Why a Rise in M.B.A.s Coincided with the Fall of American Industry

by darthfader 4 Replies latest social current

  • darthfader

    Interesting article!


    The auto industry is actually a terrific proxy for a trend toward short-term, myopically balance-sheet-driven management that has infected American business. In the first half of the 20th century, industrial giants like Ford, General Electric, AT&T and many others were extremely consumer-focused. They spent most of their time and money using new technologies to create the best possible products and services, regardless of development cost. The idea was, if you build it better, the customers will come. And they did.

    The pendulum began to swing in the postwar era, when Harvard Business School grad Robert McNamara and his "whiz kids" became famous for using mathematical modeling, game theory and complex statistical analysis for the Army Air Corps, doing things like improving fuel-transport times and scheduling more-efficient bombing raids. McNamara, who later became president of Ford, brought extreme number crunching to the business world, and soon the idea that "if you can measure it, you can manage it" took hold — and no wonder. By the late 1970s, M.B.A.s were flourishing, and engineers were relegated to the geek back rooms.

  • Robdar

    interesting theory.

  • sooner7nc

    Very interesting indeed.

  • darthfader

    Yeah, I think this works to a point. Some business is to large for a single (regular) person to handle mentally. There are some super entrepreneural creatures out there that can geek with the best of them and can manage the business accounting, sales and marketing concepts pretty well. But in reality those people are pretty rare and do you really want to base your entire business on the brain of one person. This means that as business grows, you have to break it down into functional areas, accounting, sales, R&D and logistics. Each one of these areas need to coordinate with the other to perform efficiently. This interface between groups requires scheduling and budgeting. Once you have that, you have to "measure everything".

    This is one of the reasons smaller companies are more agile and can easily out perform all the "big boys". But the smaller businesses lack the economies of scale of larger ones.

    Basically, I think that big business is onle good because of the efficiencies of scale and the leveraging of large cash amounts. If those factors were not in there, I'll bet that the largest companies would only employ 100 people.


  • Berengaria

    Having lived through the '80's, the ME generation, in SF, in the Financial District, I can tell you that is when pushing money around on paper became the focus. It's definitely been to our detriment. All of a sudden, everyone was a "financial adviser" Short term incredible profits for those in the biz, ruination for the country.

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