Re:DOD Just Beginning to Grapple with Scale of Weapon System...
by toss1 on Tuesday October 09, 2018 @06:37PM
(#18180411)
OK, I'll bite.
Here's a few concepts that came out of B-Schools/MBA land. at a grossly brief, thus over-simplified level:
* "Shareholder value" as the prime goal of management, justifying the exclusion of all other stakeholders (employees, customers, community supporting the business, country supporting the business, etc.). Few concepts have done more to damage this country and capitalism itself (note the main problem of shrinking middle class able to purchase the goods produced).
* "Manufacturing is fungible & expendable, just outsource it to the lowest-cost country". Massive damage to developed nations' economies, and national security, all to goose short-term profits. Actively destroys massive corporate value of know-how, simultaneously providing both the existing know-how and ability to generate new know-how to new competitors.
While all the MBAs thought we were exploiting the cheap Chinese labor, the Chinese were looking long terms and exploiting our myopic need for short-term profits to gain massive economic & military advantage (note the recent controversies about planted chips, among many other similar security nightmares). This will go down in history as one of the all-time great geostrategic blunders, brought to us by MBAs.
* "Invest in the stars, milk the cash cows, dump the dogs" -- breaking down your business units in this way, guarantees that the business will become a shell of its former self -- the dogs will be sold off with no regard for their potential if invested in (they may be developing key breakthrus, but not yet showing good financials), the cash cows will be starved of all potential and soon become dogs to be sold off, and maybe the stars work out or maybe they don't. Great way to kill a business. GE was financially managed -- where is it now?
* The general concept that I've seen multiple times of focusing on managing to the financials instead of managing to CREATE great value. The financials will ALWAYS look better when investment in building true value and a competitive moat is overlooked to cutting costs and goosing current sales. These numbers will look good and increase for a while, possibly years. Until they don't. At that point, the business has no hope, and is a walking zombie, unrecoverable.
So, yes if MBAs are kept in their suitable container of 1) installing good accounting practices for tracking and security of financial assets, 2) managing the profits that are made to ensure good returns, 3) optimizing operations & taxes (lease vs. buy capital assets?, etc.), then things will work out great.
But putting them in charge without also having serious domain knowledge, both on the customer/market side and on the engineering/manufacturing side -- very bad idea.
Here's a few concepts that came out of B-Schools/MBA land. at a grossly brief, thus over-simplified level:
* "Shareholder value" as the prime goal of management, justifying the exclusion of all other stakeholders (employees, customers, community supporting the business, country supporting the business, etc.). Few concepts have done more to damage this country and capitalism itself (note the main problem of shrinking middle class able to purchase the goods produced).
* "Manufacturing is fungible & expendable, just outsource it to the lowest-cost country". Massive damage to developed nations' economies, and national security, all to goose short-term profits. Actively destroys massive corporate value of know-how, simultaneously providing both the existing know-how and ability to generate new know-how to new competitors.
While all the MBAs thought we were exploiting the cheap Chinese labor, the Chinese were looking long terms and exploiting our myopic need for short-term profits to gain massive economic & military advantage (note the recent controversies about planted chips, among many other similar security nightmares). This will go down in history as one of the all-time great geostrategic blunders, brought to us by MBAs.
* "Invest in the stars, milk the cash cows, dump the dogs" -- breaking down your business units in this way, guarantees that the business will become a shell of its former self -- the dogs will be sold off with no regard for their potential if invested in (they may be developing key breakthrus, but not yet showing good financials), the cash cows will be starved of all potential and soon become dogs to be sold off, and maybe the stars work out or maybe they don't. Great way to kill a business. GE was financially managed -- where is it now?
* The general concept that I've seen multiple times of focusing on managing to the financials instead of managing to CREATE great value. The financials will ALWAYS look better when investment in building true value and a competitive moat is overlooked to cutting costs and goosing current sales. These numbers will look good and increase for a while, possibly years. Until they don't. At that point, the business has no hope, and is a walking zombie, unrecoverable.
So, yes if MBAs are kept in their suitable container of 1) installing good accounting practices for tracking and security of financial assets, 2) managing the profits that are made to ensure good returns, 3) optimizing operations & taxes (lease vs. buy capital assets?, etc.), then things will work out great.
But putting them in charge without also having serious domain knowledge, both on the customer/market side and on the engineering/manufacturing side -- very bad idea.