Fixing the American Economy by Firing the MBAs

I ran across an interesting article that talked about the fact that America no longer produces innovative products because everything is run by MBAs:

Bob Lutz, the former Vice Chairman of General Motors, is the most famous also-ran in the auto business. In the course of his 47-year rampage through the industry, he’s been within swiping range of the brass ring at Ford, BMW, Chrysler and, most recently, GM, but he’s never landed the top gig. It’s because he “made the cars too well,” he says. It might also have something to do with the fact that Maximum Bob, who could double as a character on Mad Men, is less an √©minence grise than a pithy self-promoter who has a tendency to go off corporate message. That said, his new book, Car Guys vs. Bean Counters: The Battle for the Soul of American Business, has a message worth hearing. To get the U.S. economy growing again, Lutz says, we need to fire the M.B.A.s and let engineers run the show.

Although this solution won’t fix all of the problems facing American’s economy I believe it would do a great deal to fix our lack of quality American products. Let’s face it, America doesn’t actually create many innovative products anymore. One of the few exceptions to this rule is in the personal electronics and software industries where things are almost always run by engineers. While our phones become more powerful with each passing month our vehicles remain almost the same as they were in the 60’s with only a few refinements to the technologies.

Research and development is a joke because it’s usually seen as too expensive by the bean counters. Why should a company produce an innovative product when such things costs money, it’s far easier to just create a rehash of last year’s model with a new model number slapped on the package and tout the relatively few improvements as major innovations? I think the article has a point, this attitude has lead to a stagnant market where MBAs are now in charge and engineers are relegated to the back rooms (if they’re allowed to continue working at all).

The article also states a side-effect of this system of production, good people are fired so that companies can make the short-term numbers each quarter:

In the U.S., the growth of the financial industry has only exacerbated the trend toward balance-sheet-driven management. Companies everywhere, but particularly in the U.S., where the banking sector wields the most power, are under tremendous short-term pressure to make their quarterly numbers. This often leads to planning that’s reactive rather than smart: force the highest-paid engineers to retire, even if they are the best, and reduce payroll costs across all divisions rather than invest in the ones that are pushing the New New Thing through the pipeline.

Engineers who are good at their jobs want to get paid according to their skills. This does become a problem for the bean counters because they believe it’s far more productive to hire two cheaper engineers than a single expensive one. It never crosses their mind that the one expensive engineer can produce far better products than the two cheap ones though.

Again, I realize that the problems with the United States economy run deeper than a bunch of MBAs. But I also believe America could start churning out innovative products again if the MBAs were tossed out on their asses and quality engineers were allowed to do their thing.

Alas, MBAs are too deeply rooted in the corporate culture and I fear we’ll never rid ourselves of this yoke made by bean counters.