Should I enroll in a low ranking MBA program?

[Physics_UG]

I spend a year in an EE PhD program and decided it wasn't for me. I took a one year leave of absence and I haven't decided if I want to return. I might return but I would like to find a different research group.

I am currently jobless and things are looking bleak in the job market. I am trying to decide if I should go to night school for an MBA in the meantime, which might boost my resume and it will give me something somewhat productive to do. This might help me get into an engineering management role later on. The problem is I have no real work experience in a corporate environment except for a few months as an intern (all of my other experience has been in academia) so I wouldn't be able to get into a highly ranked MBA program. Is it worth it to go to a low ranking school for an MBA? My goal isn't to become an i-banker or anything. I just want to get some basic management knowledge.

I am looking at Lawrence Technological University in Michigan (which is near my home). It is only 36 credits and they said they would transfer 3 of my graduate credits from ASU into the MBA program so I would only need to take 27 credits. Should I do it or should I just get a job, get some engineering experience and then apply to a higher ranked (top 30) program? LTU said I can start in January.

What do you think?

 

[twofish-quant]

II wouldn't be able to get into a highly ranked MBA program. Is it worth it to go to a low ranking school for an MBA?

No. It isn't. You are going to end up far, far better off if you finish your Ph.D. or if you at least get a EE Masters. The book learning that you get from an MBA, you can get from reading books on Amazon, and the culture and connections go with the big names.

I just want to get some basic management knowledge.

The best way of learning management is to manage or be managed.

Should I do it or should I just get a job, get some engineering experience and then apply to a higher ranked (top 30) program?

If you can get a job, you are going to end up much better off.

 

[chiro]

I spend a year in an EE PhD program and decided it wasn't for me. I took a one year leave of absence and I haven't decided if I want to return. I might return but I would like to find a different research group.

I am currently jobless and things are looking bleak in the job market. I am trying to decide if I should go to night school for an MBA in the meantime, which might boost my resume and it will give me something somewhat productive to do. This might help me get into an engineering management role later on. The problem is I have no real work experience in a corporate environment except for a few months as an intern (all of my other experience has been in academia) so I wouldn't be able to get into a highly ranked MBA program. Is it worth it to go to a low ranking school for an MBA? My goal isn't to become an i-banker or anything. I just want to get some basic management knowledge.

I am looking at Lawrence Technological University in Michigan (which is near my home). It is only 36 credits and they said they would transfer 3 of my graduate credits from ASU into the MBA program so I would only need to take 27 credits. Should I do it or should I just get a job, get some engineering experience and then apply to a higher ranked (top 30) program? LTU said I can start in January.

What do you think?

I am going to echo what two fish is saying.

Consider the following two scenarios:

In the first scenario you get hired by a company of reasonable stature. Every six months/one year you get rotated around the various departments gaining experience in many areas as diverse as management, finance, engineering, operations, manufacturing etc.

Through the rotation you get exposure to many organizational facets of the company and through this experience you get to move up to a management role if your performance review warrants such an option.

At this point in time you could then consider doing an MBA to give you a theoretical background behind what you are doing and help you understand a framework of knowledge that will hopefully help you make better decisions.

Alternatively you could get an MBA before you start working however consider what was mentioned about being "prepared" for such a role.

A person that has been exposed to all facets of the business, understands its market, business economics, its customers, the niche it serves, and the myriad of skills one needs to work in all the different areas and understand the "big picture" of what the business is all about is going to have a hell of a better chance in instituting the right changes than someone without this prior exposure.

I'm not trying to discourage you from getting an MBA but I would caution you that its going to be more valuable to not only you but the company you work for to have some experience behind you so that you can not only appreciate this experience but use it as a means to build on the understanding of elements I previously mentioned.

 

[twofish-quant]

The other thing is that MBA through night school by itself isn't a huge resume boost for entry level positions. Most of the target audience for a lot of these programs are people that already have some experience, don't need a big name MBA but do either need some theoretical business skills or else need some random MBA as a "union card" to get in. Also, it's pretty surprising how many MBA classes end up being taught by people with no business experience. If you already have business experience and you just need theory, then this isn't going to hurt, but if you need experience, it might be a bad thing.

Also, if you are reading this forum and do want to work in an investment bank, you probably stand a much higher chance of it getting either a Ph.D. EE or a EE masters degree than you do an MBA. Finance hires tons of EE Ph.D.'s.

 

[mgb_phys]

I would have said no, you don't learn anything in an MBA that isn't better learned on the job, big name MBA programs are mostly about making contacts and in the 90s multinationals sent every middle manager on some sort of MBA program so they are a dime a dozen.

BUT I am seeing a lot more job ads requiring an MBA for any management positions. I think this is just to reduce the number of resumes they receive in the current market But it could become normal, especially in public service - just because it takes a decision (and blame) away from the hiring dept = he had an MBA, therefore was qualified, therefore not HR's fault that he was useless.

 

[twofish-quant]

BUT I am seeing a lot more job ads requiring an MBA for any management positions.

It's a function of the bad economy. A degree let's you get rid of X% of resumes without thinking about it. It becomes much, much more important in a bad economy, and much, much less important in a good economy.

But it could become normal, especially in public service - just because it takes a decision (and blame) away from the hiring dept = he had an MBA, therefore was qualified, therefore not HR's fault that he was useless.

Curiously that sort of thinking really doesn't happen a huge amount in businesses. If you hire someone that is incompetent and it impacts profits, then there is a good chance that everyone is going to end up in the unemployment line. The thing that you get with a degree is some assurance of at least minimal competence.

One curious statistic though is how few CEO's have MBA's. For Fortune 500 companies, I think the number is around 20%.

 

[mgb_phys]

Curiously that sort of thinking really doesn't happen a huge amount in businesses.

It scales with the size of business, in large companies or public sector any real outcome is beyond any employees control so they tend to do what has least risk to them.

One curious statistic though is how few CEO's have MBA's. For Fortune 500 companies, I think the number is around 20%.

If you're a CEO of a fortune500 you already made contacts so don't need the MBA
It's worse at smaller companies, you find the original founder/CEO gets surrounded by layers of MBA middle manager types.
There is also a big USA-Eu difference. In the US (and UK) the head of a large company will generally be a lawyer/finance guy who has worked in other big companies - whereas in Europe they will often be more technical and related to the industry. The CEO of a German car maker is very likely to be an auto engineer - they wouldn't hire the CEO of Pepsi simply because he had fortune500 experience.

 

[twofish-quant]

It scales with the size of business, in large companies or public sector any real outcome is beyond any employees control so they tend to do what has least risk to them.

In well run large companies, people feel that they have some control over the "primary group" of about five or six people, and this puts a lot of peer pressure on people to act in ways that are consistent with the direction of the company. If you have someone totally incompetent on your team, then something very bad is going to happen to you, which is why most high tech companies that I've seen put most of the responsibility for hiring on the work team with HR playing a very, very limited role.

How to motivate people and avoid the problems of bigness is why management is so tricky, and why we have MBA programs, and why MBA programs work a lot better if you have real world experience.

If you're a CEO of a fortune500 you already made contacts so don't need the MBA

MBA is one way of making contacts. Anyway it's hard to be successful in business or academia without a lot of networking. Also a lot of the "book learning" that comes with MBA's is quite useful (i.e. how to read a balance sheet).

It's worse at smaller companies, you find the original founder/CEO gets surrounded by layers of MBA middle manager types.

Studying how companies evolve is also part of the business curriculum. One thing to remember is that an MBA is a curriculum for middle managers. If you want to start your own company, the MBA training is probably the worst place to start since it teaches you the wrong things.

There is also a big USA-Eu difference. In the US (and UK) the head of a large company will generally be a lawyer/finance guy who has worked in other big companies - whereas in Europe they will often be more technical and related to the industry.

Part of it is that the US and Germany large companies have different very financial structures. Large US companies are often basically large holding companies in which the point of the corporate HQ is to raise and manage money from the capital markets. German companies tend to be owned by banks, which means that the financing function tends to be external to the company.

To do well in business you both technical and management skills, and someone starting out should probably get the technical skills first, since there are more opportunities to go from technical to management than the other direction.

 

[mgb_phys]

Large US companies are often basically large holding companies in which the point of the corporate HQ is to raise and manage money from the capital markets. German companies tend to be owned by banks, which means that the financing function tends to be external to the company.

I think that's definitely true, somebody described recently US industry as basically a pension fund that does a little car making on the side. I think GE pretty much gave up the manufacturing and just became a bank.

It does create some problems. The 'all business is the same' attitude means that a new CEO comes in from another industry and all they can do is the same thing they did before, redundancies, reorganizations and a few takeovers - anything else would make the markets nervous. They certainly wouldn't suggest building a new/better car (at least not since Iacocca).

It also creates a bad feeling inside the company. An engineering manager at GM knows that however the good the car they design, the company will be more interested in the money it's making from currency trading. I think this has a bigger effect on the quality of the product than the fact that the boss of VW came up through the engineering dept.

In the UK it's worse, since all big business is government IT contracts or defence - the way to the top is to be an ex-civil servant with 'contacts'

 

[twofish-quant]

I think that's definitely true, somebody described recently US industry as basically a pension fund that does a little car making on the side. I think GE pretty much gave up the manufacturing and just became a bank.

What's happened is that the world has globalized and so multinationals are now spread all over the world. There's no such thing as "US industry" now, it's "US parts of the global economy." There is a connection with academia since I think what the US is likely to turn into over the next few decades is basically a "global college town."

GE is basically a bank holding company owning manufacturing divisions, but it's rather unusual among US industrial companies.

It does create some problems. The 'all business is the same' attitude means that a new CEO comes in from another industry and all they can do is the same thing they did before, redundancies, reorganizations and a few takeovers - anything else would make the markets nervous. They certainly wouldn't suggest building a new/better car (at least not since Iacocca).

Building a decent car is a *lot* harder than it looks, but Ford seems to have gotten it right. One thing about senior executives is that no one has all of the knowledge that they need to run a large industrial company, so what they really need is a team of people with specific skills.

It also creates a bad feeling inside the company. An engineering manager at GM knows that however the good the car they design, the company will be more interested in the money it's making from currency trading.

And how to avoid this sort of thing is part of the art of management. The main problem is that if there is an obvious glass ceiling for technical people, technical people will leave and find other things to do. One reason I like finance and investment banking is that although there is a glass ceiling, it's much, much higher than in other industries, and it's possible for a math geek to get to the top of the food chain while remaining a math geek (see James Simmons and Rentec).

In the UK it's worse, since all big business is government IT contracts or defence - the way to the top is to be an ex-civil servant with 'contacts'

I don't know of any bureaucratic organization in which can make it to the top without contacts. A lot of it involves the number of jobs available. If there aren't many jobs then networking becomes more important. After all, that's what a recommendation letter is for,

One thing that is interesting is to people within academia is how useless recommendation letters are in industry. Except in very rare situations, pretty much no one at the entry or near-entry level cares who issues a recommendation.

 

[Physics_UG]

The book learning that you get from an MBA, you can get from reading books on Amazon

The same can be said of EE coursework or any type of education for that matter.

Thanks to everyone for your help. I will reconsider getting an MBA.

 

[mgb_phys]

The same can be said of EE coursework or any type of education for that matter.

That's what we were discussing.
The opinion on MBAs was always that it wasn't for what you knew it was for who you knew.
And since the advantage of the old-boys network didn't stretch past the top-10 places it wasn't worth spending $50K at Nowhere College for an intro to accountancy.

But if MBAs are becoming a gatekeeper to any management job then you might have to find a better company to work for.

 

[twofish-quant]

The book learning that you get from an MBA, you can get from reading books on Amazon

The same can be said of EE coursework or any type of education for that matter.

Curiously it's not.

In order to understand mathematics, engineering, and physics at any sort of non-trivial level, you need do problems which implies something or someone that is grading and correcting the problems. There is a huge amount of learning that you can do with MBA's that just involves reading books. A lot of MBA work involves reading case studies, and adding them into your mental database, and at least at the very basic levels, there is less "problem solving" than in most EE or physics curricula.

 

[Physics_UG]

That's what we were discussing.
The opinion on MBAs was always that it wasn't for what you knew it was for who you knew.
And since the advantage of the old-boys network didn't stretch past the top-10 places it wasn't worth spending $50K at Nowhere College for an intro to accountancy.

But if MBAs are becoming a gatekeeper to any management job then you might have to find a better company to work for.

The MBA won't cost 50K. It will cost only 17K since I will only need to take 27 of the 36 credits in the MBA program. Does this change anything?

And if an MBA is a gateway to any management job then why not just get an MBA rather than find a "better company"?

 

[Physics_UG]

Curiously it's not.

In order to understand mathematics, engineering, and physics at any sort of non-trivial level, you need do problems which implies something or someone that is grading and correcting the problems. There is a huge amount of learning that you can do with MBA's that just involves reading books. A lot of MBA work involves reading case studies, and adding them into your mental database, and at least at the very basic levels, there is less "problem solving" than in most EE or physics curricula.

To be honest I have never taken a business class so I don't have any idea what a business curriculum might entail.

I guess the bottom-line is whether or not the intrinsic value of the knowledge obtained in a part-time MBA program outweighs the money it costs. Will the knowledge help me in my career as an engineer and as a future manager? It undoubtedly will, but is it worth the tuition? I am not necessarily looking for networking opportunities as I am looking for a decent business education.

I cannot see myself in 5 years quitting my job, spending 2 years in a full time elite program, and spending 80-100K in the process. I think a part-time MBA would be a decent alternative. And since I have no job right now I have time to devote to further education. I am also not thrilled about finishing the PhD to be honest. Taking some non technical business classes might be a breath of fresh air after doing engineering and physics for so long. I would like a job that mixes both the engineering and business aspects. I do not desire a purely technical career path to be honest. I am also not all that interested in research.

I have always been interested in getting some business education for its own sake. I would also like to start a business one day and I would think the education obtained in an MBA program (even a low ranked one) would be beneficial.

 

[AsianSensationK]

The MBA is mostly useless. There are some quantitative type courses like accounting, finance, operations and supply chain that are somewhat helpful. Other than that, it's a degree in giving effective power point presentations.

Do you want to spend 20000+ to get a degree in power point?

 

[twofish-quant]

The MBA is mostly useless. There are some quantitative type courses like accounting, finance, operations and supply chain that are somewhat helpful. Other than that, it's a degree in giving effective power point presentations.

An MBA is much more useful if you have business experience, because a lot of MBA's that are geared toward mid-career professionals have a huge component in which people basically swap stories about what they've seen and what works and what doesn't.

For people without business experience (i.e. people with bachelor's degrees), an MBA basically *is* just a degree in giving effective power point presentations, but that's not totally trivial, but it's something that you can learn in other ways.

 

[twofish-quant]

To be honest I have never taken a business class so I don't have any idea what a business curriculum might entail.

You might take one or two.

I guess the bottom-line is whether or not the intrinsic value of the knowledge obtained in a part-time MBA program outweighs the money it costs.

That's not the real question. The real question is whether or not you'll get more out of the MBA than out of the other options which are currently open to you. There is also the risk factor. You don't know what is going to happen, so part of your effort would be to avoid really bad situations.

I am not necessarily looking for networking opportunities as I am looking for a decent business education.

The two are quite strongly connected. Also you may find you'll learn more about business working at a company or even doing your Ph.D. than you will in business school.

I am also not thrilled about finishing the PhD to be honest. Taking some non technical business classes might be a breath of fresh air after doing engineering and physics for so long.

I'd take a few classes first but I wouldn't count on it. One thing that is different between physics and business is that a rather large fraction of people in physics do it for the intrinsic interest of it. This isn't true for most business and economics majors who don't have a serious amount of intrinsic interest in what they are studying and are there just to learn what they need to make money.

I would like a job that mixes both the engineering and business aspects.

It's really hard to find a job that doesn't have engineering aspects.

I have always been interested in getting some business education for its own sake. I would also like to start a business one day and I would think the education obtained in an MBA program (even a low ranked one) would be beneficial.

It's really not, and if you want to start your own company, you really want to *avoid* getting an MBA. There was a professor at a big name university that started a class on entrepreneurship that basically started out by saying. "Let's get one thing straight. None of you people in this class are entrepreneurs, You are all bureaucrats. If you were really entrepreneurs, you'd be out starting your own companies, and not wasting your time listening to me talk about starting companies."

MBA's are for corporate bureaucrats. Now once a startup starts getting off the ground and expands from 20 people to 5000, it's going to need tons of corporate bureaucrats. Also startups need finding which means that it has to deal with private equity firms and investment banks with tons of corporate bureaucrats that hopefully have some sympathy for startups. So corporate bureaucrats are important for the economic ecosystem.

But corporate bureaucrats just do not start companies. Wrong skills and wrong personality. One thing that's interesting is that it is totally economically irrational for anyone to start their own company. If you run any sort of rational cost-benefit analysis on starting your own company, it just does not make any sense, so entrepreneurs are all a little crazy.

The MBA degree is designed to train middle managers for established companies. It's rather *bad* training for anyone that wants to do a startup. An MBA is basically a degree in giving powerpoint presentations, and if you find yourself a middle manager in a 50,000 person company, you'll need to give a lot of effective powerpoint presentations to get anything done. However, its precisely the *wrong* set of skills if you have a 20 person startup. If in a 50,000 person company, the powerpoint projector goes out then you call someone to fix it. In a 20 person startup, you'll have to fix the damn projector yourself, and in the time it takes to get the fonts right to make a decision, you could have had everyone in the room, made the decision, and made half a dozen sales calls.

I'd say that if your goal is to start your own company, then you are much better off getting the EE Ph.D. One thing that will happen if you run your own company is that you will have some seriously, seriously bad days. There will be days when *everything* goes wrong, you are looking at all of the crap that is being dumped on you, and it looks totally hopeless. In a non-startup you can go home and have the boss worry about this, but in a startup, you are the boss. If you are a corporate bureaucrat, you can always quit, but if you are a founder of a startup, then you have several dozen people looking up to you, waiting for you to make a decision, and you can't really quit even if you want to.

So what you have to get yourself to do is to get out of bed, salvage what you can, and if you go down, at least go down fighting. That's more Ph.D. than MBA.

 

[AsianSensationK]

An MBA is much more useful if you have business experience, because a lot of MBA's that are geared toward mid-career professionals have a huge component in which people basically swap stories about what they've seen and what works and what doesn't.

For people without business experience (i.e. people with bachelor's degrees), an MBA basically *is* just a degree in giving effective power point presentations, but that's not totally trivial, but it's something that you can learn in other ways.

This I believe. I just had to express my opinions after taking some information systems courses in a lower ranking business school. There's not necessarily a lot of knowledge there to help you.

What may be interesting is attending a lower ranking law school part-time. There are some JD programs in southeastern Michigan that cost nothing for smarter students (160+LSAT, 3.5+ GPA). Knowledge of things like contract law, tort law, and property law are very helpful in navigating the small business arena. Of course, you may be cheating yourself and professors if you really don't want to become a lawyer. Plus 3-4 years is a lot of time.

 

[Physics_UG]

I see. Well what about the master of engineering management?

http://www.ltu.edu/engineering/mechanical/_eng_mgmt.asp

 

[twofish-quant]

I see. Well what about the master of engineering management?

http://www.ltu.edu/engineering/mechanical/_eng_mgmt.asp

It's also a degree for corporate bureaucrats. A slightly different type of corporate bureaucrat, but still a corporate bureaucrat. Engineering management degrees tend to be project management degrees that are focused toward mid-career professionals. Personally, I think someone that wants to go into engineering management is much better off getting a straight engineering degree, and then working their way upward later.

I'm interested in what other people think about this, but my sense is that an engineering management degree is probably worse for entry level than an MBA, because companies will hire MBA's at entry level, but I don't know of anyone that will hire an project manager at entry level, since they would prefer that project managers have some engineering background. It's also interesting the fascinating academic politics that causes schools to have two separate management degrees.

Also, a Ph.D. will give you some direct experience in project management.

 

[kote]

I think that's definitely true, somebody described recently US industry as basically a pension fund that does a little car making on the side. I think GE pretty much gave up the manufacturing and just became a bank.

Ignoring the recently drastic downsizing in GE Capital, GE always needed to have 50%+ revenues from manufacturing to keep its cost of capital down. The majority of the company has and will be manufacturing focused. Having said that, the goal of the company is to make money. If finance is where the money is, we'll be involved in finance. Capital is it's own division of the company though. People from Capital aren't running the industrial divisions nor is Capital in any way above the industrial segments in the corporate structure.

FYI we build power plants and their guts, wind turbines, water treatment plants, parts for oil drilling, industrial software, trains, jet engines, MRI machines, appliances, etc.

It does create some problems. The 'all business is the same' attitude means that a new CEO comes in from another industry and all they can do is the same thing they did before, redundancies, reorganizations and a few takeovers - anything else would make the markets nervous. They certainly wouldn't suggest building a new/better car (at least not since Iacocca).

I don't think the attitude is so much "all business is the same." The reason a variety of experience is wanted in management is that the manager will know what works and what doesn't in different situations. Managers in GE will rotate through energy, finance, and media, for example, so that they will be able to adapt to new situations and come up with new solutions no matter what comes up. In this way they are also replaceable.

This is especially relevant in manufacturing. The thinking is that all manufacturing is the same. Someone who has been building capacitors their whole life will never be the plant manager of a capacitor factory. How do they know what works and what doesn't? How do they evaluate their own operations critically? Bad blood will only occur if the manager doesn't know how to handle the situation properly with humility or whatever it takes until he builds credibility locally. But again, that's why it's critical that managers have experience coming into new and unfamiliar roles - so they can handle the transition.

Disclaimer: I'm an operations manager at GE Energy rotating to a new location every 6 months. Obviously I'm not authorized to be giving any company stance on anything though.

As for MBAs, we primarily hire people with business and engineering degrees. GE will support part-time MBA study but typically will not send anyone to a full time MBA program. We do not recruit heavily from MBA programs except for one sales focused rotational program. Our CEO and CIO have Harvard MBAs. One of our vice-chairmen has a state school MBA that he got while working. School brand in general doesn't carry much weight at GE, but personal networks of course are a part of all business.

 

[kote]

I see. Well what about the master of engineering management?

http://www.ltu.edu/engineering/mechanical/_eng_mgmt.asp

It will depend heavily on the placement record (network) of the program. In my mind the degree is a little suspect for someone with no experience. If someone told me they had this degree but no experience, I might think, whether true or not, that they will probably be stuck up and think they should be running the place. If someone has experience, I would completely ignore the degree and not give it a second thought. It is my impression, and I have been told by several engineer friends in aerospace, that a master's in engineering is more desirable for engineering management than even the two year MBA from a resume perspective.

I have also heard reports that the training has eventually been relevant and helpful on the job even if the degree itself isn't a resume boost. Your mileage may vary. I wouldn't generally recommend it.

 

[twofish-quant]

he majority of the company has and will be manufacturing focused. Having said that, the goal of the company is to make money. If finance is where the money is, we'll be involved in finance.

One has to distinguish between external finance and internal finance. Pretty much every industrial company in the United States has to run a pretty sophisticated financial operation in order to finance its operations.

Managers in GE will rotate through energy, finance, and media, for example, so that they will be able to adapt to new situations and come up with new solutions no matter what comes up. In this way they are also replaceable.

This is highly, highly unusual for American companies. The standard MBA theory is that companies should focus on their core competencies. What happened was that the way that GE does things was pretty standard for conglomerates in the 1960's, but GE is really they only company that I can think of off hand that has gotten this business model to work after the 1970's and 1980's.

 

[kote]

One has to distinguish between external finance and internal finance. Pretty much every industrial company in the United States has to run a pretty sophisticated financial operation in order to finance its operations.

Right. When I refer to "Capital" I'm talking about the external finance organization in the company.

This is highly, highly unusual for American companies. The standard MBA theory is that companies should focus on their core competencies. What happened was that the way that GE does things was pretty standard for conglomerates in the 1960's, but GE is really they only company that I can think of off hand that has gotten this business model to work after the 1970's and 1980's.

Management consultants rotate around between companies for a living . Former management consultants are generally sought after in industry as well. I believe it's standard in pretty much all manufacturing for managers to move around frequently, although focusing in one industry is rarely a negative. At GE you typically stay in one industry until you are the CEO of the business unit involved in the industry. Only at that point will you move to something new. Only the CEO of the entire company would realistically have been in industries as diverse as energy finance and media.

It's likely, however, that if the CEO of the appliance division is successful he will be promoted to run Transportation (trains). The Transportation CEO may be promoted to run the jet engine division. GE execs are also sought after by diverse companies, although some have famously failed. Bob Nardelli went from GE Power Systems to CEO of Home Depot to CEO of Chrysler. James McNerney, now CEO of Boeing, has the following experience per Wikipedia:

McNerney joined General Electric in 1982. There, he held top executive positions including president and CEO of GE Aircraft Engines and GE Lighting; president of GE Asia-Pacific; president and CEO of GE Electrical Distribution and Control; executive vice president of GE Capital, one of the world's largest financial service companies; and president of GE Information Services.

GE may be the the only company to formally and internally pull off this sort of thing. Many other companies just go outside of their own organizations to find experienced managers with diverse backgrounds. This may be more prevalent in industrial manufacturing companies - just looking anecdotally at the examples I can think of. You'll also find quite a few McKinsey alumni CEOs though.

 

[twofish-quant]

Management consultants rotate around between companies for a living . Former management consultants are generally sought after in industry as well.

A lot of physics bachelors in prestige schools end up as management consultants. It's a rather odd system in which someone that has never been a line manager ends up being a management consultant, and there is usually a great deal of friction between the engineers and the management consultants.

One reason it's probably better to get an engineering degree if you want to be a manager is that often the engineers won't take you seriously unless you have some engineering/technical background. They often have good reasons for doing this. One problem with engineering is that if you want to go up in the corporate hierarchy, you have to deal more and more with administrative matters. On the other hand, in a lot of high tech companies, the engineers more money (and sometimes a lot more money) than the managers that manage them.

I believe it's standard in pretty much all manufacturing for managers to move around frequently, although focusing in one industry is rarely a negative.

It's pretty standard in any industry in the US for everyone to move around frequently. Even if you *want* to stay in a company for the rest of your life, the odds are that you won't. Also one reason managers move around is that corporations are pyramid structures. Most people reach a point where it's obvious that they aren't going to be promoted, so at that point, people tend to leave.

GE may be the the only company to formally and internally pull off this sort of thing.

Lot's of companies have tried (ITT and Textron). GE is the only American or European company that has been able to pull it off. One problem is the role of financing. GE can get cheap capital by using the profits in one division to finance investment in another, but for that to work it has to have profitable and well-run manufacturing divisions. If it didn't have those divisions, then it's no cheaper for the parts of GE to get money from the capital markets, at which point there wouldn't be any point for the company to exist. At that point, it would be food for corporate raiders.

Now the GE structure is much, much common in other parts of the world where it is difficult to get capital from the capital markets (because there really isn't a capital market). Chinese state-owned holding companies look a lot like GE, as do a lot of family owned businesses in India and Southeast Asia.

Many other companies just go outside of their own organizations to find experienced managers with diverse backgrounds.

One problem is that the managers really don't have such diverse backgrounds. Yes, they may have worked in a different company, but often they went to the same schools, live in the same places, and basically think the same way.

This may be more prevalent in industrial manufacturing companies - just looking anecdotally at the examples I can think of. You'll also find quite a few McKinsey alumni CEOs though.

And McKinsey turns out to hire a lot of physics bachelors from MIT. My problem with the world of management consulting is that pretty much everything is about branding and there is very little about technical competence. That's one reason a low ranking MBA program is a lot worse than a low ranking physics / EE program.

If you had someone at an interview that came from a physics / EE school that no one has ever heard of, you can ask them a dozen technical questions and come up with a measure of a persons competence which is independent of branding, and conversely someone from a brand name school that can't answer some basic questions is going to look bad.

You really can't do this for an MBA. I can't think of an dozen questions that would demonstrate management competence, and if I did then it would be trivial to memorize the correct answers to those dozen questions. So branding matters a lot more in that world then it does in the technical world.

 

[kote]

^ Agreed . The only thing I'll say is that when I recommended an engineering master's over an MBA for management, I was specifically referring to engineering management in an engineering department. Frankly almost none of the people I work with care too much how technically competent the engineers think they are because there is very little interaction. I can't imagine that the sales or finance people spend much more time with the engineers than we do in the supply chain either. Having said that, we require an engineering degree for entry level managers in the supply chain.

 

[kote]

Lot's of companies have tried (ITT and Textron). GE is the only American or European company that has been able to pull it off. One problem is the role of financing. GE can get cheap capital by using the profits in one division to finance investment in another, but for that to work it has to have profitable and well-run manufacturing divisions. If it didn't have those divisions, then it's no cheaper for the parts of GE to get money from the capital markets, at which point there wouldn't be any point for the company to exist. At that point, it would be food for corporate raiders.

We do get a lot of money from capital markets by the way. We have decent leverage... we just get loans cheaply because of the industrial businesses (is that what you just said?). I believe we were the largest TLGP participant and we let Buffet gouge us to help roll over $100bln of commercial paper alone in addition to other debt.

 

[mgb_phys]

I don't think the attitude is so much "all business is the same." The reason a variety of experience is wanted in management is that the manager will know what works and what doesn't in different situations.

I wasn't referring specifically to GE.
Just like Apple hired a soft drinks maker to be CEO, the new boss of GM is from a telco.
When asked if he knew anything about cars his attitude was pretty much that all business is the same - so what's his response to GM's problem likely to be?
Build a better car, concentrate on engineering ?
Or do the same thing that 'works' in all industries - layoffs, mergers, sell any divisions that can be sold and hope for a positive Wall st report for the next quarter.

 

[twofish-quant]

When asked if he knew anything about cars his attitude was pretty much that all business is the same - so what's his response to GM's problem likely to be?

The truth is that for large manufacturing companies, all business *is* pretty much the same. The companies are so huge that the CEO can't micromanage and he's main concern involves finance, since finance is the language of control. If you are a really good auto engineer, you really shouldn't be in the executive suite, you should be on the plant floor designing cars, and the job of the senior executives is to make sure that you get the money you need to do your job.

Build a better car, concentrate on engineering ?

I don't think that's going to help much with GM's current problems. Toyota and Volkswagen are building better cars, but it also got hit pretty hard by the financial crisis. One problem with quality is that if you build better cars, they last longer, and you aren't going to need a new one for a while, so you hit the limits of consumer demand eventually.

Ford is doing pretty well, because it had a much better financial structure.

Or do the same thing that 'works' in all industries - layoffs, mergers, sell any divisions that can be sold and hope for a positive Wall st report for the next quarter.

And sometimes it has to be done.

In the case of auto manufacturers, one problem is that that there just isn't a huge amount of new cars in the developed world. If you build a very high quality car, it's going to last you for years and years, and you aren't going to need another one for a while. The big demand for cars is in China and India, The big management mistake the GM made was not to invest large amounts of money in electric cars.

I think that manufacturers in the developed world are getting hit by the fact that as machines become more efficient, you just need fewer warm bodies to produce goods and more warm bodies to produce services.

Also, Wall Street doesn't shrink all industries. In some industries (high tech software industries) things are growing with venture capital and private equity. Innovation and large corporations really don't mix together well.

 

[kote]

I wasn't referring specifically to GE.
Just like Apple hired a soft drinks maker to be CEO, the new boss of GM is from a telco.
When asked if he knew anything about cars his attitude was pretty much that all business is the same - so what's his response to GM's problem likely to be?
Build a better car, concentrate on engineering ?
Or do the same thing that 'works' in all industries - layoffs, mergers, sell any divisions that can be sold and hope for a positive Wall st report for the next quarter.

GE is just what I know best . There is too much of a short term outlook in business in my opinion, but I don't think that's much of a surprise to any executives. When you're a new CEO taking over, it's rather hard to tell your shareholders and board of directors that results will be lagging and your stock price will tank for the next few years while you wait for R&D bets to pay off - at least if you want to keep your job and earn a bonus.

Concentrating on engineering can certainly be in the best interest of the company though, and I think that's pretty well acknowledged. Toyota's dominance is due in large part to their continuous investment in manufacturing process improvements, which has systematically lowered their costs and improved their quality to the point where other automakers couldn't really compete. Toyota is also probably the most studied and well respected manufacturing company.

 

[edpell]

Are you willing to work in Bagalore, China, Egypt, Belarus? If not, avoid large corporations. Good paying upper management jobs in large corporations typically go to the sons and daughter of the rich not you and me. So get back to work and stop dreaming.

 

[kote]

Are you willing to work in Bagalore, China, Egypt, Belarus? If not, avoid large corporations. Good paying upper management jobs in large corporations typically go to the sons and daughter of the rich not you and me. So get back to work and stop dreaming.

I don't think this is accurate at all in the US. If you do well in school you can be hired by a large corporation, investment bank, consulting firm, etc. Once you're in no one knows or cares who your parents are. You can work your way up, go to business school, whatever. My boss knows whether or not I'm making him successful and earning him a bonus, and that's it.

It's also rare from what I've seen for anyone to be asked to move overseas - although it certainly occurs. You would only do that after staying local for years first though.

 

[twofish-quant]

Are you willing to work in Bagalore, China, Egypt, Belarus? If not, avoid large corporations. Good paying upper management jobs in large corporations typically go to the sons and daughter of the rich not you and me. So get back to work and stop dreaming.

That's far from true. The big thing that's keeping me from a good paying upper management job is that I have a good paying technical job, and I want to stay technical. The people that I've seen that are really, really loaded don't come from family backgrounds that are much different than mine.

It does help a lot to get an upper management job if your parents are loaded, but you aren't pushed out if your parents are middle class. The reason for this is that the rich know that if they don't allow kids of the middle class to make it into the upper class, the middle class will revolt. Now if your parents are poor then it's a very different story, but part of the social history of the United States has been how the upper class has gotten the middle class to side with them rather than with the poor.