the VC's concern - "run the business! don't prepare to run someone else's business later!", as well as harboring the same concerns outlined below, and do have the Thiel quote on MBAs in my fortune database - https://github.com/globalcitizen/taoup https://github.com/globalcitizen/taoup - I am frankly leaning towards doing it anyway... if they'll take me. ;) I'll let you know in a few years!

10y ago