> in fact some of Boeing's best and most successful years as a company were well after that.

That's logical, isn't it? If your claim is that the company cut the long-term philosophy and squeezed short-term benefits, the most profitable time for the company is logically going to be the time where benefits go up while long-term investments are no longer made.

I'm not saying that you're wrong, just that your rebuttal isn't going to convince someone thinking like that.

MBA thinking is exactly about squeezing profits by cutting expenses. You can completely gut a company's future by doing so, while having multiple years of profits guaranteed by backlog orders.

There's some kind of inertia, were bad and good decisions take some time to have their effects felt.

Likewise, due to the same inertia, unless something dramatic happens, the current administration of a company is downstream the culture of previous administrations, as the people at the helm in the present were promoted, hired mostly based on the criteria of the the last past dramatical cultural change, that was the managerial takeover by the MD bureaucrats post-merge.

And how long did it take Jack Welch to bleed GE dry? Decades. With companies this size, it doesn't happen overnight. There is a LOT built up before you that you have to systematically destroy.

It is as if I read the grand and the parent comment verbatim yesterday. Deja vu or this is now the pattern for every Boeing discussion?

Probably, Boeing was the topic of discussion on Last Week Tonight relatively recently.

We're all experts now.

A lot of folks don't realize that MBAification of companies does not have an immediate feedback loop. The entire point is that in the short term it does super well, with the costs being realized in the long term.

Boeing's timeline of failure actually matches the trajectory of other MBAified companies.

And it’s not necessarily the fault of the specific person in that position but rather those who set the priorities of what that position needs to accomplish - the Board of Directors. The MBA in itself didn’t cause the failures. I don’t fault an engineer going through the hoops to check the MBA box in order to be a viable candidate for that position. I almost did the same a few years ago to do the same. My motivation wasn’t money or ego though it was because I imagined I could make a difference in our organization if I had a better hold of the reigns. I ended up not doing it and decided it was just time to move on instead. In the end it was me being a bit selfish and my motivation was simply quality of life for myself and family.

A lot of people on this forum just use the MBA as a dirty four letter word (minus one letter) without understanding what it is or what it means.

There’s no such thing as being “MBAified.” An MBA is a generalist degree that contains the bare minimum information you need to operate a corporation.

You know how in undergraduate computer engineering you learn many different subjects like power systems, microcontroller programming, computer programming, transistors, basic processor design, digital/analog circuit design? And how nobody is going to use all those subjects in the real world? That’s exactly what an MBA is like: it’s got subjects like corporate finance, organizational behavior, information systems management, marketing, etc. Just about nobody with an MBA is going to use ever single one of those subjects on a daily basis.

Nobody else is being judged by their degree. It’s ridiculous, and kind of disgusting that people act like learning the set of knowledge contained in an MBA makes you a worse manager. Armchair engineers seem to think they could run a multi-billion dollar aircraft manufacturer using avionics engineering skills alone without understanding the concepts you learn in an MBA like inventory turnover, cash flow, global operations, or how to design the organizational structure of a company with tens of thousands of employees. In what way does an engineering degree prepare you to do that job?

Imagine if you were a nurse and you got told that you were a worse nurse because you got a nursing degree. That’s what the engineer-types who dunk on MBAs are doing.

Of course nobody is blaming literal MBAs. We are blaming this kind of managerial culture best symbolized by Harvard Business School and MBA programs.

The whole idea that no matter what a company does, a generic degree holder, with an education heavily centered on accounting and finance can be the ultimate decision maker without taking into input any other aspect behind financials and accounting.

Most business type have this misguided idea that we engineers don't value business and financial knowledge. We do, what we question is the hubris of business people that seem to believe that domain knowledge is not important, and that managing a soft-drink manufacturer is the same as manufacturing a tech company. It is not.

The problem with your analogy, is that no nurse are being taught on nursing programs that all that matters is what they learn on their programs. If this happened, yes, nurses would be worse nurses by having those degrees.

But everything you said assumes the MBA and culture is a certain way. My classes quite often emphasized case studies where long term thinking, innovation, and quality were key to success: examples like Costco and the Toyota Production System were in my materials published by Harvard Business Publishing. The way that Trader Joe’s gives store employees the freedom to respond to local tastes was another case study I read about.

My courses emphasized gathering feedback from employees and empowering them to make decisions. We learned about multiple different ways to compete which were very often not based on “cost cutting.”

Agreed, I think 'jack welched' or similar would be a better term. Not all MBAs are destructive to institutions. Followers of Jack Welch mostly are.

Honestly, I think this discussion won't go anywhere because you've taken this personally due to the time you've spent on getting your MBA.

MBA also can't really be compared to Nursing, or really most other degrees. Nursing is a real thing, that can have completely quantified measurement on success.

MBA is...not. In some capacity MBAs are a self-fulfilling role, where the existence of the degree and the artificial rarity associated with the "big schools" around it, create a necessity for more MBAs in the future.

The impact of MBAs can't really be quantified either. First, we don't know what firms are working with what employers sometimes until decades later due to the various NDAs and secrecy around them. Sometimes going as far as the firms taking on obvious conflict of interests, but being able to keep them hidden (e.g. taking on the FDA, and addictive drug manufacturers at the same time.) Second, due to how these firms operate, and the impact of short term vs long term thinking - the negative results of MBAified management strategies do not come across for years. And when the negative results do happen, the blame is either pointed at ${politicians}, ${immigrants}, or ${economy}. When was the last time a firm took responsibility for destroying a company? Even if you think MBAs don't actually destroy companies all the time, by just nature of it being an intervention it's bound to happen at least __once__ right? When has a firm taken responsibility for this happening?

And this is again, one of the differences MBAs have with nursing. Nurses do absolutely from time to time make the situation worse for patients. But responsibility is given and understood.

If you'd like to discuss we can. It seems like you don't really want to learn anything about what an MBA or a person who has one is like and have some preconceived negative feelings about them, but if you're willing to listen I can tell you.

I'd probably start by saying that not all people with MBAs are in the executive leadership team, CEOs, board members, etc. They're not all "the fat cats in charge." In fact, most aren't. You have people like business and financial analysts, salespeople, and people managers with those degrees. For example, a couple of my classes involved learning about effective people management, the kind of thing that would benefit an engineering manager.

> MBA also can't really be compared to Nursing, or really most other degrees.

How so? It's got classes, tests, math, writing, reading, analyzing. It sure felt like a degree to me when I was writing papers, citing sources, putting formulas in spreadsheets, etc.

> In some capacity MBAs are a self-fulfilling role, where the existence of the degree and the artificial rarity associated with the "big schools" around it, create a necessity for more MBAs in the future.

I would ask how is this different than any other job that asks for the candidate to have a degree or a presigious degree? Do I need an engineering degree to write code? Technically, no. For an MBA there really isn't any scarcity unless you are looking for an extremely prestigious job that wants a prestigious degree program, which is the the exact same thing that engineering firms hiring MIT graduates do. It's way easier to find accreddited online MBA programs than it is to find online accredited engineering programs, especially for engineering programs that require in-person lab work.

> First, we don't know what firms are working with what employers sometimes until decades later due to the various NDAs and secrecy around them.

This is quite literally untrue in the context of public companies that have mandatory disclosures like the 10-K. Also, you know how Hacker News has a bunch of articles about the goings-on of businesses on the front page every day? Yeah, those are articles that can be used as information for analysis. I cited TechCrunch a decent number of times during my time as a student. How do you think business leaders analyze their competition? They don't just sit there and twiddle their thumbs and say "I don't know what my competitor is doing, they won't tell me, it's behind an NDA!" No, they gather information about their industry to benchmark just like you and I do.

And sure, the case studies we used in class were sometimes 10 years old but that didn't make them worthless, and quite often they were much newer than that. Some car companies could still learn a thing or two from the Toyota Production System from the 1980s.

Now, let's talk about your last two paragraphs. You are essentially saying that business leaders never take blame for anything, and that everyone else takes responsibility and blame. But that's really not true either: business leaders are more frequently compensated with performance incentives and company stock compared to engineers, nurses, etc. That means that poor long-term company performance will lower their pay.

Sure, there are cases where executives abuse these compensation schemes, but overall those compensation schemes are there to make sure the executive leadership makes the kind of decisions that grow the company and make its shares more valuable.

> When was the last time a firm took responsibility for destroying a company?

When was the last time an engineer took responsibility for destroying a company? Or a nurse or doctor took responsibility for destroying a medical practice? How many doctors are out there agreeing that they engaged malpractice when they get sued? It's kind of a ridiculous question, isn't it? Who is raising their hand and saying "blame me” as a generality? I don't know a lot of general humans like that who volunteer to be fired, be thrown in jail, or face fines.

Destroying a successful culture can happen slowly over time, but once it happens, there’s no recovery from it. That’s what seems to have happened with Boeing. The 777 was the last fully pre-merger aircraft. The 787 started right after the merger and mostly seems to have escaped the problems. But since then it’s been a shit show.

> All the executives and "accountants and MBAs" behind it have long retired.

They have, but they have left the cultural infestation behind. You'd need a complete purge of Boeing's leadership, as well as a re-integration of Spirit Aerosystems.

If you did that this afternoon, Boeing would cease to operate. There are no candidates ready and able to step in. They have to be trained, they have to gain experience, etc.

I don’t think even that would help. Culture is self-replicating. Everyone at Boeing today was hired based on that culture and socialized into it.

I like this idea of geriatric McDonnel Douglas vice presidents being taken out of cryosleep every few months to make a terrible engineering decision then being put back in their cabinet.

McDonnell Douglas was when Boeing went to shit.

Thank you, McDouglas Man Bad is a tired meme.

The problem is Boeing.

But the behaviour hasn't changed. Aggressive stock buy backs while losing billions and poor culture are still there.

Do we blame a company that ceased to exist 27 years ago for the problems of today?

Protecting Boeing from blame is precisely the opposite of what we should be doing.

The problem is Boeing.

We may (justly) blame the problems of today on the culture change that the merger brought. But that gives us no way forward, and 27 years later, there's no way of un-scrambling the egg. To fix Boeing, we're going to have to start with the Boeing we have now.

> there's no way of un-scrambling the egg.

As usual, there's a kids educational show to drive the concept home (fast forward to 3:30 for the meat of it):

https://www.youtube.com/watch?v=7Wegg7ewXC8

With the associated music video:

https://www.youtube.com/watch?v=mAAnGjjCI5M

There's no reason to complain about stock buy backs. Most profitable public companies should be returning a portion of those profits to shareholders through stock buy backs.

No they should not. Stock buybacks of such recklessness were not even legal until Reagan - for this exact reason. It's not good business when your stock is growing and your company is dying. In fact, it's just an accounting trick which is essentially vulture capitalism - but from the inside.

https://www.cnn.com/2023/04/25/business/bed-bath-beyond-shar...

"The $11.8 billion Bed Bath & Beyond spent on its own stock since 2004 comes to more than twice the $5.2 billion in debt it had on its books in its most recent SEC filing, a debt load that proved crushing for the company. It left the company unable to buy the inventory required to create the sales it needed to reverse losses.

“The company’s stewardship of their capital failed,” said Declan Gargan, retail director and credit analyst who follows Bed Bath & Beyond for S&P Global Ratings."

Nonsense. If the shareholders prefer to take capital out instead of reinvesting in the business there's nothing wrong with that. And if businesses sometimes die as a consequence then so what. Individual businesses have no particular right to exist indefinitely.

The only reason that companies use stock buy backs instead of dividends to return capital to shareholders is double taxation. If Congress eliminated the double taxation then there would be little reason for stock buy backs.

Thank you for defining "broken capitalism".

Snarky complaints are cheap. What are you proposing exactly? Should people donate their capital to businesses and expect nothing in return? Should all businesses continue operating forever?

Again. This is why this used to be illegal. Why should the new shareholders have the right to destroy something others spent decades building? A successful company constantly provides sustainable returns, then a group comes in and says "that's enough, let's milk this cow until it dies. Thanks for doing the hard work! Also, to the shareholders that got screwed as the company stock crashes finally - too bad, play again".

When you own something that means you have the right to do pretty much whatever you want with it. That is the fundamental social contract with private property. If I want to buy a bunch of diamonds and smash them with a hammer then I can do that, regardless of whether you think it's a good idea.

Businesses fail for all sorts of reasons. Sometimes they get too aggressive with the capital structure and blow up. This is a feature, not a bug. While the experience may be painful for some stakeholders in the short term, over the long term this creative destruction unlocks latent value and increases economic growth.

And if old shareholders want to prevent new shareholders from having the ability to destroy the company then that's easily accomplished. Just establish separate share classes with different voting rights. Many companies already do this.

Stock buybacks per se are not bad.

But when they come on top of:

- cutting R&D and QA budgets

- losing money year after year and amassing further debt and liabilities

- buying your own stock at market highs

they are just reckless.

At that point why don't just buy another's company stock instead of your insanely overvalued one. It's nonsense.

There's a reason why Buffett buys back Berkshire, but only if he finds the stock being undervalued. Otherwise it's not the best use of Berkshire money, it's just stupidity.

Please understand that buybacks are just one way to use money a company has and they are not always the best usage of money and they aren't even the best way to return money to shareholders (e.g. buying your own stock at market highs is a terrific way to burn equity as Meta has learned few years ago). It really can be nothing more than money burning.

There is no reliable way to determine whether a stock is overvalued or undervalued, so those are meaningless terms which apply only in hindsight. You are essentially claiming that Boards should be able to time the market, which is absurd and not actionable.

As for R&D and QA budgets, what is the correct amount? There is no reliable evidence that Boeing's recent troubles are caused by any particular spending amount on those line items. From the outside the problems seem to stem from culture and lack of discipline than from spending levels. But the reality is that all of us here are just guessing and don't know what's really going on.

And don't presume to condescendingly tell me what to understand. I understand stock buybacks perfectly well. In many cases they are the most tax efficient way to return capital to investors.

Only a company that is decrepit and unable to figure out how to invest in their own growth and improvement does buybacks. Actually investing is a far better for long term shareholdes. Once company uses buybacks accessibly, you know the management doesn't have it.

That is just completely wrong and displays ignorance of the basics of how capital markets work. Investors want to maximize their risk-adjusted rate of return. Even if a corporation still has some potential growth opportunities, investors may prefer to get their capital back so that they can invest in other more profitable ventures and they will exercise their votes accordingly.

And if you're certain that "management doesn't have it" and can convince enough other investors to provide funding then you can take over the entire company and run it as you see fit. Activist investors like Pershing Square Capital Management do this all the time, and despite some high profile failures on average they are very successful.

And there is fundamentally no major difference between paying dividends versus stock buybacks, just a matter of tax efficiency. It's sad to see people (who likely aren't even shareholders) complaining about buybacks without understanding that.

If investors want to prefer to get capital back, they should sell stock.

> just a matter of tax efficiency

Yes, and that shouldn't be how it works. Its basically tax evasion.

> It's sad to see people (who likely aren't even shareholders) complaining about buybacks without understanding that.

Understanding it isn't the issue, its just different having different values.

> That is just completely wrong and displays ignorance of the basics of how capital markets work. Investors want to maximize their risk-adjusted rate of return. Even if a corporation still has some potential growth opportunities, investors may prefer to get their capital back so that they can invest in other more profitable ventures and they will exercise their votes accordingly.

It's hilarious how you put these two sentences together completely ignoring the possibility of selling you shares on the open market if you "prefer to get your capital back". That's a real display of ignorance.

It's sad to see the level of aggressive ignorance on HN sometimes. Many investors prefer to have the capital returned through stock buybacks and/or dividends than sitting in a corporate treasury where it can potentially be squandered. The fact that investors can also sell their shares is irrelevant.