Proliferation of generic MBAs and decline of SMEs

Anyone much under the age of say about 40 might struggle to understand this but once upon a time bosses actually knew their trade.

So the man or woman at the top usually had a background in the core discipline of the company or area of a company they were heading up.

What a manifestly daft idea! How can someone lead if they know what they’re talking about?

Fortunately however, such dangerous nonsense started to go out of fashion when MBAs started to proliferate. Lots of guys started turning up waving an MBA saying “Hey, this means I can run your business. Can I have a top job please?” Equally large numbers of gullible Chief Execs swallowed that hook, line and sinker and immediately started to write huge checks to say “welcome” to the hordes of MBA holders being churned out of colleges nobody had ever heard of.

To make way for them, those old outmoded leaders, who knew something of the core business, were quickly weeded out – three cheers!

Now at heart, the rapid-advancement idea behind the MBA is a disaster. It’s based on the concept that all businesses are largely the same in many of their core functions and that they need to manage things like cash flow, marketing, cost bases, investment, research, personnel development etc etc etc.

Nobody’s disputing that but what is questionable is whether someone who’s been trained in those things alone but who knows nothing of the business’s products and services is thereby qualified to step into a top job.

Sound controversial? Let’s consider reality.

Take a company manufacturing, say, roller bearings for the automotive industry.

At one time, several members of the board would probably have been qualified engineers who’d come up through the ranks. Today, you might be lucky to find anyone at the top who really knows the product at all. What you probably will find though, are a lot of MBAs.

What does that mean?
1. Take the CEO of the same company who’s asked a question relating to metallurgy quality concerns at a press conference. He’s probably got a great MBA and could talk for hours on overnight investment yields on the currency markets but he hasn’t a clue when it comes to his own company’s products.

This is a potential nightmare. It’s almost as bad as his experience at a recent trade fair where, in front of reporters, he’d erroneously identified another product as being one of his company’s. Corporate communications had worked overtime to dig him out of that hole.

So, this time he ducks and says he’ll get an answer shortly from the appropriate expert. He signals his EA to make a crisis call to the Head of Manufacturing.

2. The Head of Manufacturing has an MBA. He really wanted to work in banking but couldn’t find a job. He’s never used a lathe or stepped out onto the shop floor but his MBA has got him a big office and title.

His expertise is in firing people to reduce costs, even if quality suffers as a result. He takes the call and has a panic attack. He calls one of his team – the Head of Quality Management.

3. She takes his call but is hazy as to what metallurgy actually is. Her MBA has led to her specializing in designing new job satisfaction assessment forms for people on the shop floor to fill in periodically.

Unlike her boss, she has been on the shop floor once but didn’t like it much. She does know though that someone called the Head of Metallurgy reports to her. She’s pretty dynamic and even though she’s never met him, she’ll look his name up fast and give him a call.

4. Marvin’s the Head of Metallurgy. Once a competent scientist plugged in to what’s going on, most of his staff have been fired over the past couple of years due to cost-cutting.

He’s also the first to admit that he’s not as up-to-speed on real production issues as he used to be because he’s spending much of his working day and spare time studying for his MBA so he can progress upwards in the company. He’s worried about answering the question, partly because he doesn’t really know and partly because he doesn’t want to be seen as knowing anything even remotely connected to how the product is made. He thinks it might stand in the way of his promotion.

5. Marvin goes out onto the shop floor. He realizes there seems to be a lot fewer people on it than there used to be. He eventually finds Gus, who’s covered in oil and trying to adjust a huge lathe.

Gus tells Marvin that he’s not surprised, as metallurgy used to be regularly tested in Marvin’s area but as almost everybody’s been fired, it just doesn’t get done any more and people just hope the steel’s OK.

Gus states that he’s given the best explanation he can and there’s nobody further down the chain to ask, as he’s at the bottom. He suggests Marvin might ask one of the cleaning staff but he’s not sure they’ll be able to add much – though he secretly thinks they’ll probably know more than Marvin seems to these days.

6. Gus only earns about 5% of the salary of the CEO. Pity he hasn’t got an MBA.
Would you like the pilot of your aircraft to announce they didn’t have a lot of flying experience but they had a great MBA? Maybe you’d be happy with a surgeon telling you as you go into theatre that he isn’t medically qualified but his MBA should help him see you through?

I guess you get the picture.

What we need in commerce and industry are more people at the top who know the nuts ‘n’ bolts of the business they’re in – not fewer.

Is it just coincidence that the decline of many industries seems to correlate to the rise in the numbers of MBAs around? Form your own view!