78 ms·

So HBS, I believe, is responsible for spreading a strange phenomenon: that management is a separate craft and someone who can manage a company selling beverages

by chx 9y ago

So HBS, I believe, is responsible for spreading a strange phenomenon: that management is a separate craft and someone who can manage a company selling beverages can sell computers just as well. We know how that worked out. There's also the case when a private equity firm takes over a company and in the name of profit makes it hell on earth.

TimJYoung 9y ago
I think that your post really sums things up nicely. Yes, a generic business expert will have a leg up on things that apply universally to the running of an organization, such as financials. However, I can't possibly see how they would be better than someone that has been in the applicable industry for 20-30 years and knows the industry inside and out. Furthermore, hasn't it been demonstrated that MBAs tend to take actions that revolve around their generic business expertise, such as mergers and acquisitions, cost-cutting in the form of layoffs, etc. ?
- thesumofall 9y ago
  Don't founders in their 20s claim the same? That they understand a certain industry better than the incumbents? You basically argue that managers have their strength in certain areas (e.g., financials) but not in others. So what? That's the same with any other profession :-)
  - lliamander 9y ago
    I think it's perhaps more accurate to say that young founders see a particular leverage point to change the industry, not that they fully understand the current state of the industry. Sometimes they're right; often they aren't. I think the point is that managers/executives whose only strength is business/financials tend to make poor leaders.
  - LeifCarrotson 9y ago
    Founders, like those discussing startups on YCombinator, typically don't claim to understand the existing industry better than a veteran. They claim to understand the power of the Internet and computers to change that industry better than veterans stuck in old ways of doing things. They may naively and incorrectly believe that the industry is not that complicated, but in practice the leverage of technology often is enough to overcome that underestimation. Consider, for example, AirBNB - not exactly experts in the hospitality industry: https://www.airbnb.com/about/founders https://www.airbnb.com/about/founders. A hotel chain, with all their issues of real estate, zoning, construction, maintenance, room service, reservations, and so on is very complicated. Just running a bed-and-breakfast is a full-time job. AirBNB founders didn't think that they were better at hotels or B&Bs than existing veterans, they said "Why not use the Internet to connect people with living space at destinations with people who want to go there?" and wrote a website for that. In practice, they had some trouble with zoning regulations, subletting agreements, and destructive tenants - "Who could possibly have known it was so complicated?" - but in the end the appeal of just renting out personal space has proven to be a powerful idea. The problem with HBS is that they seem to claim that applying generic business skills like financials and cost-cutting to an existing industry have a similar effect. The problem is that they don't.
    - lliamander 9y ago
      > The problem with HBS is that they seem to claim that applying generic business skills like financials and cost-cutting to an existing industry have a similar effect. The problem is that they don't. I think you just helped me to make a connection. I think what we are seeing is that technology skills with some business acumen out-competes pure business skill in generating efficiency. This lines up with a book I just read[0], which recommends that developers become independent "efficiency consultants". [0]https://leanpub.com/developerhegemony https://leanpub.com/developerhegemony
      - ethbro 9y ago
        > I think what we are seeing is that technology skills with some business acumen out-competes pure business skill in generating efficiency. I wouldn't say "out-competes" globally, but rather "in the context of disruption." (Which the tech industry has largely been in for the past 80 years) The problem with MBAs is that they're not (generally) suited for the CEO role in an innovative company. A CEO is making strategic, long-term decisions, and those are vastly improved by deep, subject matter expertise. Some MBA CEOs manage to cultivate that (I'd say in spite of HBS-alike), but generally they focus on the things they already know and were taught in school. Which are exactly the wrong things to chase when you're trying to disruptively innovate. Plus HBS and the like have 100% incentive to sell their expertise as applying to as broad and high a market as possible. Rather than saying "Your MBA qualifies you for upper middle management, not leadership."
    - deleted 9y ago
      [deleted]
    - Mathnerd314 9y ago
      > "Who could possibly have known it was so complicated?" It really wasn't that complicated, until they got to a few million users. Before that they just spread through friends and word-of-mouth, so the user population was relatively nice and very similar to the couch-surfing community. Maybe nobody actually knew what specific complications would arise, but at least the VC's should have known that generic complications would arise when they tried to scale the company...
  - TimJYoung 9y ago
    I think that people that are running established businesses have a different set of required knowledge and responsibilities then startup founders in their 20s. If a startup fails, then the effects are primarily only negative for a very small number of people, most, if not all, of which were more than prepared for the prospect that the startup would fail.
- lliamander 9y ago
  Indeed. Business isn't really a subject unto itself, because running a business is deeply linked upon the market it serves. I would say that an MBA prepares one to be a CFO, or maybe even a COO, but by itself it probably only prepares one to be a CEO in the financial industry.
icelancer 9y ago
>that management is a separate craft and someone who can manage a company selling beverages can sell computers just as well Huh. I never heard it summed up so succinctly. I think you've hit the nail on the head - ignoring technical expertise in the field.
deleted 9y ago
[deleted]
acchow 9y ago
"and someone who can manage a company selling beverages can sell computers just as well. We know how that worked out." In case some people need context, this is referring to John Scully (previously president of Pepsi-Cola) then CEO of Apple during Steve Jobs' ousting in 1985. Edit: updated to clarify that John Scully was previously president of Pepsi.
- rst 9y ago
  Someone ought to write a comparative study of Scully's time at Apple with the successful turnaround of IBM led by Lou Gerstner, whose prior experience was at RJR Nabisco.
  - xapata 9y ago
    Conveniently, a comparison of two companies such as that can ignore all counter-examples. After all, it's a case study, not a boring statistical survey.
    - guiambros 9y ago
      Speaking of case study, Louis Gerstner's account of the turn-around is a great read [1]. I read when it was published, so not sure it has aged well; need to check it again someday. [1] https://www.amazon.com/Who-Says-Elephants-Cant-Dance/dp/0060523808 https://www.amazon.com/Who-Says-Elephants-Cant-Dance/dp/0060...
  - YZF 9y ago
    What people have studied is how much difference CEOs make. https://news.ycombinator.com/item?id=10441713 https://news.ycombinator.com/item?id=10441713 Lou had 1993 until 2002. Scully had 1983–1993. I think Lou had the .com boom on his side. Scully not so much. There's definitely a deflection point around 1994 where everyone did a lot better. I guess the question is how did IBM and Apple perform relative to some benchmark under those leaders and even that could be just luck. Microsoft certainly outperformed both thees companies by a huge amount of this time period: https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=logarithmic&chdeh=0&chfdeh=0&chdet=1495171493864&chddm=3270&chls=IntervalBasedLine&cmpto=NASDAQ:AAPL;NASDAQ:MSFT&cmptdms=0;0&q=NYSE:IBM&&fct=big&ei=o4EeWfvdJ4q3jAHE4regDQ https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&... So compared to MSFT both were huge failures. [EDIT: it's interesting that at least during some Scully's tenure APPL tracks MSFT fairly closely... So at least during those years he was as good as Bill Gates? :) ]
api 9y ago
HBS in effect introduced the Western capitalist version of what in the USSR was called an "apparatchik." This was precisely what you say: a party functionary and professional administrator who knew little else and had little real world experience with how anything they were managing actually worked. It turns out that to manage things effectively you need to understand them. Who knew? I used to live in Boston and a friend (who went to Harvard) once related to me his view that the point of this was to ensure high earning employment for the otherwise inexperienced and overly sheltered children of the wealthy. The other contribution of HBS was to deeply entrench the cult of "presence," extroversion, and alpha signaling as the single most important quality for leadership. There's an excellent book whose title is escaping me that gives a great history of the "extrovert ideal" in the West.
- cat199 9y ago
  But the Central Planning committee of Economic Think Tank has computed that all available 5-year corporate plans will be a success and a great victory for the People in precice accordance with the scientific principles of Smithism-Keynsianism! The honorable People of the Corporation would never dream of altering their annual reports to the Market by overstating production in order to recieve the Good Capitalist award and gain foreign travel privileges from the Corporation Planning Committee - you sir are certainly an imperialist spy for suggesting otherwise and should be sent for Reeducation!
  - api 9y ago
    I used to call this "Kapitalism." It's a very different thing from entrepreneur-maker capitalism. I've lived on the East and now the West coasts, and the manager caste ideology of the East is clearly why the West has completely dominated in innovative business sectors. Boston and Cambridge should be Silicon Valley and almost was, but the mentality killed it. Being a maker and a doer actually pegs you as a lower class, or at least that's the mentality I ran into. I actually had people there tell me I should not "do." "Executives don't do anything." Direct quote.
- jdbernard 9y ago
  Is it "The Power of Quiet" by Susan Cain? Very good book that touches on this, mentioning HBR by name if memory serves. https://www.amazon.com/Quiet-Power-Introverts-World-Talking-ebook/dp/B004J4WNL2/ref=tmm_kin_swatch_0?_encoding=UTF8 https://www.amazon.com/Quiet-Power-Introverts-World-Talking-...

by chx 9y ago

TimJYoung 9y ago

I think that your post really sums things up nicely. Yes, a generic business expert will have a leg up on things that apply universally to the running of an organization, such as financials. However, I can't possibly see how they would be better than someone that has been in the applicable industry for 20-30 years and knows the industry inside and out. Furthermore, hasn't it been demonstrated that MBAs tend to take actions that revolve around their generic business expertise, such as mergers and acquisitions, cost-cutting in the form of layoffs, etc. ?

thesumofall 9y ago
Don't founders in their 20s claim the same? That they understand a certain industry better than the incumbents? You basically argue that managers have their strength in certain areas (e.g., financials) but not in others. So what? That's the same with any other profession :-)
- lliamander 9y ago
  I think it's perhaps more accurate to say that young founders see a particular leverage point to change the industry, not that they fully understand the current state of the industry. Sometimes they're right; often they aren't. I think the point is that managers/executives whose only strength is business/financials tend to make poor leaders.
- LeifCarrotson 9y ago
  Founders, like those discussing startups on YCombinator, typically don't claim to understand the existing industry better than a veteran. They claim to understand the power of the Internet and computers to change that industry better than veterans stuck in old ways of doing things. They may naively and incorrectly believe that the industry is not that complicated, but in practice the leverage of technology often is enough to overcome that underestimation. Consider, for example, AirBNB - not exactly experts in the hospitality industry: https://www.airbnb.com/about/founders https://www.airbnb.com/about/founders. A hotel chain, with all their issues of real estate, zoning, construction, maintenance, room service, reservations, and so on is very complicated. Just running a bed-and-breakfast is a full-time job. AirBNB founders didn't think that they were better at hotels or B&Bs than existing veterans, they said "Why not use the Internet to connect people with living space at destinations with people who want to go there?" and wrote a website for that. In practice, they had some trouble with zoning regulations, subletting agreements, and destructive tenants - "Who could possibly have known it was so complicated?" - but in the end the appeal of just renting out personal space has proven to be a powerful idea. The problem with HBS is that they seem to claim that applying generic business skills like financials and cost-cutting to an existing industry have a similar effect. The problem is that they don't.
  - lliamander 9y ago
    > The problem with HBS is that they seem to claim that applying generic business skills like financials and cost-cutting to an existing industry have a similar effect. The problem is that they don't. I think you just helped me to make a connection. I think what we are seeing is that technology skills with some business acumen out-competes pure business skill in generating efficiency. This lines up with a book I just read[0], which recommends that developers become independent "efficiency consultants". [0]https://leanpub.com/developerhegemony https://leanpub.com/developerhegemony
    - ethbro 9y ago
      > I think what we are seeing is that technology skills with some business acumen out-competes pure business skill in generating efficiency. I wouldn't say "out-competes" globally, but rather "in the context of disruption." (Which the tech industry has largely been in for the past 80 years) The problem with MBAs is that they're not (generally) suited for the CEO role in an innovative company. A CEO is making strategic, long-term decisions, and those are vastly improved by deep, subject matter expertise. Some MBA CEOs manage to cultivate that (I'd say in spite of HBS-alike), but generally they focus on the things they already know and were taught in school. Which are exactly the wrong things to chase when you're trying to disruptively innovate. Plus HBS and the like have 100% incentive to sell their expertise as applying to as broad and high a market as possible. Rather than saying "Your MBA qualifies you for upper middle management, not leadership."
  - deleted 9y ago
    [deleted]
  - Mathnerd314 9y ago
    > "Who could possibly have known it was so complicated?" It really wasn't that complicated, until they got to a few million users. Before that they just spread through friends and word-of-mouth, so the user population was relatively nice and very similar to the couch-surfing community. Maybe nobody actually knew what specific complications would arise, but at least the VC's should have known that generic complications would arise when they tried to scale the company...
- TimJYoung 9y ago
  I think that people that are running established businesses have a different set of required knowledge and responsibilities then startup founders in their 20s. If a startup fails, then the effects are primarily only negative for a very small number of people, most, if not all, of which were more than prepared for the prospect that the startup would fail.
lliamander 9y ago
Indeed. Business isn't really a subject unto itself, because running a business is deeply linked upon the market it serves. I would say that an MBA prepares one to be a CFO, or maybe even a COO, but by itself it probably only prepares one to be a CEO in the financial industry.

icelancer 9y ago

>that management is a separate craft and someone who can manage a company selling beverages can sell computers just as well Huh. I never heard it summed up so succinctly. I think you've hit the nail on the head - ignoring technical expertise in the field.

deleted 9y ago

[deleted]

acchow 9y ago

"and someone who can manage a company selling beverages can sell computers just as well. We know how that worked out." In case some people need context, this is referring to John Scully (previously president of Pepsi-Cola) then CEO of Apple during Steve Jobs' ousting in 1985. Edit: updated to clarify that John Scully was previously president of Pepsi.

rst 9y ago
Someone ought to write a comparative study of Scully's time at Apple with the successful turnaround of IBM led by Lou Gerstner, whose prior experience was at RJR Nabisco.
- xapata 9y ago
  Conveniently, a comparison of two companies such as that can ignore all counter-examples. After all, it's a case study, not a boring statistical survey.
  - guiambros 9y ago
    Speaking of case study, Louis Gerstner's account of the turn-around is a great read [1]. I read when it was published, so not sure it has aged well; need to check it again someday. [1] https://www.amazon.com/Who-Says-Elephants-Cant-Dance/dp/0060523808 https://www.amazon.com/Who-Says-Elephants-Cant-Dance/dp/0060...
- YZF 9y ago
  What people have studied is how much difference CEOs make. https://news.ycombinator.com/item?id=10441713 https://news.ycombinator.com/item?id=10441713 Lou had 1993 until 2002. Scully had 1983–1993. I think Lou had the .com boom on his side. Scully not so much. There's definitely a deflection point around 1994 where everyone did a lot better. I guess the question is how did IBM and Apple perform relative to some benchmark under those leaders and even that could be just luck. Microsoft certainly outperformed both thees companies by a huge amount of this time period: https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=logarithmic&chdeh=0&chfdeh=0&chdet=1495171493864&chddm=3270&chls=IntervalBasedLine&cmpto=NASDAQ:AAPL;NASDAQ:MSFT&cmptdms=0;0&q=NYSE:IBM&&fct=big&ei=o4EeWfvdJ4q3jAHE4regDQ https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&... So compared to MSFT both were huge failures. [EDIT: it's interesting that at least during some Scully's tenure APPL tracks MSFT fairly closely... So at least during those years he was as good as Bill Gates? :) ]

api 9y ago

HBS in effect introduced the Western capitalist version of what in the USSR was called an "apparatchik." This was precisely what you say: a party functionary and professional administrator who knew little else and had little real world experience with how anything they were managing actually worked. It turns out that to manage things effectively you need to understand them. Who knew? I used to live in Boston and a friend (who went to Harvard) once related to me his view that the point of this was to ensure high earning employment for the otherwise inexperienced and overly sheltered children of the wealthy. The other contribution of HBS was to deeply entrench the cult of "presence," extroversion, and alpha signaling as the single most important quality for leadership. There's an excellent book whose title is escaping me that gives a great history of the "extrovert ideal" in the West.

cat199 9y ago
But the Central Planning committee of Economic Think Tank has computed that all available 5-year corporate plans will be a success and a great victory for the People in precice accordance with the scientific principles of Smithism-Keynsianism! The honorable People of the Corporation would never dream of altering their annual reports to the Market by overstating production in order to recieve the Good Capitalist award and gain foreign travel privileges from the Corporation Planning Committee - you sir are certainly an imperialist spy for suggesting otherwise and should be sent for Reeducation!
- api 9y ago
  I used to call this "Kapitalism." It's a very different thing from entrepreneur-maker capitalism. I've lived on the East and now the West coasts, and the manager caste ideology of the East is clearly why the West has completely dominated in innovative business sectors. Boston and Cambridge should be Silicon Valley and almost was, but the mentality killed it. Being a maker and a doer actually pegs you as a lower class, or at least that's the mentality I ran into. I actually had people there tell me I should not "do." "Executives don't do anything." Direct quote.
jdbernard 9y ago
Is it "The Power of Quiet" by Susan Cain? Very good book that touches on this, mentioning HBR by name if memory serves. https://www.amazon.com/Quiet-Power-Introverts-World-Talking-ebook/dp/B004J4WNL2/ref=tmm_kin_swatch_0?_encoding=UTF8 https://www.amazon.com/Quiet-Power-Introverts-World-Talking-...