
Former GM exec, Bob Lutz: Fire the MBAs and let the engineers run the show - iseff
http://www.time.com/time/magazine/article/0,9171,2081930,00.html
======
thinkcomp
The notion of firing the MBAs overlaps substantially with my thinking, except
I don't think there should be any MBAs in the first place.

[http://www.quora.com/Aaron-Greenspan/Shut-Down-the-
Business-...](http://www.quora.com/Aaron-Greenspan/Shut-Down-the-Business-
Schools)

Also, anyone who thinks the FedEx network is "ultra-efficient" (as the article
claims) hasn't shipped anything FedEx lately. More than ten years ago, FedEx
bought RPS for FedEx Ground but never bothered integrating any of the systems.
There are still two types of tracking numbers. Shipping something overnight
from San Francisco to Los Angeles via FedEx Express routes the package through
Nashville, while it could be sent just as quickly over FedEx Ground at lower
cost and without using jet fuel. Also, their web site is just about the
biggest piece of junk Oracle has ever produced. When you deal with their
executive support team, as I unfortunately have, they give you FedEx coupons
that the FedEx Office (formerly Kinko's) cashiers have absolutely no idea how
to scan. I think what they need is engineers.

~~~
aurelianito
I think that MBAs should prove their worth by running their own businesses.
The tricky situation is that they claim to be able to run any business using
the same rules, but most of them choose to run other people's business instead
of their own.

If MBAs were good. They would make their own businesses and win. Is it the
case or not?

~~~
8dot5by11
A lot of MBAs graduate and get into management consulting--basically they get
paid to make bullshit Powerpoint decks and provide expert guidance in
torpedoing their clients. In the consulting world, everyone agrees senior-
level consultants (with an MBA) who are hired for C-level positions will run
the company into the ground.

------
damoncali
At the risk of sounding overly snarky, I don't think that GM's leadership is
in any position to make recommendations on how to run a car company.

And to get to his point, it's fluff. Which engineers, exactly, will run the
show? The ones with the marketing skills, the social influence, and business
knowledge to get the job done. I wonder if he knows that about 1/3 of MBA's
_are_ engineers.

~~~
ccc3
_At the risk of sounding overly snarky, I don't think that GM's leadership is
in any position to make recommendations on how to run a car company_

Despite the general level of incompetence among GM's leadership there were a
few smart people there. Lutz was one of them. He has a strong track record of
developing successful products and has never been shy about criticizing his
bosses.

 _And to get to his point, it's fluff_

It's not fluff. Perhaps this synopsis of his book didn't provide sufficient
detail, but his point is broadly acknowledged as one of the major problems
with the US auto industry. If you look at a US made car from the early 2000's,
the level of cost optimization at the expense of all other factors is
embarrassing. It's indisputable that as MBAs have gained prominence in the US
auto industry, the products have become less compelling. Lutz is simply
advocating that the people who love the product be the ones who have the final
say.

(Disclosure: I'm an automotive engineer)

~~~
bane
"It's indisputable that as MBAs have gained prominence in the US auto
industry, the products have become less compelling."

While I don't entirely disagree with your premise. Correlation does not equal
causation.

<http://farm1.static.flickr.com/54/139092366_ce5b410228_o.jpg>

------
uvdiv
Logically, they should fire the engineers and let lobbyists run the show. GM
is in the business of government rent collecting, not cars.

~~~
lcargill99
Bingo. We have a winner, folks. Once an organization is forced into, or drifts
into that line of work, it's like a dog that's tasted human blood....

------
ilamont
_The only time Apple ever lost the plot was when it put the M.B.A.s in
charge._

Tim Cook runs Apple's operations, is widely credited as a supply chain genius,
and has been acting CEO of the company since Jobs started his latest medical
leave. He received an MBA from Duke.

~~~
goalieca
Operations might be a good place for someone with certain business talents.
But also, apple has lately received a lot of flack for their off-shoring and
the types of workers and working conditions.

------
rdtsc
Our company has been in business for 20+ years and our main policy is to never
hire any MBAs. Has worked out great so far.

------
westajay
A counter argument to this was Carlos Ghosn's experience with Nissan. He said
that one of Nissan's problems was engineers making cars for engineers, but
that people did not want to buy.

In reality creating, marketing and being successful with a product requires
diverse perspectives.

I think engineers beating up on MBA's is no different from MBA's beating up on
"propellerheads." It's counter productive.

And just because you have an MBA, should you then be typecast by engineers?
Why does having an MBA reduce someone's potential to be a passionate product
person, or to have productive relationships with the makers?

~~~
yuhong
The problem is that the old business school courses taught a lot of flawed
stuff, including stuff from Jack Welch like cutting costs by treating
engineers etc as disposable.

~~~
westajay
That's a good point, and poor cost accounting practices..

I have a friend (an engineer) who is doing his MBA right now. At his school he
said there is a big focus on ethics and ethical behaviour. Based on what I've
witnessed in business, I wish some of that was maintained once people entered
the work world!

~~~
cultureulterior
In high school there is a big focus on abstinence and staying away from
alcohol, for much the same reason.

------
quanticle
_In the first half of the 20th century, industrial giants like Ford, General
Electric, AT &T and many others were extremely consumer-focused_

I couldn't really read any more of the article after seeing this outright lie.
In the first half of the 20th century, At&T wouldn't even let you plug in a
third party _telephone_. How is that customer focused in any way?

~~~
kwantam
It's customer focused because it allowed them to enforce _strict_ standards[1]
with regard to how devices on the telephone network behaves, which in turn let
them provide high quality telephone service to a huge number of people. The
Bell telephone network of the first half of the 20th century was a marvel by
the standards of the day.

Anyway, there honestly wasn't much of a problem with doing things that way
from most customers' point of view: Bell owned the telephone equipment, but
that was a good thing because it was expensive stuff, and they would maintain
it for you. Moreover, there just wasn't much opportunity for differentiation
in CPEs (customer premise equipment, the stuff in your house): battery
technology wasn't at the point where wireless handsets made sense, commodity
answering machines were a long way off, et cetera. In total, in terms of
Bell's ability to roll out the network quickly, it was probably a net win with
regard to the technology that they kept the whole thing closed.

Now, obviously it also gave them the opportunity to act pretty anti-
competitively, and obviously that was not good for customers. But it's often
been observed that huge infrastructure buildouts are much more efficiently
done under central control, and given the choice between the Federal
government doing it and Ma Bell doing it, I'll take the latter.

[1] I've read and implemented most of the Bellcore standards; in the past I
worked on a team doing integrated telephone line control circuits (SLICs), and
if you think fifteen years of web standards turns into a rats nest, try
implementing 100 years of standards plus working around well-known cases that
break those standards but are too widespread to ignore. The telephony
equivalent of IE6 is the Casio Phonemate answering machine. That single piece
of equipment is, I shit you not, singlehandedly responsible for about a 10%
bloat in the cost of telephony equipment because it sold so many units and yet
so badly breaks the ringing standard.

~~~
yuhong
You bringing up IE6 made me wonder whether the "legacy" MBA is going to become
the next IE6.

------
ig1
GM didn't fail because of product, that failed because of lack of management
talent. GM had vastly higher costs than it competitors due to a heavily
unionized workforce, long term dealership contracts that were losing them
money, and a huge pension deficit (roughly $1500 from every GM car sold goes
to paying pensions). It didn't matter how great their products were, they'd
never be able to compete with new or foreign car manufacturers.

~~~
razzmataz
In the past decade, product really seemed to matter. I knew a few Saturn
owners who loved the car, but the sedans that were being sold in the last five
years of Saturn's life did not appeal to them, and that shows in the sales
figures too.

------
cal5k
Has anyone considered that there just might be room for more than one
particular set of talents inside a company?

------
VladRussian
from his wikipage it seems that he isn't an engineer, he is a professional
manager and salesman. If he were following his own advice, he wouldn't had
been running the show himself in the first place. Of course, as a result
nobody would care today what some old man going by the name of Bob Lutz is
thinking.

------
pbreit
MBAs have their place: big multi-nationals in middle and upper middle
management. Not at the top, not in tech and not in startups.

~~~
bobthebee
Pointless generalization. Engineers have their place: as individual
contributors without customer facing roles. Not at the top or any management
position.

~~~
samyzee
"customer facing roles" and "management positions" sound like the shitty
corporate bureaucracies which engineers want to stay from.

The corporate culture of exploiting engineers will soon come to an end.

~~~
orborde
> The corporate culture of exploiting engineers will soon come to an end.

That seems exceedingly unlikely. Care to elaborate?

~~~
Helianthus
corporations will be the first against the wall when the revolution comes.

if you believe the revolution is coming, that statement is therefore
straightforward.

------
vanessa98
"The company off Highway 101 that best illustrates this point is, of course,
Apple."

There's three numbers the author got wrong.

------
sunstone
To state the obvious, many MBA's also have engineering degrees. What should be
done with these guys?

~~~
digikata
Make them the CEO? An engineering undergrad degree is the most prevalent
degree among CEOs (at least with a sample of S&P 500 companies).

[http://engineering.curiouscatblog.net/2007/06/05/sp-500-ceos...](http://engineering.curiouscatblog.net/2007/06/05/sp-500-ceos-
again-engineering-graduates-lead/)

I think there is a problem in business school focus on short-term
optimization. There's data showing the while businesses have fatter profit
margins than ever, total profit growth has been much weaker than in past
decades. Hmm I think I saw that data in a Umair Haique presentation.

------
ajays
I would say that especially in fast-moving companies, like in the "Web" space
(generalize as you see fit), MBAs have no role. But they do have a role in
established companies (like Intel, IBM, etc.) where "processes" have to be
followed and nobody wants to rock the boat.

------
pramit
I have covered this 'MBA - good or bad' quite often in the past.
<http://thesuccessmanual.bighow.com>

------
vrikhter
What are the odds that this happens over the next decade? I'm only asking
because I'm not sure where those engineers are going to come from unless we
fix immigration laws.

~~~
blackguardx
Engineers aren't making doctor or lawyer salaries yet, so what makes you think
we don't have enough engineers?

~~~
jayzee
For the past quarter-century, the American Medical Association and other
industry groups have predicted a glut of doctors and worked to limit the
number of new physicians. [1]

The problem is that the supply for doctors is artificially constrained leading
to better salaries for them. If anything let's have more doctors so that the
salaries are in parity with engineers.

[1]<http://en.wikipedia.org/wiki/American_Medical_Association>

~~~
yuhong
A bit of history:
[http://articles.mercola.com/sites/articles/archive/2008/05/0...](http://articles.mercola.com/sites/articles/archive/2008/05/03/how-
the-american-medical-association-got-rich.aspx)

~~~
slavak
All due respect, you could've chosen a better source for your bit of history
than an article that uses a book by the name "The Homeopathic Revolution: Why
Famous People and Cultural Heroes Choose Homeopathy" as its only source.

------
samyzee
It gets me so angry when I see complete idiots getting free corporate trips to
europe to "present to customers" stuff that me and my fellow engineers built
working late on weekdays,sacrificing our weekends...while these douchebags
were at the bar talking to women about their exciting "work".

~~~
aphexairlines
That's a sign that you should look around for an employment situation (another
team, another company, or yourself) that values/needs your work.

~~~
samyzee
m on it sir!!

