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I like to think of this topic using an automotive racing analogy: Fortune 500 companies are the formula 1 cars. They need a great big team to perform efficiently, and minor tweaks applied correctly can yield significant results. The MBAs are the specialists who work the electronics and the advanced controls for the race cars. A team working on a formula 1 car could find a way to increase down force by 5%, or they could install a GPS system to analyze turns and scrape 1/100s of seconds off of lap times, and that edge could help them win.

Startups are cars with a very different purpose. They are project cars, and they have 1 purpose: to go. Forget GPS systems and down force. These cars need tires and a working steering wheel. It would be a mistake to think about installing spoilers on a car that doesn't have all 4 tires, just as it would be a mistake to worry about ideal liquidity ratios in a startup. Entrepreneurs are the mechanics who decide to take on these 'project cars'. Eventually, as the car project develops and grows, specialists (MBAs) can be brought on to find the minor, yet precise changes that will improve the car's results.




I question to value of MBA even for large companies. I see value in structured, methodical, analytical thinking for many classes of business problems (not all, many crucial business decisions involve creative guesswork!), but an MBA is way overkill, and whatever it is supposed to teach can be learned on the job. If a person cannot learn that on those skills on the job, I seriously would question his/her ability to be an effective manager.

Here is my real world evidence: German and Japanese large companies are as good or as bad as American ones (depending on your point of view). The MBA is relatively rare in Germany and Japan. Japanese large companies, in particular, tend to recruit fresh undergrads without much attention paid to their major, train them internally, and promote from within. The fact that their companies hold their own in global competition, indicates that the MBA doesn't add any superior competitiveness to American companies. In fact, I would argue the MBA actually subtracts from American competitiveness, but that argument would be more subtle, and would require industry-by-industry analysis of competitiveness. I will note in passing that software and internet industry is probably where the MBA influence is the weakest in America (primarily because of the extraordinary rate of start-up creation), and that sector is the one where America is the most globally competitive.


Based on my own experience of MBAs I tend to agree with you. My company brought in a US name-brand management consulting firm to assist with a large M&A. One of the MBAs was assigned to help me write a transition plan for the integration of the IT systems my company would inherit. She correctly recognized that helping me was useless to her real purpose (inserting herself into my company at a high enough level that she could scout out new consulting opportunities) so she spent two months with us and delivered nothing. I wrote the transition plan on my own.


Isn't the fact she had an MBA incidental to her behaviour? Her job could have been filled by someone without an MBA who might have acted in exactly the same way. I've met many self-serving, selfishly ambitious people who don't have MBAs!


Exactly. A lot of people have taken to using 'MBA' as a heuristic for 'lazy self promoting asshole'. While I agree there is probably some overlap, it's extremely unfair to go around painting with this wide brush.

The fact that the consultant wsa trying to get more work out of the company had nothing to do with her qualifications.


Perhaps, but I did point out that I was talking about my direct experience. I must say that all of her colleagues I dealt with appeared to behave in exactly the same way.


I'm not an MBA and I'm prepared to believe in your assertion that MBA has not much value, but your arguments are not very relevant.

For starters, I don't know that American companies are as good as German and Japanese companies. US is measurably wealthier than both of these countries, at least in terms of GDP per capita. Maybe US large companies are more efficient.

But even if assume large companies in those countries are similarly efficient, there are way too many differences between US and Japan besides "MBA density". It could be the case that Japanese companies hold their own despite the lack of MBAs. In fact, I do believe they do well despite the custom of treating fresh undergrads as useless, insisting on an archaic seniority system, etc.


An MBA isn't just a study in one thing, it's a multi-disciplinary degree. You take classes in accounting, economics, entrepreneurship, finance, international business, operations management, organizational behavior, marketing, strategy, etc.

You can learn a lot on the job, but how many jobs let you do accounting and marketing? If you're working for a domestic company do you get any experience in international business? If you work in HR are you doing anything involving economics.

It's easy to say you can learn anything on the job, but that's hardly the case when your job has specific responsibilities. A student who truly STUDIES and EARNS their MBA has the ability to apply a broad set of knowledge to any job. What's the basis for questioning someone's ability as an effective manager because of their degree type? Not all MBAs are managers, that's something different entirely.

Then in your "real world evidence" you're questioning the efficacy of MBA graduates based on how foreign companies train from within? Huh?

By itself, any degree means nothing - it's up to the employee to apply the knowledge they gained while earning that degree to bring value to their company.

Questioning if there's value in an MBA in any company is questioning the value of knowledge. If there's no value in knowledge, then why bother having any sort of degree - just hire kids of a working age and teach them to put the widget together. They'll learn the rest on the job right? Hardly.


> If a person cannot learn that on those skills on the job, I seriously would question his/her ability to be an effective manager.

Well, since a lot of learning comes from failures, I think an MBA should teach you at least how to avoid common causes of failures. As a boss of mine used to say: "By practice alone, it will take you one hundred years." (meaning that a little theory goes a long way).

An MBA does not make you an effective manager anymore than knowing OOP and the syntax of a programming language makes and you an effective programmer.

Theory without any practice is entertainment. Practice without any theory is a bet.


A couple of interesting points you bring up, although probably not by intention:

A: An MBA is a credential, not necessarily a skill or set of skills. Earning an MBA is applying yourself to learn a set of skills, and then convincing the instructing organization you have learned the skills. Why get an MBA if you can circumvent it and just learn the skills? Why even bother with the superfluous skills and instead only learn the necessary skills on the job (and get paid for it)? With your MBA you can convince someone that you have some set of business skills, and that you are capable of applying yourself.

B: There is a different culture of employment relationships between America and say, Japan. In Japan, you are typically employed by the same company for life. Job hopping is rare, and there is a lot of loyalty in the employee-employer relationship. Why would you get an MBA in such a culture? You can surely learn the necessary skills on the job, and you most likely will not be leaving the company to find a better opportunity. Branching off from point A that an MBA is a credential, it follows that such a credential is not needed as much if you aren't planning on using it to unlock external opportunities. The flip side to this is that in America, an individual might find themselves working 2 or even 3 'careers' in their lifetime, and job hopping isn't considered disloyal, it's being aggressive. A credential is much more important to someone in this culture, as they will need it to convince new employers to hire them.

A counterpoint I want to bring up in support of an MBA is that an MBA readies you for the job you may have 5 years from now. You indicated that the necessary skills could be learned on the job. But training a new manager is expensive and risky. First, the manager must take the time to learn the tools, making him or her less effective. Second, there is the risk that this person is simply not management material, and that the investment will be wasted. Having an MBA shows (in theory) that the candidate is management material, and in fact has already learned many of the necessary skills. A company looking for a manager gets to know that this candidate is more likely to work out for them.

Finally, you said "If a person cannot learn that on those skills on the job, I seriously would question his/her ability to be an effective manager." The actual purpose of the MBA degree is to show that the candidate does have the capacity to be an effective manager. Again, it's a credential that is designed to remove the risk of a poor hiring decision.


This is one of the best descriptions I've heard about people who work at startups and MBA's who work inside large organizations. I don't understand why so many people in startups feel the need to rip on MBA's; its comparing apples to oranges.


>I don't understand why so many people in startups feel the need to rip on MBA's

It's because we've worked at startups where MBAs were brought in on the middle management layer and wasted our time polishing nuts and bolts in order to reduce drag when what we should have been doing was upgrading the suspension from a Watt's linkage to MacPherson struts.


Not every MBA is lousy and incapable of seeing the forest for the trees, even though lots of startup techs think so.

Not every tech is lousy and incapable of understanding that IT needs to serve business needs, even though lots of MBAs think so.

Broad brush hatred of all MBAs is moronic.


It serves a useful purpose as a teaching tool for new initiates into the startup community. If they develop a phobia of MBAs, then they will know not to hire them into a brand new company without being very skeptical of that particular one's skills. If one checks out and is actually just a really good person for the job, sure, but on average, the stereotype is there for a reason.


I'd agree with that - I've met some pretty decent people with MBAs but I've probably met more absolute scoundrels with MBAs than any other qualification (even more than law degrees).

This has nothing to do with the concept of the MBA or the courses, but more to do with the type of people who feel drawn to a short cut to senior management or influence over senior managers.


Most job applicants suck. That's true with techies, with salesmen, with everything I've ever hired for. I'll happily concede that small businesses often have trouble hiring outside their founders' core competencies just because it's hard for a CS geek to vet a CMO or VP of Sales unless they get some serious assistance with the candidate selection, but that really has nothing to do with MBAs being unusually bad.

"My god, he decided to supplement his education by learning the basics of accounting, finance, marketing, and a bunch of electives! Fear him!"

So lame.


I downvoted you because I believe your F1 analogy is off. F1 cars are highly optimized to do one thing: go around the given circuits in the calendar that year as fast as possible, within the rules. For a specific GP weekend, they are further optimized to go around that circuit, even if it means doing weird things to the car's balance.

What are Fortune 500 companies optimized for? Certainly not for making money, they're wasting money left and right --- for example, on legions of MBAs.


I can't be sure if you are being sarcastic or not, so my apologies if I missed it. To say that large corporations aren't optimized for making money seems foolish. Of course the goal of a corporation is to increase shareholders wealth, and by extention earn a profit. The goal is the same for a small company or even a startup. There will be instances where a fortune 500 fails this goal, but that doesn't mean the analogy is off. There are some Formula 1 cars that break down or crash. The logic in your argument escapes me.


Your analogy works. Most hackers certainly don't belong in business school...but many hackers could benefit from an MBA's experience/education once their product has traction, users, whatever. An MBA as the first hire probably doesn't make sense. But an MBA to optimize sales/marketing/support might make a lot of sense...

People tend to forget that top tier MBA grads are (usually) incredibly bright and productive professionals.


> Most hackers certainly don't belong in business school...but many hackers could benefit from an MBA's experience/education once their product has traction, users, whatever.

I'm not convinced of this. Apart from the fact that your two sentences contradict each other, I don't believe this optimizes for the right variables. If you're a hacker, and you want to do a startup, you should be learning related skills - and the best way to do that isn't to attend an MBA course, it's to do a startup yourself.

And, besides, if you ever find yourself wanting of MBA skills in the future (which implies that your startup has some degree of success) you can always go out and hire one.


I believe that is what the poster was saying (as well as the author of the original article).


Hrmm. That's odd. Either I completely missed the poster's contention, or he edited his comment.




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