What do we need to do to grow the US economy again? Fire the MBAs, and let engineers run the show.
That's what Bob Lutz, the former Vice Chairman of General Motors, suggested. He noted that American companies started to lose its way when the MBAs took over from the engineers:
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.
This is not to say that the Whiz Kidding of American business yielded no positives; things like the hyperefficient FedEx logistical hubs and the entire consulting industry were born out of it. But ultimately, moving numbers around can do only so much. Over the long haul, you've got to invent or improve real products and services to grow.
Rana Foroohar of TIME Magazine has the article: Link (Illustration: Harry Campbell)
The engine is great. It is a four cylinder turbocharged 2.8 liter from Detroit Diesel Motori. It is the engine used in European Jeeps where Diesel is more popular.
The downside to this Chrysler product is engineering by accountants.
This is the only modern car I know of that does not have a sending unit (electric fuel pump) in the tank. The accountants left it out to save money.
A few years back the ball joints in all Libertys were replaced under warranty. A very big expense to Chrysler caused by an accountant who decided to use smaller than engineer specified ball joints.
There's more but, that gets tedious and boring. Suffice it to say I have a neat Diesel engine with a bunch of Chrysler parts - all selected by accountants - loosely attached. My job is to keep up with the maintenance as the Chrysler parts fall off.
Being in that finance department, I found myself getting into a lot of arguments with my supervisors.
There's a reason I'm not in that line of work anymore.
Oh, and Fred - I have a Jeep, too. I wish Chrysler would spin them off into an independent company...
"I told everybody that things would be different when I was in finance, we wouldn't do things on the cheap, we wouldn't do things the accounting way, only best for everything. It wasn't till the 6th month that I realized I was agreeing with the accountants all the time because I realized that we cannot always do everything the best way because if we did we wouldn't be able to stay in business. Now there are times when we really do need to do things the engineering way but just not for most things."
I veiw it as a team, engineers come up with wonderful ideas and accountants tell them if those ideas can feed them. For example the $100,000 Zafirro Iridium razor is an engineers razor, only the best. The Gillette Fusion ProGlide is the accountant's, good enough to get the job done even if it needs upkeep from time to time, cheap enough to still allow you to eat and in the end vastly more cost effective.
Philosopher King
See: Steve Jobs.
You can have your Design+Engineering cake and make enough to eat, too.
You just need someone strong enough to kick the crap out of the old False Paradigms.
I agree completely. People use to invest in companies for the long haul. You wanted stable companies that always grew. Now, it is all about pumping up stock value not matter what happens, then dump and move on to the next.
Sure, investors want to make a return, but one day they will be sitting in a board room going "where are all those companies we use to invest in?" and the answer will be "You consumed them all, there aren't any more."
Really? I am looking over a parking lot, I see no Rolls or Maybach. I am 100% sure that the desk and chair I am use are not top of the line, since I have better at home and I didn't buy the best. I know the PC I am using is the base of the model range. In fact it would be a safe bet to say that nothing in the building I am in is the best there is for whatever it is.
If you asked an engineer to build you the best extension cord you would probably end up with something that was made of platinum wrapped in Gore-Tex and Kevlar (I have no idea but I have been told those 3 items would a better cord). Given the current cost of those 3 items a 6' cord would run you somewhere around $5000. If I was in the business of making extension cords and I was making the best my business would have failed prior to selling my first product.
If I follow Marx economics correctly; all real wealth is generated through labour, but only productive labour, management is not productive labour. It is merely asset management. Bloated managerial salaries cannot help matters.
The accountants have convinced businesses to rely on Option 2 for too long.
No the accountants did not most likely it was the consumers and marketing.
When I was in high school I worked in a seasonal department. During the summers we sold this 36" round table and 4 chairs for $30. If you got a full summer out of those I would be shocked. For $10 more you could get the same size set but witha table and chairs that were far better. Yet for every 1 of the $40 set we sold we would set 10 of the $30.
I like Lutz but he has forgotten something. Accountants do not tell you what you need to do, they tell you what you did, Marketing or Finance generally tell you want to do.