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).
I'm an MBA & startup founder, and I don't think it's fair to suggest this is an MBA-only thing. Talk to any startup co-founder or early-stage employee, and tell him/her that Lean Startup principles are wrong, or that VC $ is never worth it, or that Tim Ferriss (PBUH) should work longer hours--I'm certain they'd get just as dogmatic as you suggest MBAs are about capitalism.
MBA teachings are useful in the same way that any guru's lessons find a following: they offer a general framework for tackling large, ambiguous problems that would otherwise feel intractable.
I get that you're feeling stereotyped as an MBA, but you're doing the same. I happen to have been a co-founder and early employee several times, and the issues you cite are anything but the dog whistle you imagine them to be.
For instance, saying "VC $ is never worth it" is a far more dogmatic position than what most startup people I know believe: namely that it's a major decision with serious pros and cons that can make a huge difference in your potential benefit and control of your business.
WRT to Tim Ferriss, it's even more bizarre to imagine that there is some kind of startup party line in support of his methodology. The guy is a self-help guru with a cool brand. Far be it from me to proclaim what he should or should not do, and I think most startup people would agree that the main relevance he has to startup life is brand-building.
Lean Startup is the only one where I think you are on the mark, but even there, most of that stuff is just common sense table stakes that you pick up a few months into your first startup. If you want to make an argument against it, it's not like I couldn't be swayed in a variety of specific circumstances.
Its a joke about how Tim Ferris followers can be very protective and dogmatic about his teachings, which parallel the way followers react to a certain prophet of a certain religion we all know.
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.
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.
I was nearly bamboozled by their successor Quixtar while in university. Luckily I was able to smell the scam when I went to one of their sessions. Very vague and very pushy about us buying into a scheme before we could learn how it worked.
Glad you were able to dodge that one. They've ruined a lot of lives and families in the Midwest, where, incredibly, they still are treated as a legitimate business.
My understanding is that, as a multi-level marketing scheme, they are doing enough to be considered a legal entity as opposed to a pyramid scheme (which is what they are).
I was always told that the MBA is about the network. Someone in your cohort has a friend who gets you your next job. And there is also some diversity in the class since everyone worked for a few years prior to taking an MBA.
The network effect is very important. It allows you to grow and to attract smart ambitious people to your own adventure.
Reminds me of Ted Wassanasong from King of the Hill. There's an episode when Khan asks him why he doesn't see him at the Buddhist temple any more and he replies, "We're Episcopalian now. It's just good business."
I completely agree. The amount of megacorp apologists on here is deeply disturbing to me. No matter
what happens, there's always someone willing to apologize for them. Business seems to be the new
religion.
> readymade set of sacraments and oaths one can apply to any business to achieve magical effects
On the contrary, MBAs are designed not to be a "management formula" but teach by experience in two ways: first, exposure to thousands of real life case studies (often, in the better programs, with the CEO who lived it participating in the class discussion), and a class formed of carefully balanced profiles to have a mix of experiences contributing to the class discussion.
Domain experts will of course judge what they know: the accounting classes are weak, the investment classes are outdated, etc. but I'd argue there is no better way to speed-teach a generalist exposure, because the real world is complicated and management is about juggling inadequate resources and conflicting objectives for which there are often no rules. Whatever "rules" are taught (such as accounting standards, or using EBITDA instead of revenue for company valuation) are the product of generations of trial and error and tend to exist for a reason; it's good to question the rule and look up the reason, part of building a better mental model of how the world works.
Look at Enron: today, the black and white story is that they were fraudsters, but if you dig into the history of the company, first there were tons of genuinely interesting and moral people employed there because they believed in the vision and second there was a pattern of "the end justifies the means" from the true believers in management. So when you see a ton of smart people hired by true believers taking ethical shortcuts because "the end justifies the means"...
The generalist part is important. You might think you do not need to know about accounting or legal issues now, but as a manager they will come up. Just being aware of what can go wrong (reducing unknown unknowns) can go a long way in mitigating temptation. I think this is missed by many people who are on a certain career track: for example, I often hear that the CFA is better than an MBA if you want to stay in finance, and this may well be true (disclaimer: bailed out after failing level 2) but the CFA won't teach you, for example, how to deal with a toxic C-level hire, nor will you hear first hand a former infantry officer describe instances of creative leadership under intense pressure. Anecdotally, this kind of experience comes in a handy in private equity whilst being less useful in global macro trading.
Philip Delves Boughton's book [1] in particular captures this quite well.
Agree. You need experience from as many parts of an industry as possible, from the front line, to line management, etc. Can't get any of that in school.
There are a number of domains where fads or apparently arbitrary orthodoxies emerge: clothing, music, food, art. To a certain extent architecture. Fandoms around books, or films, or comics. Theories of political economy. And management fads.
The common thread through all of these, as I see them, is that the underlying domain is complex, with an irreducible informational complexity, as well as rich and frequently highly significant interactions: the wrong clothes, accent, or music can get you laughed at, shunned, or killed, depending on the circumstances.
In the field of management, there's the need to communicate over a short order (hours, days, quarters) with a set of audiences (investors, stockholders, policymakers, employees), over dynamics which may not play out fully for years or even decades.
A significant problem is that at the levels of complexity being considered, there are systems of systems of systems -- if you're looking at a world-model view of cognition, understanding, and communications, then the problem is one of building up models of models of models, though to depths far more than three in many instances, and then communicating these effectively.
Quite frequently it's far easier to just follow the topical contours without a deep understanding. At the extreme case, you end up with cargo-culting, both figuratively and literally: aping the forms, structures, and actions of some system viewed as "successful", but with absolutely no understanding or attainment of the true dyanamics involved.
MBA culture is a part of that, and there have been a number of fads that have come along, typically with runs of ~5 - 20 years by my rough sense. I'm still planning on looking into this in more depth.
But the thought that the whole concept of a fad -- a temporary deviation from some base norm -- being a fundamental sociological dynamic with an information-theoretic underpinning strikes me as fundamentally sound.
Some of us think Capitalism will not be the dominant organizing principle for resource management forever. Like many other -isms we expect it to have a beginning (growth) phase, a middle (status quo) phase, and an end (decline) phase. Some subset of those believe we are in the late stages of it already, thus discussion of "Late Capitalism". That doesn't necessarily mean total death—Monarchism and Totalitarianism still exist—it just means other organizing principles will be more dominant.
Others (you, perhaps?) think that Capitalism is the final form of our resource management ecology. To them, it just represents acceptance of fundamental laws of resources: property, policing, valuation, and money are inevitable constructs in any sane, functioning society where resources move semi-freely.
I respect people who believe the latter. But I am in the former category, and I (obviously) think that's a reasonable position as well.
What about capitalism-as-a-phase is so absurd to you that its suggestion immediately and completely discredits the speaker?
I don't really understand how you can make the claim that people in the near future (relative to the time capitalism has been around) people are going to just give up en masse everything they own so some other entity can manage it "for their own good". This is why making claims that capitalism is winding down via terminology such as "late capitalism" is extremely hopeful at best.
How do you define dominant organizing principle? If all profit was taxed >50% would you have won that battle?
It is absolutely fascinating to look at the explosion of books, both self-help and entrepreneurial, that started in the 1980s and continues to this day. Some of those books are very good, and worth reading (my favorite, is Drucker's 1985 book "Innovation and Entrepreneurship"). Some of the self-help books are useful to salespeople (a good interview technique, when hiring salespeople, is to ask them the last 3 self-help books they've read. If they haven't read any, then they are not serious about sales).
Many of these books are complete garbage. But there are a lot of them.
The fascinating thing is how much this explosion of exciting rhetoric coincides with a sad and darkening reality, as described in sources such as these:
What if the conventional view of startups and entrepreneurship in the U.S. turns out, like so many conventional views, to be wrong? Substantial recent research suggests that it is. So brace yourself for decidedly counterintuitive findings that may help explain some of our era’s economic puzzles.
First surprise: Startups aren’t increasing in the U.S. On the contrary, entrepreneurship has been declining for decades. The startup rate has fallen sharply over the past 30 or so years, from 14% of total companies in a given year to about 8%, say multiple papers by researchers Ryan Decker of the Federal Reserve Board, John Haltiwanger of the University of Maryland, and Ron S. Jarmin and Javier Miranda of the U.S. Census Bureau. That’s bad news because the rise of new companies is an important way in which capital and labor get reallocated from low-productivity uses to high-productivity uses. But this bad news gets worse.
Startup rates, or the share of all companies formed within the past year, had exceeded closure rates every year since at least the 1970s — even during recessions. That all came to a halt in 2008 with the economic downturn. While it’s normal for growth to diminish somewhat during economic recoveries, it has been slower than usual: There were still 182,000 fewer businesses in 2014 than in 2007, according to the report.
Falling startup rates aren’t just confined to a few industries. All major sectors of the economy experienced gradual declines.
The slowdown in the formation of new businesses has led to what the report calls a “golden age of incumbency,” with a larger share of Americans working for well-established companies than ever before.
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.
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.
I have an MBA from one of the top 3 programs, and I see a lot of evidence to support this, but I disagree that it's a lack of conviction.
I came from a diff't background than most of my classmates, but the sense I got was that, for a lot of them, life was a series of clearly defined competitions & steps. I took to calling it the Gilded Pipeline, but in general, it was ivy undergrad -> banking/consulting -> private equity -> MBA -> ???.
The '???' triggered a surprising # of identity crises. A lot of people felt they'd had a clear way ahead their entire lives, and now there was no clear goal in the horizon.
Most of them had strong convictions--from community work to personal beliefs to long-term goals--at least as strong as the general pop., I'd argue. But give anyone $100k of student debt & the promise of exit options galore, and I'd wager most would take the 'last big thing.'
Same observation here [top 10, but as we like to say everyone in the top-15 are within the margin of error of each other :)].
The "Gilded Pipeline" post-MBA pretty much has to be "back to banking or consulting". Otherwise the MBA has a negative ROI. Ask me how I know. You can soul search all you want, but end of the day you're dropping $100K+ on your degree and foregoing 2 years of career growth (opportunity cost). So you need to exit into the highest paying jobs THAT ALSO HAVE CAREER GROWTH and they are always banking and consulting.
I hate on Peter Thiel all the time, but he's absolutely right here. MBA schools teach a form of strategic analysis that is almost purely driven by fatally flawed ex post facto reasoning. Hell, the case study model pioneered at Harvard is a case study in ex post facto reasoning. Just read their most popular business books...always looking to the past and trying to find mystical reasons why one company did well and another company didn't (while completely ignoring counterfactuals).
We shouldn't be surprised that this form of reasoning leads to really bad ideas about what the next big thing is.
Current MBA student here. I certainly agree with the fact that a lot of business (especially case studies and popular business books) is a posteriori
However, I don't think that means that it is always flawed reasoning. There are kernels of truth that can be gained.
The challenge is that most of the analysis and synthesized learnings will apply for specific companies and points in time.
BUT, it's the analytical ability and reasoning skills that are important to develop as an MBA and NOT the specific learnings that applied to companies in the past. Any MBA that tells you otherwise is obviously flawed.
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.
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.
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.
This is a doctrine that now starts with kids at a very young age. People reverse engineer their way into that Ivy League school, then the herd mentality drives them into finance / consulting, etc.
The further they go down this road, the greater the perceived risk of leaving it becomes. Add in the financial aspect for many, and you get the golden handcuffs. Spend too many years here and I suspect it just becomes your entire worldview, especially as your social circles thin out and become more homogeneous, especially in environments like business school.
In my own experience those who eventually escape are often driven out by what can be the psychological stress of conformity, or the realization that they are far from what they had wanted for their lives 5, 10, 15 years 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!
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.
I don't think this is an MBA vs STEMLord thing. Rather an MBA versus "everything else" thing. Especially studies and experiences that really are mind-broadening:
"""The strange thing about my utter lack of education in management was that it didn’t seem to matter. As a principal and founding partner of a consulting firm that eventually grew to 600 employees, I interviewed, hired, and worked alongside hundreds of business-school graduates, and the impression I formed of the M.B.A. experience was that it involved taking two years out of your life and going deeply into debt, all for the sake of learning how to keep a straight face while using phrases like “out-of-the-box thinking,” “win-win situation,” and “core competencies.” When it came to picking teammates, I generally held out higher hopes for those individuals who had used their university years to learn about something other than business administration."""
There's something on that phrase that really hits me very hard, so that every time I hear it, by reflex I'll start looking for the exit and what paths I may take to run there.
The most interesting thing about MBA's is it's approval focused not success focused. If you can convince a fortune 500 company to pick you as their CEO you have already won even if the company fails because you run it into the ground.
So, yes the language changes as you go up. But, so does what it means to fail.
As time has gone on, I really wonder if the canonical technical/non-technical split in leadership is really the right breakdown for companies. It frequently ends up being a risk item that leadership is so separate from the low-level revenue and cost generation activities of companies. Perhaps it would work better to distribute a lot of the administrative scaling, budgeting, type activities in favor of being more organically connected to revenue activities and the skills that can open or expand various markets.
This is basically more like how Amazon operates (and oddly enough some very stressful work-cooperative companies). It puts the ability to act closer to people that can see the opportunity... and lack of that rapid see-act cycle is hurt by the canonical hierarchy, and why large corporations (who should be the best resourced entities) seem to be the worst at starting & pursuing new ventures.
To me, what you're arguing for sounds like decentralization.
Toyota's lean builds on decentralization of expertise and decision making, and that is what American and Western European companies miss and why their lean implementation efforts fail.
Another success story is Handelsbanken, the only (?) European bank to not need govt bail outs in 2008.
>>Satya Nadella doesn't give a fuck about a 5% latency reduction on the Bing landing page.
He might if you are a smart engineer and demonstrate that that 5% reduction in latency results in $100 million additional revenue per year by way of more users and more ads.
I just made up that number, but still. My point is, at the end of the day one doesn't need an MBA to draw the connection between their technical endeavors and the business effects of those endeavors.
He shouldn't have to ask. You have to imagine that when you're at that level you're dealing with a magnitude more problems, and rely on your team to inform you of changes and their high-level impact.
The higher you climb in the ladder, the more you focus on non-technical topics like scaling, budgeting, revenue growth, recruiting, etc etc etc.
You're describing a competent product manager.
Those CEOs you mention are really thinking about geopolitical strategies like how do we deal with this new anti-privacy legislation, or changes in the rare earth metals market, or diversity, or what should we do about VR or cloud etc...
But certainly they care about hiring competent people and being able to recognize, retain and reward competent people within their organization.
In contrast, if your organization is full of business-oriented people, it becomes a self-reinforcing downwards spiral, because:
- business oriented developers are biased towards competition. development is a collaborative effort.
- many business oriented developers downplay the role of engineering, wanting to be closer to management. because of this they might not be technically competent. When hiring, they will hire more people like them.
- since business oriented developers think programming is just means towards an end, they will focus on features and disregard maintainability and other important non-functional requirements. they force other people to take care of those issues for them, creating a toxic team dynamic ("want it fixed? then you fix it") and impacting their performance metrics.
If you have your MBA and you don't really like engineering because you consider it as being a lower form of work, then don't be an engineer. Do something else.
Finance I, II, III. Accounting I, II, III. Corporate Strategy. Emerging Markets. Micro/Macro Economics. Business Acting. Marketing Strategy. Ops Research.
I did online classes. Read books. Still signed up for an MBA after I realized I didn't have the confidence and needed time to develop in an environment that encourages immersion and discussion of these topics.
Not everyone needs to do this. But those who do, like me, should do an MBA.
A large part of getting the MBA is the piece of paper saying you have one, and another large part of it is the network you form while getting it. Things you can't really get online.
Of the "valuable" set of classes, what % would you have only been able to attend/learn from in an MBA program? I was accepted to several top MBA programs and decided not to go for a variety of reasons, including that virtually all of the classwork was things I had already learned or could easily learn via online coursework or community college without spending a quarter of a million dollars.
There's nothing stopping you from learning everything on your own. BUT you miss out on the MBA network. When you're forced to spend 2 years with a cohort of 75-100 people, you develop a close-knit bond when you spend most of your time eating, drinking, studying (and sometimes sleeping) with these people. If I want a job at a company that one of my MBA classmates works at, an interview is literally one phone call away.
I realize the network effect is positive for you, but I think it's negative for the world at large. One would hope that hires would be merit based, not simply that your are friends in the MBA club.
It doesn't have to be binary there. It can be merit-based and heavily dependent on having friends in the club. And that's not a special property of the MBA folks. That is to say, you might be good enough to be a lead engineer at Google, and they're not going to give you that job if you aren't, but it's still a whole lot easier to put yourself into the position of being able to do that if people in your network work at Google. MBAs are no different. You don't get to be a VP of finance because you used to do bong hits with the CEO, but if you're someone who is able to do the job of VP of finance (and can convince people of that), then that connection to the CEO is hugely valuable.
Networks aren't just for MBAs. I'm a software engineer, and I got my current job partially because one of my best friends works here and he gave me a referral. Now, I'm sure I passed the interview on my own merits, but I might not have even gotten to an interview if not for my friend letting me put his name on my job application.
I said nothing about the network, which is indeed likely valuable (though I argue you get a much better ROI by working with/networking with people who are already successful instead of with people who might one day be successful). The parent comment was specifically about the value of classes, which I strongly disagree with.
You might want to re-explore your opportunity cost.
At any top educational program, you'll get better competition and coaching from professors, peers, and alumni access than self-teaching. At most MBA programs, you can take accelerated courses or skip re-learning skills.
I'm not referring to other aspects of the program, either.
> "you'll get better ... coaching from professors, peers, and alumni access than self-teaching."
Not all of the academic knowledge is in the textbook.
If I want to learn anything, I know the best way to learn is to get great coaching and a great curriculum. The unbundled (self-teaching) route is harder to navigate successfully, though, everyone thinks they're the exception!
I'm going to have to disagree with you on that one. If you want to learn anything, the best way by far is to learn by actually doing it. The perfect example is languages - you learn far faster and more thoroughly by immersing yourself in the language and using it every day than you do by learning in an academic setting, great coaching or not.
Many business topics are the same way - you will learn much more by actually applying the knowledge to real-world problems than by working through textbooks and case studies. When hiring people, I and my peers vastly prefer demonstrated hands-on experience to any equivalent amount of academic knowledge.
Agreed, I was trying to understand what part of the classwork the parent comment found compelling enough to spend the time and money on for an MBA program.
While MBAs might learn stuff like budgeting, recruiting, etc. Are they going to better at doing this than an accountant or a professional recruiter? Is this the additional value they add when the join a company?
No, but it's the same as a CS student taking one class on operating systems, machine learning, android development, etc. You won't be an expert after one or two courses, but you develop a foundation level of understanding. As a CEO, you'll be in meetings with accountants, marketers, engineers, recruiters, lawyers, etc. Knowing the common vocabulary helps you avoid wasting unnecessary time asking questions about the core concepts.
And you're going to be in the position of having people under you frequently disagree with one another, and they're going to try to provide the best argument they can as to why you should pursue their preferred strategy. If you don't know the difference between an capital and an operational expense, you're heavily compromised in your ability to decide who's right.
They don't need to be better than a professional accountant. That's not where the value is.
I completed an MBT (Masters of Business and Technology) at UNSW, Australia.
The course programme was certainly slanted towards technical managers, perhaps aspiring CTOs (which I'm not). There were fairly basic courses, for someone with a technical product management background, but there was also some very useful business focused topics. The one module I really learned the most from was Fundamentals of Corporate Finance.
I do not aspire to know more than a professional accountant, but I can now understand what the professional accountant is telling me. I don't just know what the numbers in the budget mean, but also a pretty good idea of how they were derived. For example, I understand, in context, asset depreciation and what it means for my business.
I probably could have picked up these skills elsewhere too, but that module alone made the entire MBT degree programme worthwhile.
Can you talk more about your experiences? Did you go to a top program? A full time program? Do you think it's worth it if you already have an MS and are currently a first line manager and team lead?
BS & MS in CS. Worked at one of the big 4 (google/apple/amazon/facebook). Got my MBA from a top 10. Currently in venture capital. If you want to stay in engineering, there's no need for an MBA. It only helps if you want to pivot.
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.
I don't know about them, but since they rose up in the companies you usually get an MBA from that company. So the cause/effect relationship is off. I assume they were proper managers (like actual management, not shitty middle management) before getting the MBA.
This is what usually happens to some of the engineering guys I went to university with who stay at companies and do not specialize in anything engineering but want to progress in management.
Everytime we do this on HN, the same argument shows up -- "MBAs are the worst." "Well what about these popular CEOs?" "Well they're not really MBAs, c'mon."
Sundar Pichai went to Wharton for his MBA before joining Google. He is also ex-McKinsey. So, by HN standards, he's the absolute worst, right?
Google's leadership ranks are filled with MBAs, including tons of VPs that aren't household names but are nonetheless very influential here.
MBA programs are one of the primary ways we recruit product managers (it's how I became a Google PM, full disclosure). Sales, strategy, ops are also full of MBAs.
The next phase of this monthly argument on HN will be, then: "Well, that's what's wrong with Google then, it's all crap after they started hiring MBAs!" which is also nonsense, because lots of the senior people w/ MBAs were hired a decade ago or more.
I find it odd how MBA's are painted with such a broad brush here. It's literally just a degree.
IMO, anyone who hires purely based on a degree - whether it be a PhD, MBA, CS or whatever, is probably lazy and bad at hiring. If MBAs ruined a company, the people to blame should be the people who hired those individuals who happened to have MBAs and allowed them to ruin the company.
Granted, MBA programs do attract certain types of personalities - there were plenty of jerks when I started my MBA almost a quarter of a century ago (wow, i'm getting old), but there are also plenty of people with MBAs who aren't stereotypical money-grubbing, buzzword-spewing drones either.
> The next phase of this monthly argument on HN will be, then: "Well, that's what's wrong with Google then, it's all crap after they started hiring MBAs!" which is also nonsense, because lots of the senior people w/ MBAs were hired a decade ago or more.
To be fair, "a decade ago, give or take" may fit perfectly with some people's view of when Google (and with it, the rest of the Web) become crap.
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...
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.
MBA's add other MBA's so having zero tends to be the better choice than looking for the 'good ones.' Remember, a primary focus of MBA programs is getting to positions of power, so they are great at self marketing.
Further, if the market says X is valuable and you think it's useless then you are better off saving money by avoiding the price premium.
Remember, a primary focus on MBA's is getting to
positions of power...
Now you're projecting! For every power-hungry poorly-managing CEO-wannabe MBA, there's someone who just wants to know how to administer a business well. A MBA is a (but certainly not the or the only) path to accomplishing that.
a primary focus != only focus. But, networking for example is a large part of how MBA programs are setup.
PS: Probably should have explicitly used MBA programs not MBA's for the place you quoted, but it's also a large motivator for many people getting an MBA.
I don't have a MBA, so not much to get defensive about here. And I see what you're saying: yes, networking is a MAJOR part of a MBA. Morso than other programs. I don't think that translates to unmitigated desire for "power" so much as a desire to succeed and learn from well-connected peers. In which case, any well-regarded graduate or undergraduate program would have a similar benefit.
> 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.
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.
By the way, this is the attitude that causes diversity issues. "The rich ore is Stanford CS grads who worked at Google and Facebook, so why should I recruit anywhere else?"
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.
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.
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:
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.
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.
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.
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?
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.
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.
"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.
> 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?
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.
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.
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).
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.
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"
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.
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.
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.
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.
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?
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.
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.
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/ 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 - I am frankly leaning towards doing it anyway... if they'll take me. ;)
Several years back I did a semester of the MBA program at Tsinghua University as part of a (now discontinued) Australian government scholarship program.
One of my main takeaways from that experience was finding out that disciplines such as marketing and sales had far more rigor than I previously realised. Coming from a technical background it was easy to be dismissive of these fields.
From that perspective, I think your point 2 is likely to be where you get the most value.
I'd also add a point 5. the alumni network and all the networking advantages that provides. At a top-tier program, your classmates will likely go on to be movers and shakers in their industries, though it might take quite some time to manifest.
Sounds interesting... I had no idea Qinghua offered MBA courses to exchange students. Re: rigor in other fields, I've already learned that lesson, but I suspect you are right on both points.
> 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.
I reckon they should be actually working at a hedge fund. They need a strong understanding of the business and theory of finance, as well as the systems and technologies the fund uses. If they're running technology there - on a daily basis, I expect they would be tracking dashboards and thinking about and planning on how to reduce risk and improve operations.
I may not be there yet, so on a daily basis, I continue to improve my skillsets in management and technology, teaching technology, both theory and practice. I'm building my leadership abilities through teaching, organizing, lecturing, tutoring, speaking up where appropriate at work, and moderating on Stack Overflow where I'm focusing on using soft power (talking to people instead of pushing buttons).
If you have thoughts on that, I'd like to hear them.
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.
This is probably the point at which we go from an interesting specific topic (MBAs as CEOs) onto a generic tangent (Thiel generally). Generic tangents are hard to resist but they're the thing that make threads go bad the most, so I've detached this from https://news.ycombinator.com/item?id=14003765 and marked it off-topic. (This doesn't mean your comment was bad.)
> 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.
> 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.
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.
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.
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.
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.
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
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).