This is an interesting article that rings true.
The dot-com boom was largely about “genius” MBAs coming up with brilliant ideas for online companies, for example. They spent ages in meetings blowing hot air, drawing up financial charts, and coming up with marketing plans. The actual technical implementation was considered so unimportant that they took it for granted they’d just pay some “geek” to put the finishing techie touches on their fabulous creation. The reality was that the techie-implementation was where they usually failed. Meanwhile, techies built websites like Google, EBay and Yahoo simply because they knew how all the nuts-and-bolts worked.
In almost every successful IT project I’ve ever been involved with it’s been a nuts-and-bolts techie that’s had the most important impact. More often than not, the “business skills” types were more hindrance than help. Many times their superiority and arrogance led to project failure.
I would only add that is the combination of entrepreneurship and technological expertise that makes it all happen. It’s unclear precisely where the MBA fits into that.
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Business schools group people together with others of similar interests. The course work can be a useful way to fill in knowledge gaps. For instance, a techie with a brilliant idea and entrepreneurial spirit may need to bone up on marketing, accounting or operations management skills. With basic tools in hand, the techie can utilize classmates and/or alumni networks to facilitate staffing, capital-raising and other aspects of getting the start-up business off the ground.
Get an mba only if you want to change careers, want to network from good school, or want to completely waste $60k+and 2 years on a useless degree.
A science journal once had an article on the number of new businesses started by college professors in some technical area. The number was in the tens of thousands each year. But the article went on to say that 99.9% of those businesses never become more than hobbies for the professors because those technical professors lack the necessary business skills. The writer suggested that professors partner with someone with business expertise.
Interestingly, when I worked with “techies” in a major software development project, the techies were the arrogant ones who had no grasp of the business, while the business side, including myself, had nothing but respect for the opportunity technology created for running the business better. We wanted the best solution, the techies wanted only to remind us how cool and high paid they were and how stupid we were for not knowing all the intriciacies of writing code.
There’s value in knowing how to make the tool, but the rubber meets the road in applying the tool in a productive and successful business combination. Google succeeded because it was a great business idea, not because the founders were programmers.
Couldn’t agree more on MBA observations.
Interestingly, when I worked with “techies” in a major software development project, the techies were the arrogant ones who had no grasp of the business, while the business side, including myself, had nothing but respect for the opportunity technology created for running the business better. We wanted the best solution, the techies wanted only to remind us how cool and high paid they were and how stupid we were for not knowing all the intriciacies of writing code.
There’s value in knowing how to make the tool, but the rubber meets the road in applying the tool in a productive and successful business combination. Google succeeded because it was a great business idea, not because the founders were programmers.
Couldn’t agree more on MBA observations.
I recently read “The New New Thing,” by Michael Lewis. It’s about Jim Clark, the founder of Silicon Graphics, Netscape, Healtheon, & MyCFO. (An OK book, wouldn’t necessarily recommend it.)
In any case, many parts of the book focused on the friction between the techies and venture capitalists.
Obviously, since the book is about a techie, the techies were portrayed as masters of the universe, while venture capitalists (or “suits” I believe they were called) were portrayed in an almost criminal fashion.
My opinion is that both groups serve a valuable function. In fact, it’s the division of labor that makes both occupations even possible in the first place.
I agree that techies are more important than MBAs, and add that artists (which include entrepreneurs) are more important than techies.
As one of those “geeks”, and related to the other comments under the “net neutrality” idiocy, I saw often how perfectly good ideas would be twisted out of all recognizable shape by gung-ho MBA types.
On the other extreme, the best of the MBA types are the ones who came to us geeks and said, “What can we deliver in terms of services right now? What can we deliver in 3 weeks?” They then built plans and roll-out schedules based upon what we could put in place that worked.
You can imagine which were the managers for whom we had respect.
Uh..what about an Engineer with an MBA (or some business training).
Wouldn’t that work pretty well? You can learn the Masonic systems of finance, taxation and accounting in MBA school pretty much like you learn vocal pitch or Morris-Dancing. It is not much good outside of its own arena, but you will never get on the stage without it. (Exceptions apply)
JBP
“Uh..what about an Engineer with an MBA (or some business training).”
That’s exactly why in Germany we have a combined study called “Wirtschaftsingenieurwesen” (Business and Engineering) which incidentially I am studying.
Now I have to do an internship during winter term 07/08 and I’m looking for something in New Hampshire. If anybody has any contacts send me an email at felix.benner@imail.de
I think the key is to be an “engineer” (someone who knows how to make an idea reality) that also understands how the market works. Unfortunately, the current educational system, as well as culture, make that a rare breed.
Most “engineers” (with technical knowledge) are very much hostile to the idea that they should have to sell themselves. They believe their technical knowledge entitles them to a certain standard of living. In essence, they are at heart technocrats.
On the other hand, most MBAs I’ve dealt with are no more than con artists. What they learn in business school is quite often wrong (gee, I’m sure that’ll come as a surprise to those on this site) and even if somewhat right, useless.
The people that I’ve known who are truly good business side people are people who cut their teeth in entry level sales jobs or in the trades for years and moved their way up from there. Even then, a fair number of the sales types are con artists mostly, but almost every person I know with a proven track record of creating a business from an idea has a background of this sort.
What we really need is to get rid of this vestigal Marxist cultural prejudice against market fundamentals, like sales and marketing. Then, most techies will be just fine, just like most trades (where there isn’t this intellectual snobbery against sales and marketing) are, at being entrepreneurs.
That, and of course the state and its entry barriers and taxation that makes self capitalization nearly impossible.
It is common that the “business side” and the “technical side” of projects clash on different issues. There is “new” development methods (often called agile software development methods) like Extreme Programming who tries to alleviate some of these problems. One of the core principle is to let the geeks decide how much time it may take to make the features asked by the business/management and let the management decide the features that will be built first depending on the cost (number of days for implementation). Even if it seems simple, often the management try to impose deadlines and features without really knowing how much time it will take. The method try to split the roles where they belong and not let the management try to guess how much time *it should take* to build something.
I have worked for enterprises where rivalry was omnipresent between management and techies. It is often the case that techies feel superior because they have the skills to implement what the management want but one thing they don’t have often: knowing what clients want (and that should be the job of the management).
Now, as a geek and an entrepreneur, I have more the business thinking now and thanks to libertarian ideas, I understand more the role of entrepreneurs in society. Sometimes I have debates with our developers about what and how something should be implemented. I have the clients and budget in perspective so I can decide not primarily as a geek (wow, this feature seems really cool to implement, it’s a good challenge) but as an entrepreneur who try to capture what our clients really want.
quasibill wrote:
That, and of course the state and its entry barriers and taxation that makes self capitalization nearly impossible.
Yes, effectively. But it is not impossible. We have done it with our internal projects. We are purely financed by internal savings (we take lower salaries than we can get from a job and have a tight budget). No state subsidies or loans.
I worked ten years in marketing communications before getting an MBA. Two reasons: (1) I wanted a better handle on why I was doing what I was doing, and (2) I had an idea that I wanted to be where the action was, and wherever that was, I was pretty sure that marcom wasn’t it.
Part of the problem with “genius MBAs” coming up with great ideas for companies is that that’s all they do. There’s nothing wrong with coming up with a great idea — once. And then acting on it. Anyone can come up with a great idea. What’s then needed is actual action, implementation. Reading through Lou Gerstner’s Who Says Elephants Can’t Dance, and he had a very interesting quote, upon taking up the reigns as CEO of IBM: “The last thing IBM needs right now is a vision”. His point was that most of the real work is in the every-day fundamentals of a business — cash-flow, operations management, making daily operations more efficient, eliminating unprofitable and wasteful business ventures (in IBM’s case, their attempts to compete with MS and Intel on the PC and OS market), and focusing efforts on real opportunities.
Part of the problem with many MBAs is they’re taught a lot of theory; that’s fine. Some of it is good, useful theory. However, theories of business-management can’t just be thoughtlessly implemented. Many people come to a position with a pre-defined idea of “what the right thing” to do is, that is what the right monitoring, compensation, incentives, etc system is; and they aren’t going to do a lot of work. What good businesspeople do is first do the real work, analyzing the situation of a company. That is, CEOs and high-level executives have to realize that they really aren’t the experts on the nuts and bolts of their companies (or at least few of them are). They have to follow around people on the ground floor, and figure out what’s going on, how people respond to incentives in a particular company, and so-on and so-forth.
This is primarily Hayek’s issue of specific knowledge, and the decentralization of knowledge. Of course, there’s things that have to be balanced, because there’s also issues with too much decentralization (agency costs).
Good executives do the hard work of figuring out what’s working for their company, what isn’t, what’s happening on the ground floor, how people respond to incentives, the requirements of various projects, and getting employee input. Bad executives don’t bother with that hard work, but instead implement top-down directives without much thought, and then when financial disaster occurs, worry about “earnings management”.
Good evening, David–
Gerstner’s comment puts me of mind of Ram Charan and Larry Bossidy in Execution.
Your points are solid. MBA theory is useless without a grounding in the real world: that being, preferably, clear communications about what the customer wants.
We haven’t yet talked about the flip side of MBA genius: them as are aggressively ignorant and durn proud of it. I have more experience with that type than I care to think about.
I read “The New New Thing,” by Michael Lewis a few years ago and loved it. Lewis is a talented writer and perceptive observer of people and events. I couln’t put book down and gobbled it up in one night. So, contra Chris R, I recommend it.
As for MBA v. Geek, everyone has a different set of abilities. Gates has more business savvy than most MBA’s and more tech-techiness than most techies, that’s why he’s rich and most MBAs and Techies are not. Period. Division of labor applies everywhere, all the time. Knowing your product, your market and keeeping tabs on all the little details is what positions you for success — and consumers buying it makes you a success. I’ve met stupid techies and stupid MBA’s in my time as corporate counsel, neither group has the leg up on the other — afterall, if they were so smart, they’d be attorneys, right?
I can’t help but find it amusing that the armchair CEO’s here seem to know all about what’s wrong with a business education that that they’ve never actually experienced:
“completely waste $60k+and 2 years on a useless degree.”
“What they learn in business school is quite often wrong (gee, I’m sure that’ll come as a surprise to those on this site) and even if somewhat right, useless.”
“Part of the problem with “genius MBAs” coming up with great ideas for companies is that that’s all they do.”
“…the problem with many MBAs is they’re taught a lot of theory.”
“MBA theory is useless without a grounding in the real world…
“…MBA genius: them as are aggressively ignorant and durn proud of it.
In my experience, I didn’t learn anything about business theory in my MBA classes that I couldn’t have learned with a library card. That’s not what I paid $60k+ for.
What I learned in business school is that every modern business organization is far too complex to be entirely understood by any one person.
I learned that I don’t know nearly enough about any one aspect of technology, industry, commerce or management, and I probably never will.
I learned that if I don’t devote time to continuously improving my knowledge and skills, other motivated business people will not hesitate to leave me in their dust.
I learned to take a stab at problems without fear of being wrong, and to not be afraid to admit it when I’ve been wrong.
I learned that at times I’ll be expected to make irreversible decisions based on incomplete or inaccurate information, and that many people may be impacted by the consequences of my decisions.
I learned that I will need to work effectively with people who know far more than I ever will about things I’ve never heard about.
I learned that if I don’t deliver real value to whatever organization I work for or with, there are many other capable individuals who will.
And I learned that firms are willing to compensate people very attractively if they deliver real results.
After all that learning, I graduated at the top of my class, and was able to choose from a number of attractive job offers. Some of these firms recruit their professionals primarily from business schools (and almost exclusively from the top tier), and if the people they hired weren’t capable and productive, the firms would have failed long ago.
My compensation is now better than triple what I earned pre-MBA (which was itself above average), however, I know that my employer will drop me in a heartbeat for some other bright kid if I fail to perform to their expectations.
Employers pay a premium because they value whatever it is that MBA grads have that the general population doesn’t. Otherwise, they’d save themselves a whole lot of cash, and hire from high-schools or community colleges.
So, next time you want to complain that MBAs are stupid and overpaid because you happen to have met a few who fit that description, rethink your argument in a free-market context before spouting overgeneralized opinions.
If MBAs don’t do anything useful, why do they get paid so much?
Ah, because the free market is very inefficient!
My take on computer programming is that it’s too complicated for a non-computer programmer to manager. It’s not at all like constructiong a building, which is the shoebox that people are always trying to stuff computer programming into. “You never see any abandoned half completed skyscrapers, so if we could only figure out how to manage the computer programmers like we manage the construction workers there will never be any half completed abandoned software projects.”
Has anyone read Taleb’s book “Fooled by Randomness”? One of his points is that success in business, especially financial markets, has the same characteristics of randomness. He can’t say for certain that all success is random, but it certainly looks very much like randomness. He argues for humulity on everyone’s part.
MBA Grad:
Thank you very much for your post. You just saved a lot of people two years and $60,000.
Beg pardon, MBA Grad, I wasn’t referring to MBAs when I said “aggressively ignorant and durn proud of it.” Quite the opposite, in fact: I was talking about the tendency in some quarters to refer anything that can’t be dealt with over 18 holes and a couple of strippers to “the fill-in-the-blank guru–he/she’s the one with the MBA.”
I stayed with my current company when I finished my MBA, and I’ve started my doctorate this summer.
Why dance around the obvious?
Entrepreneurs can’t be made/taught. You either are or you aren’t.
The MBA, while valuable/useful for other purposes, is really a false proxy for entreprenurship.
Okay. I’m going to play heretic to at least two different orthodoxies here, while simultaneously being orthodoxly Austrian here. It isn’t often I get an opportunity like this.
Yup, there are arrogant techies around. I’m a techie, and when I’m annoyed at some stupid business decision that I know is going to bite us eventually, I’m one of the arrogant ones. And when you are building a company based heavily on technologies, your techies had better be good for one simple reason. If you have average techies, your competitors can easily overtake you by hiring somebody better.
Yes, there are some bone-headed MBAs out there. The same thing applies to business people that applies to the technical staff. You need good ones for the mission-critical aspects of your business. Earning a degree can be useful for building a broad foundation of knowledge of a subject, but it doesn’t make you an innovator. It gives you the tools to do the mechanics of the task and teaches you how to operate them. That’s a good thing. When you are hiring, you want that. But the question remains, can the candidate build something new?
Now that I’ve attacked the orthodox view of “the nerds” by “the suits” and vice versa, I get to go orthodox Austrian. There are no groups. Knowledge can’t be aggregated or averaged. Skills come from individuals. And the one time that individual skills are most valuable to a business is in creating something new, whether it is a new business, new product or even just new features.
Okay, so you have some hot skill set: tech or business. What can you do with it?
There’s an excellent book that just got released this year entitled _The Strategy Paradox_. It contends that if people were 100% honest about how business successes really happened, they’d have to attribute at least some of it, if not most, to the existence of good luck.
With regards to the “techie” spirit mentioned here, there’d be an absolute insistence to full left-brain rational thinking, cause-and-effect, if-this-then-that justification. Where then does any of the intuition ingredient fit in, as well as the creativity / innovation chance to experiment that some engineers crave tingling on the 20% free time projects Google is alleged to grant, or 15% that 3M lent to Art Fry to stumble on PostIt’s, another unplanned / accidental “success”?
I came here on a search of how “proven track records” are overrated and found this. Some people who’ve succeeded before can and do fail miserable, especially when they insist they and only they know true strategies. Others who fail one day deliver incredible successes; they were prevented from delivering their best by management forms who were either possessed by the fear of failure or threatened by another peer/subordinate/higher up.
When it comes to avoiding generalizations as posed by MBA Grad, I wholeheartedly agree. Yes, let’s study these on a case-by-case basis, and you shall see that even those who appear to know it all after the fact may admit behind closed doors that they really didn’t know what they were doing, that they invented it all as they went along (as one Inc. magazine cover article has quoted and portrayed). Let us not only study successes, let us also study failures for the purpose of completeness and the hopes of getting lucky.
Why would you base your opinion of MBAs on how effective they are for technology firms? You might as well have said that MBAs are useless because they aren’t used for nuclear physics.
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