Famous MBA Bashes MBAs and the Degree

by John A. Byrne on

Former GM Vice Chairman Bob Lutz doesn't much care for MBAs

Legendary auto executive Robert A. Lutz doesn’t seem to like MBAs very much—even though he happens to have an MBA from the University of California at Berkeley. After getting his MBA in 1962 with a concentration in marketing, Lutz left for Detroit and what would be more than 50 years at Chrysler, Ford, BMW, and General Motors.

In a new book, “Car Guys vs. Bean Counters,” published June 9th, he seems to take unusual pleasure in bashing people who have MBA degrees.

“I’m not a member of that club that views MBAs as largely unproductive,” the former vice chairman of General Motors writes in the book. “I’m the president of that club.” Lutz says he regards the MBA in the same way sailors do their tattoos. “I got it before I knew any better!.”

The book is largely the story of GM from 2001, when then Chief Executive Rick Wagoner, hired Lutz out of semi-retirement to revitalize the slumping company’s lackluster portfolio of cars and trucks. Lutz, for years a highly outspoken executive in Detroit, writes that GM was populated with man hard-working intelligent people who were trapped in a dysfunctional culture that was more interested in numbers and analysis than great product.

Part of the problem, he argues, were MBAs who had no love or passion for cars.

“At Chrysler, we tried to wean ourselves a bit from the MBA habit,” he writes. “It used to be the case, for example, that a Chrysler engineer, in order to get ahead, would have to get his very own almighty MBA. We changed that. We began to encourage our engineers to get additional technical training—either an M.S., a Ph.D., or even a second B.S. in a branch of engineering different from their first bachelor’s. We figured the United States had enough MBAs already.

“Actually, there’s nothing wrong with an MBA, or for that matter, a law degree,” Lutz says. “And I must admit that I myself have an MBA (though I sort of regard it the same way sailors do their tattoos—I got it before I knew any better!). If the United States is going to maintain the marvelous competitive position we’ve won in the world, however, we’re going to have to keep ourselves focused on production and encourage more of our young to opt for careers that make production possible. The MBA degree will cover itself in glory the day its letters stand for ‘Must Build things Again.’

Lutz ultimately believes that the U.S. needs more engineering talent. There are just too few engineers and too many MBAs, he says. “We need more nerds! And we need to stop thinking of our nerds as nerds. We need to think of them instead as an endangered population—like gazelles, maybe…More of our universities need to offer programs in manufacturing and industrial management,” he maintains. “We need to put engineers on a pedestal. And your young people need to be taught that there’s something noble about engaging in value-creating activity. Twenty or thirty years from now, when their grandchildren ask them, ‘what did you do in the great economic war?’ they shouldn’t have to answer, ‘I was a bond trader.’”

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  • Bruce Vann

    I doubt that I’ll have grandchildren old enough to think of a question about the “great economic war.” However, I can see Lutz’s point. You need a passion for whatever business you’re in and that makes you a natural leader in that field and you’re more likely to stick with it and make a career out of it. Unfortunately, I guess he’s seen too many MBA’s who aren’t passionate about the industry that they’re in.

    I also see what he’s saying about needing more nerds. We really do. We need more engineers and doctors but I think that just as badly as we need them we need people to manage many of them and the fields in which they exercise their expertise. I know some very intelligent people who couldn’t care less about and would be horrible at managing the business or people side of things. A lot of nerds have trouble relating to people sometimes. I think I’m just nerdy enough to be able to say that and I know that’s one of the main reasons that I wanted to get my MBA. Maybe all nerds should get MBA’s… :)

  • Bruce Vann

    “I doubt that I’ll have grandchildren old enough to think of a question about the “great economic war.”” Should read “I doubt that I’ll have grandchildren old enough to think of a question about the “great economic war” in just 20 or 30 years.”

  • folky15

    The number of people who make their money by moving other people’s money from one place to another is staggering.

    This country needs more passionate teachers. This country needs more stable families. This country has been basking in the luxury of wealth created by previous generations and is now only looking for the quickest path to a comfortable lifestyle.

  • Christopher Larson

    How does a guy with an MBA from 1962 who presided over the complete collapse of three automotive giants dare to make such a comparison? Focus on production? Assuming he means automotive production, perhaps he should take a modern course in finance, logistics, and accounting. Hey Bob, 1965 is calling and wants your “just-in-time” vision of production back.

  • wwow

    It had to take a full on recession for someone from the American auto industry to take notice? Look at Germany’s BMW AG, Daimler AG and VW Group.

    What do they all have in common?

    Their top dogs all have doctorates in engineering instead of MBAs. The best marketing for technical products would be the product itself, a fine product. People who make decisions to buy cars look at the specs, and they look at reviews, and they decide with a test drive (the feel). No amount of advertisement can convince people that Detroit makes better cars than everyone else (it doesn’t). The product speaks for itself. The revival of the American auto industry rests on the lap of its engineers, not MBAs. MBAs are useful, but in tech areas (cars, planes, weapons), I have my doubts.

  • Mr Ed

    Disclaimer: I’m currently an part-time MBA student at UCLA’s Anderson School of Management and I’m also working at a tech startup in Silicon Valley. Let me start by saying I agree with Bob Lutz in the sense that many businesses are driven by MBAs who are very numbers focused and obsessed with short-term results just to appease some annoying analyst or two on Wall Street or a fat cat shareholder who wants his yearly dividend so that he can buy another yacht or two. And while bashing MBAss seems to be the chic thing to do these days, I think people need to be a little careful in jumping to other side of the spectrum by saying engineers are God’s gift to mankind who will solve all of our problems.

    Yes, I absolutely agree we need more people to enter the math, science, and engineering fields because I believe those people are crucial to revitalize our country’s innovation engine that can create new products, generate breakthrough industries and ultimately, jobs.

    However, one thing that the CEO at my startup said to me which I found very compelling is the assumption that the ‘best product will win’. It’s one thing for an engineer to create a beta product and attract Angel or Series A funding; in fact you can argue that Silicon Valley is littered with too many of these types of people. But the question is do those engineers possess the business savvy and interpersonal skills that will allow them to navigate their companies from the early stages and through the often painful growth stages where companies become viable and sustainable enterprises? If you look at the success rate of startups in general, I bet the data shows that doing that is easier said than done.

    Yes, people like to point out that tech companies such as Facebook, Ebay, Google and the like were all founded by Mark Zuckerberg, Pierre Omidyar, and Sergy Brin and Larry Page–all engineers. But you can make a very strong argument that they would never have achieved their potential if it weren’t for Sheryl Sandberg, Meg Whitman, and, yes, Sheryl Sandberg again…non-engineers who had–gasp!–MBA’s! Zynga? Founded by Mark Pincus (Harvard MBA) and Linkedin’s Jeff Weiner? He has an MBA from Wharton (although the jury is still out whether he can keep Linkedin on the upswing)

    Yes, you’ll find bad apples in both the engineering and MBA ranks. But before society poo-poos MBAs for all the bad they have done, just pause and remember that they’ve also done some pretty decent things too ;-)

  • http://poetsandquants.com/members/jbyrne/ John A. Byrne

    Mr. Ed,

    Thanks much for your thoughtful comments.

  • http://poetsandquants.com/members/rsupreme/ Ruler Supreme

    It seems from the excerpts of Lutz’s comments that he’s saying that a person with knowledge, passion, and love for the given industry is going to be better for the company than someone who just cares about the bottom line. He’s just couching that train of thought in his sweeping condemnation of all MBAs.

    So what about an engineer, doctor, or scientist with an MBA? Wouldn’t that be the best of both worlds?

  • http://poetsandquants.com/members/jbyrne/ John A. Byrne

    Ruler Supreme,

    Truth is, this is little more than what you call it: a sweeping condemnation of all MBAs.”

    A little perspective is probably useful here. When Lutz got his MBA in the 1960s, MBAs were less well-rounded and eclectic than they are today. They largely brought analytical skills to bear. They weren’t trained in leadership, team work, communications, and in most cases, real world decision making. However, that hasn’t been true for quite some time. Lutz is unfairly slamming MBAs as bean counters when that hasn’t been true for many years.

    The bean counters in Detroit did have a major negative impact on the ability of those companies to compete. They unduly focused on cost controls at the expense of product, helped to paralyze decision making by insisting on excessive number crunching, and they did gain enough power in these bureaucracies to suffocate and overwhelm the car people who had a true passion for the product. But the bean counters were not necessarily MBAs–by and large, they were accountants and financial analysts.

  • kp

    Seems to me the problem is not the MBA degree but the organization that blindly hires MBAs and expects them all to save the day. Same with any hire, MBA or not, if the employer makes a bad hire it’s their fault and they let that person go and move on. There are a lot of MBAs that are just bean counters and a lot that are big picture and strategic thinkers. Make the right hire based off of what you can learn in the interview and by following up with references. Don’t blindly hire MBAs and then say they don’t add value when you hire a bean counter but were looking for a strategic/big picture thinker or vice versa.

    The degree is extremely well rounded where you learn the quant that you will need but also the leadership skills and team effectiveness that will make you an effective executive. This doesn’t mean that everyone coming out of the program is the right hire. Everyone has different personalities, work ethic and passion for different industries.

    People love to make sweeping statements for effect and this is no different. I do agree that we need more engineers though. The popularity of the degree has fallen out of the top 10 in the US which doesn’t make a lot of sense when engineers often receive the highest pay out of any undergrad major. If he thinks there is a shortage of engineers, he and others need to pay them more and it will drive more people into those majors.

  • Brani

    the problem with engineering is that it’s very cyclic, and pay flattens out after 10-15 years… in other field you get more $$$ with more experience, but with engineering you are a liability after a certain point…

    -Brani

  • Bruce Vann

    Brani, that’s a pretty good reason engineers should get MBA’s. :)

  • xp

    If the world needs more engineers, pay them more. If MBA’s deserve bashing, pay them less.

    The truth is that the demand for MBA’s produce MBA’s. If we really needed more engineers, the market will adjust and people will follow the money.

  • http://www.seniorpreneur.ca/ Joe Wasylyk

    Oh, to go back to the 60′s………What A Rush! In the 1960′s MBA degrees were the rage! You only needed an MBA degree and you got your foot in any corporate door because your Boss didn’t have one and as a result, you could command respect and more money. Every large or medium sized company in North America at one time was at FULL production and increasing World exports were unchallenged. Now, you have competition coming from every country including Bangladesh, once the poorest Country in the World.

    Do we need less MBA’s today and more engineers? I think that we need more ‘innovators’ that can come from many disciplines including engineers.
    And, don’t forget MBA’s today are specializing in subjects like Entrepreneurship, International Commerce, and other areas of interest that are closer to today’s needs in the marketplace. Finally, there are many MBA’s that have begun careers in the economic growth areas eg. China, India and yes, Bangladesh which will eventually balance the supply and demand for MBA’s.

  • Brani

    Bruce:

    That certainly is a motivation.

    Good luck. Did you decide where you would go?

  • Mel Gibson

    Engineering is hard, and people are lazy.

  • Bruce Vann

    Brani, I’m happily going to Darden. I CAN’T WAIT!!!

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  • Chris Ryan Smith

    I can’t tell you how many MBA’s I’ve met who are only concerned with their functional role (bean counting, analysis, marketing). Why go get an MBA to keep pumping out excel spreadsheets on the daily? To Lutz’s point, a leadership career exists at the intersection of function AND industry. The MBA needs to do a better job at directing MBA’s to become industry leaders, not just functional doers.

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