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)
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.
The accountants have convinced businesses to rely on Option 2 for too long.
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.