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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 or

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.

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.