Is Management Getting Worse?

To some readers, the answer to the headline may seem obvious: Yes, American management is clearly worse than it was, say, thirty or fifty years ago, because short-termism is endemic among public companies, and short-termism leads to all sorts of bad outcomes, like underinvestment and accounting gaming.

But that analysis is simplistic. Short-termism simply shows that management has adopted good for them, bad for pretty much everyone else (save maybe their bankster allies) goals and are pursuing them aggressively.

A comment by John Kay of the Financial Times has the effect of raising much more fundamental questions about the caliber of top managers. Forgive me by starting with a personal anecdote. When I was at McKinsey in the early 1980s, one of my clients was then then Citibank. The partner on the account asked me to get the organization charts of the major investment banks (commercial banks in those days were desperate to become investment banks and not very good at most of the investment banking businesses they could participate in, like M&A and private placements).

I knew Citi’s problem was not its organizational structure but its culture, so I dutifully followed orders, got the org charts, and then wrote a presentation that contrasted how investment banks operated versus commercial banks on five major issues. It became a best seller at Citi.

More than 20 years later, when I saw the partner who was still at McKinsey, he remarked, “You remember that document you wrote on investment banking culture? They are still using some of the slides at Citi.” He thought that was a good thing.

I thought it was a bad thing. It meant Citi had still not learned the lesson of the presentation.

Now to Kay. His article keys off a new book, Good Strategy/Bad Strategy, by Richard Rumelt at the Anderson School at UCLA. What I found disconcerting was this passage, which effectively says that despite the greatly increased presence of MBAs in the corporate world, business practice has not improved and has maybe even regressed:

The message of Prof Rumelt’s book is that strategy is really just careful thinking about business problems. Checklists – Swot (strengths, weaknesses/limitations, opportunities, threats), five forces or seven Ss – are popular because they are a starting point for people who are unaccustomed to structured thought. Good strategy begins with diagnosis. And diagnosis is analysis, not a description of symptoms. You don’t go to your doctor to be told you have a sore throat. You go to be told you have an infection and that an antibiotic will fix it. The doctor tries to discover “what is really going on here?” and the measure of his competence is his ability to do that.

If that also sounds obvious, it isn’t what business people typically do. In the business world – as sometimes in the surgery – the reputation of the CEO or value of the consultant is measured not by the accuracy of the diagnosis but by the confidence with which the prescription is dispensed. Many business gurus resemble George Bernard Shaw’s doctor, Sir Colenso Ridgeon, who treated every ailment with an exhortation to “stimulate the phagocytes”. Their PowerPoint presentations reiterate the patient’s complaint and prescribe their universal template.

Now I am big on stating the obvious, that the MBA is an overrated degree. But one of the things that that degree does provide is some commonsensical frameworks and tools. And naive me, I had assumed that the big reason that the big consulting firms like McKinsey were doing less good old fashioned strategy work was that the prevalence of MBAs meant that big companies were now doing more of the analytical work related to strategy in-house.

But Kay’s observations suggest instead that the effect of more “professionalized” management, perversely, is a greater need to be on the cutting edge of conventional wisdom in order to stand out, which makes them even more susceptible to hucksterism.

An alternate interpretation is that the short-termism has promoted faddishness, since any con that is good enough to enlist top managers can also be sold to the great unwashed investing public, and will pop a stock for a while (or even longer: look at how much the market liked “reengineering” and “outsourcing” and “offshoring”). Or maybe prolonged use of PowerPoint makes people stupid.

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  1. Rehabber

    As an accounting undergrad/MBA grad who worked at a bank, then went to law school, all within the last 12 yrs, I can tell you that B school is more about being “formulaic,” not analytic.

    1. Fifi

      The problem is that most MBAs are neither about business nor administration and certainly not about mastering any actual skill but much more about learning the external attributes of executive roles. Essentially, they are an overrated and overpriced theater class where the students learn to play the role of being someone important.

      By the way, I’d be curious to know how many MBA graduates have ever heard of people like Henri Fayol. I guess, not many.

  2. joanna

    The first commandment of MBA is that you do not need to know the content of anything to manage it. Hence the systemic stupidity and the need for formulas and cutting edge metaphors.

  3. Daniel Pennell

    In my experience most MBAs spend their time complicating the simple.

    The fact of the matter is that most business problems require nothing more than common sense to identify, the cajones to speak truth to power and good leadership to implement.

    1. Ishmael

      Ten years with a major consulting firm working world wide for some of the largest international clients, senior role with two Fortune 500 firms, CFO for four public companies including two NYSE. I now consult on my own. What I have seen is a steady deterioration from developing a strategy to solve problems and move a company forward (this takes time to implement) to lets develop a PR spin to sell to the public and cook the numbers to support the spin.

      A couple of the last few comments as a CFO. First from an IB with major firm — Our goal is to give you enough debt that you will be back at the door knocking and asking assistance to help you out. Then from the head of HR right before the big blow ups in 2000 and SOX being implemented — You must learn to be more flexible (that is flexible with the truth.

      I never learned the second lesson and on the first one, the CEO fired me when I attempted to control his money losing strategy. This is one of the reasons you see a lot of youngster CFO’s. Youngsters do not want to challenge the ruler and chief CEO. Recently, I was doing a presentation for CFO’s (both active and inactive) and I asked how many believed that the CEO really wanted a weak CFO. Two thirds raised their hands. This is why most CFO’s last about 18 months at a job.

  4. jsmith

    I don’t think management is getting any worse than the society in which it exists as concerning the ability of people to think critically about the world around them and themselves.

    For example, even though the were/are serious questions concering the War on Terror and its many aspects – the events of 9/11, the Iraq War, the nature of Al Queda, Bin Laden, Pakistan, etc etc, American citizens were not only told not to ask any questions – i.e., think critically – about any of the given facets of the WOT and where this country was headed but people were actively ridiculed, threatened and called unpatriotic by our elite betters if they dared ask a question.

    Another example, wouldn’t it be refreshing to have a Presidential debate in this county in which the views of libertarians, socialists, communists and neoliberals were all represtented? If candidates had to defend their views against those advocating for the polar opposite?

    Talk about farfetched! One can’t even politely discuss certain ideas within the societal framework that the elite have constructed for us much less have a MSM disseminated conversation on such matters.

    The point I’m trying to make – and which Chris Hedges does a wonderful job of describing in his chapter on education in his book “Empire of Illusion” – is the perceived worsening of management is only a reflection of a general intellectual stagnation and malaise in the United States.

    Just as the Cultural Revolution in China destroyed the intellectual and artistic ouput for a generation of the Chinese, the corporate/neoliberal revolution is doing the same thing in our society.

    Neoliberal orthodoxy couched in such propagandistic terms as “freedom” and “efficiency” has been soldifying itself in the United States and other countries over the last four decades and one must give the propagandists credit in that the real effects of said orthodoxy are only really beginning to be noticed now.

    1. ScottS

      Perhaps people in business aren’t as grounded and are more spoiled growing up than the Greatest Generation.

      I think we also see more behind-the-curtain shenanigans now than we did in the past. News has a way of leaking out onto the internet.

      1. MontanaMaven

        The whole “Greatest Generation” meme is malarky. Foisted on us by conservative from the “Silent Generation”. Wish he would stay silent. Every generation has its victims and heroes. My father lived in desperate circumstances in the Depression while my mother lived in comfort. I’m part of the so-called spoiled generation. But my Father through the GI Bill was an educator without a big paycheck. I worked my way through college and grad school, but the tuition wasn’t so bad. Some of my friends had nice clothes and cars and others had to take buses and wore home made. The meme of the sixties generations being “spoiled” is propaganda. Each generation has spoiled and poor and has dropped the ball in the history of the U.S. because we aren’t allowed to talk about alternatives. In the early 20th century the whole world was seriously discussion alternatives to capitalism aka profit seeking. Anarchism, socialism, communism all were debated. It got to the point where even Teddy Roosevelt had to become a progressive in order to keep those ideas down. But still they rose. So the powers that be, as always, dug up a war to put the keebosh on those ideas.

        As to hucksterism? I see it everywhere. A great movie is “I Love You Phillip Morris” starring Jim Carey and Ewan McGregor as a grifter that manages his way into upper management with fake credentials and a whole lot of confidence.
        We just had a confidence man come through our little town and bounce checks left and right while he tried to purchase a business. I see it in my business, the movie business, all the time. But smart producers and good agents can usually smell a rat who prey on stars or try to hustle producers. The studios, however, can be filled with “suits” who substitute schmoozing for any sense of style and taste.
        What’s to be done? My father always said, “the fish stinks from the head”. As long as you have hucksters at the very top of government and business, you will have a whole lot of grifting. That’s why islands of sanity like Costco’s management at least don’t make you hold your nose as you shop. Until we get a fresh fish, we need to at least ask questions and challenge “conventional wisdom” which is a weasel phrase meant to stop the conversation.

        1. ScottS

          I agree the “greatest generation” thing is generally overblown. But I get the feeling there is a sense of camaraderie for the bulk of the population having fought, as equals, an external enemy.

          And I’d kill for a new GI bill — without all the killing.

    2. Dan B

      Nicely put. I see it as a growing mismatch between the organization and its external environment. An immutable driving force of this widening mismatch is the paradigmatic inability to grasp that -in addition to the issues Hedges and others raise- modern society has reached the physical limits to economic growth. What was a core metaphor of the modernist cosmology -perpetual growth- is now destroying us. How would we behave if we accepted the proposition that growth is over?

    3. Fiver

      But it is Management (private or public sector) that has in fact set the entire agenda for many decades, that has so thoroughly corrupted everything else. Which is why I believe the effort to pretend the elite is the 1%, as opposed to at bare minimum the 10% is so incredibly disingenuous.

      1. Ian Ollmann

        Really? I’d say the elite is < 0.1%. The cutoff for the 1% is low enough to include a lot of very ordinary doctors, lawyers and a few engineers. These guys are paying quite a bit in taxes and doing their share to contribute productively to society. They generally don't wield a lot of power and don't spend a lot of time trying to bend the rules in their favor.

        Its the forces of corruption that do little productive work — living instead as very fat parasites on society — but pay 15% in capital gains and attempt to pervert the 1 man, 1 vote principle to 1 dollar 1 vote, who are the people I think of as ruining this county. This is a smaller and much richer subset.

        1. Fiver

          If the professional and management classes had not fully supported your version of who constitutes the elite, they would not exist. There is of course a pecking order within the elite, as everywhere else, but to suggest large numbers of doctors, lawyers, academics, IT wizards, consultants of all description, senior ranks in the military, various celebrity figures (sports, music, film, media), policy analysts, economists, and many, many more are NOT part of this culture’s elite is just not on. Just 1 example: How could you get something like Big Pharma’s despicable record on drugs that either do not help at all (i.e., no more effective than placebo), or actually do serious harm/cause death, again, and again, and again, and again, if the AMA was not actively complicit?

  5. NotTimothyGeithner

    One of the forces which pushes management to do better is the threat of losing employees and not being able to replace them. Unhappy employees don’t have the option to leave without facing unemployment in a hideous economy, and the primary force driving management efficiency is gone.

    If not being able to replace employees/work output was a threat, management would get real good real fast, or they won’t be management.

    1. digi_owl

      Reminds me of a claim by David Harvey that the push towards home ownership in USA (and perhaps elsewhere), was the thinking that homeowners do not riot for risk of their investment in the local community. Tenants on the other hand could just pack up and move elsewhere, as they did not own their place of living.

  6. biased anecdote

    one of the few things that the students at my top tier law school could agree upon was the complete lack of intellectual firepower among our B-school colleagues even though the MBA-ers supposedly were in the 99th-98th percentile of the GMAT pool.

    1. Ishmael

      Hate to dash your view of the real world, but an old live in girlfriend of mine is Managing Partner of a pretty good size firm and labeled a “Super Lawyer” At the end of a lunch after not seeing her for 20 years she says, “Well, I guess I need to go back to the office and come up with some lies for why my client does not need to honor their agreement.” To be honest I just about fell out of my chair but this is difference between professional accredidations. If I come across a material law being broken I am suppose to resign if the client does not rectify, a lawyer hardly needs to do anything. One time I had the general counsel of a public company yelling at me that they pay my bills and I need to say what they wanted me to say (MIT undergraduate with Stanford Law). Luckily the CFO heard the conversation going on and runs in and tells him that is not how my professional ethical requirements works. Good thing, I was just about getting ready to stand up and say I resign.

      One of the main reasons that America is the way it is, is because the legal profession has no requirement to ensure clients follow the law or resign!

      1. LeonovaBalletRusse

        American CEOs hire lawyers and financial consultants to help them skirt the law for maximum extraction of capital from the firms over which they preside. It’s ALL about the dough. Since the 1980s, maybe earlier, MBAs have been schooled expertly to suck up to the corporations, for which elite universities are shills–in exchange for endowments and name-brand chairs.

        Ours is a sick, corrupt, if not depraved, society, which our “corporate captains” and their lawyers/consultants/shills have created. Yes, a national tragedy.

      2. Pepe

        In theory your attorney-friend was in violation of her ethical obligations:


        Rule 1.16 Declining Or Terminating Representation

        (a) Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:

        (1) the representation will result in violation of the rules of professional conduct or other law;

        (b) Except as stated in paragraph (c), a lawyer may withdraw from representing a client if:

        (1) withdrawal can be accomplished without material adverse effect on the interests of the client;

        (2) the client persists in a course of action involving the lawyer’s services that the lawyer reasonably believes is criminal or fraudulent;

        (3) the client has used the lawyer’s services to perpetrate a crime or fraud;

        (4) the client insists upon taking action that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement;

      3. Justicia

        Eons ago, when I was a young attorney at a major “white shoe” law firm working in bank finance, I encountered the managerial mindset of the deal makers that blew me away.

        Late (very late) one night as I read a sovereign loan agreement for a deal that our client was doing with the Philippine national bank I looked at the guarantee and realized that it was executed by none other than Ferdinand Marcos’ brother-in-law. In a prior incarnation, I had studied corruption in developing countries and realized that this was a set-up.

        Worse yet, the loan had a cross-default clause, meaning that in the event any lender felt “insecure” they could call it’s loan and trigger a domino effect that would cascade to all outstanding loans. Instead of providing more security, it essentially created a hair trigger.

        The next day, when I tried to explain this to the banker doing the deal he shrugged it off saying “that’s how we do the deals.” Damn the torpedoes, full speed ahead. We know how that story ended.

  7. Ralph Crown

    Another perspective is an extension of one of Ishmael’s points. The CEO focuses only on maximizing each quarter’s profits for the almighty shareholders. There is no long-range planning, no thought about deleterious consequences, no integrity, only juggling, smoke, and mirrors. Unfortunately this irresponsible style has spread from business to government as bribery has become institutionalized, so there is not enough regulation to curb the infantilism. Short of some miracle, I don’t see how the US can recover.

    1. Ishmael

      Ralph — you make an excellent point and there is more to it. First 10 years outside of consulting I was focused by upper management (and later as CFO it was my own focus) what we would be doing in 3 to 5 years. We always had initiatives going that if they succeeded they would pay off several years down the line. The funny thing is when you got there it was easy to make your numbers. Then I went to work for a company that was focused on the quarter and it became more and more difficult (like impossible) to hit the numbers and that puts pressure on accounting gimicks (uncovering huge what we can call accounting errors by my predecesor) and etc that I refused to do and there was a parting of the way. Ultimately short term focus leads to your inability to hit your numbers. Funny how that works.

      The same thing is happening to this country. No long term vision has led to running the country year to year which results in huge distortions until one day the train will totally come off the track.

    2. LeonovaBalletRusse

      Ralph Crown, the profits are maximized not for “the almighty shareholders.” The IPO leads to the “Cash Cow”–the stock price–from which the Officer’s bonus is derived, especially vis-a-vis his/her stock options, which may be exercised after a date certain, but which need not be exercised on that date. As stock options pile up, the bonus is calculated every 30 days, creating the “crimenogenic environment” for accounting control fraud, as William K. Black avers.

      As a strategic positioning consultant at the heart of such a corporation “gone public” I heard the lament of the ethical executives that the purpose of the “business” had changed. It no longer served the customer, it served the “bottom line” every 30 days. The road show became the gravy train. The name of the game became: “hype and load.” Pride of performance, product and service gave way to anxiety over feeding the Beast of short-term profits, curiously considered to be the rise in stock price, the “rise in shareholder value.” The former focus on clients and customers yielded to an exclusive focus on “shareholders,” meaning the rise in stock price on which bonuses were based. And the stock price had to rise despite dilution of shares to feed the Beast, “growing the business” in order to “grow bonuses” based on the rise in stock price, turn after turn. The Beast was fed aggressively, the Cash Cow milked continually; the options of executives became more and more valuable, the bonuses higher and higher, until the executives “cashed out” their “magical” rewards, exiting via the Golden Parachute. “Marketing” was the Magician, delivering profits for executives out of dazzling illusion.

      How quaint, in light of the BigBank “magic” of profit from leverage via derivatives compounded infinitely, and the skimming of digital currency in nanoseconds (“Now you see it, now you don’t”) by HFT quant robots. In 2008, we saw the “end of story”–“A tale told by an idiot” with a twist: the Cash Cow was milked to death. We the People replaced her. Will we be milked to death?

      “The Empire of Illusion” indeed. Chris Hedges will show us the actual results of the greed and folly of our Corporate Captains & Co., come June 2012.

  8. ECON

    Excellent article by YS. For a starter in demystifying the MBA and management practice, Henry Mintzberg at McGill University (Montreal) is a prof with international expertise and consulting widely. Fifteen books , latest called Managing, is critical of how managing and leadership have a disconnect. Management without leadership is discouraging and leadership without management is disconnected because you have no understanding of what is going on in the organization. It is management that makes the connection for you to understand whats going on. Too often there is a split distinction between leadership and management conceptually.

  9. Hugh

    Bad management is not a bug but a feature. Or rather what is bad management for society is actually good management from a kleptocratic standpoint.

    Modern professionalization is less about professionalism and more about elite control. It’s not just business. How has professionalization worked out for economics, political science, journalism, and education?

    1. BillyBob

      To be a reporter pre “professionalization” one needed a high school diploma and an urge to write a double-sourced story of import to your readers in clear English to a deadline: verbal carpentry – a craft.

      With professionalization, one needs a Master’s in Journalism from an expensive J-school, parents who can afford to put you up in DC, NYC or LA for a year’s internship, a nice face and blow-dried hair, and an urge to make a lot of money presenting formulaic stories with a personal branding: verbal pap – a fraud.

      1. Soilman

        … except you won’t make a lot of money. Or any money, much. And you’ll be out of a job, probably permanently, within a few years.

        The amusing part is that the internet has done this, not falling standards and ‘professionalisation’ (although they were already doing the job before the web arrived).

        Oh, the irony.

        1. BillyBob

          Just like all of the rest of these phony professions, a very few will make lots of money, but most won’t. NO reporters used to get rich under the old way, unless they wrote books on the side. The internet hasn’t hurt Katie Couric, Leslie “Wolf” Blitzer, or Bill O’Reilly. But the pseudo-professionalization which requires big money has helped make sure that the people who actually get jobs reporting have at best an upper-middle class bias. The internet has nothing to do with this. As you say, this was under way long before the internet threatened journalism.

  10. Binky the Bear

    Everything is going as it was planned. I don’t see a reason for all the complaining. We are simply at a milestone point in the evolution of capitalism as it was planned since Nixon and implemented under Carter and Reagan. Crush labor and elevate wealth to “tighter, righter and whiter” hands; this would make upper management more pliable to the wishes of their betters.

  11. PQS

    Can’t comment on finance – been in construction too long.

    However, I fondly recall when upper management hired a brand new non-construction “management team” for our group when I worked at a Large Multinational.

    “Leader” of so-called management team proceeded to spend the all-hands branch meeting crowing about how well they had done in clawing back IPO money to make the current venture profitable. IPO money, that, of course, every single person in the room had forked over at the urging of previous management in hopes of massive payouts. (Which of course were realized for all the Important People. Those of us with teensy stakes of $10-50K of our own money we invested that then evaporated in six months, well, we were just told that’s how capitalism works!)

    The room was nothing but crickets.

    1. fledermaus

      Ain’t it the truth. My girlfriend works part time 20 at a grocery store. They just had a management change and at the team meetings the store managers brag about how many hours they were able to reduce, to the same people that have had their hours cut.

        1. Mark P.

          It’s all so stupid.

          Ultimately, of course, they get worse results from their people. But also they dumbly assume that being part of the corporate structure is somehow going to personally protect them if someone sufficiently aggrieved ever targets them for personal reprisal. Not so.

        2. ScottS

          I worked at an ancient (for technology) company whose preferred method for motivating engineers to work harder on projects that were years late was to gather each team in a room and simply scream at them for half an hour. This is, of course, for benefit of the employees who were putting in unpaid overtime to make up for the many people who were laid off.

          Yes, the beatings. Must be a technique learned at the MBA factory.

          I worked at the Graduate School of Management while I was in college. The quality of people who get their MBA — full-time students as well as “executive” — gave me the same creepy feeling as with talking to a realtor. Slick, superficial, phoney, and vapid.

          I could have a conversation with the foreign-born PhD candidates without immediately needing to take a shower. Though they had obviously drunk the Chicago-school Kool-Aid.

          1. Fifi

            Screaming works. It makes the workers despondent and passive and less willing to confront management.

            Just think of it as spousal abuse applied to the workplace.

            Now, there are some countries, in Europe for instance, where the notion of managerial abuse is slowly starting to take hold in courts. Eventually, it will lend management in jail.

            Another interesting trend is that willfulness is starting to be assumed in cases of gross corporate neglect. An example is Harald Espenhahn, top executive for ThyssenKrupp in Italy, in the case of an accident that killed 7 workers. He was sentenced to 16 and half years in jail after being found guilty of murder. Not involuntary manslaughter or negligent homicide, but MURDER.


            We’ll see if it holds through appeals but it’s a nice development. Now, if ThyssenKrupp as a corporation could be tried too (and the top executives back in Germany), it would be even better.

          2. Nathanael

            I question how long abuse will work on a societal scale.

            It works for individual abusers abusing spouses, etc., only because they pick their victims.

            When companies start making it a general practice, eventually they will run up against people who don’t react by being cowed.

  12. Skippy

    CEO = Cult of Personality (see Rome, all hail!), all bedded down within MSM – Industry publication tripe.

    Skippy…tall poppy syndrome is a great antidote.

    PS. at least some emperors had the bloke trailing, whispering, “only a man”. Today its all about personal greatness ( libertarian rubbish )…barf.

  13. Lyle

    To boot its the issue of the 30 second share holding so the investor (???) has not interest in the company. I say one fix is a very short term capital gains tax of 50% for holdings less than one week.

    1. gordon

      Or, as suggested by an economist friend (only half in jest); require all shares to be traded through an exchange, and allow the exchange to operate on only two (or was it four?) days a year.

      1. ScottS

        My thought as well. The form of capitalism that makes the most sense to me is venture capitalism. Capitalists (hopefully) know what they’re getting into, provide working capital to startups providing the world something new.

        Functionally like your idea, in that money must be invested or withdrawn on yearly horizons instead of femtoseconds.

        1. Ishmael

          Venture Capitalists are kind of long the following rationale — we do not want to hear bad news. If it happens make it go away or we will find someone who will. This leads to cooked books.

          Look at how many VC deals go tits up once they go public such as Web Van! You could name hundreds. VC’s have a cozy relationship with IB’s who take trash public that if a VC was not involved they would not touch with a ten foot pole. Why would they do that. Because IB’s want to leave one day and become a VC and make tens of millions!

          1. ScottS

            As someone who waited out the dot-com meltdown making minimum wage, I’m well aware of the damage VCs can do.

            But boring banking doesn’t bring new ideas to the market. Local business banks need something any analyst can understand — a nail salon, tire store, etc — to lend to. And they want to lend against capital they can repossess to recover some of their money.

            VCs lend against equity and ostensibly have specialized knowledge so they know when to cut and run and when to go all in on cutting-edge technology.

            The alternative is east-asian style conglomerates that are effectively internal venture capitalists.

            The good news is research into high technology statups finds that many of the truly revolutionary ideas need very little funding. I don’t know if that’s the sign of an immature industry or a democratization of technology.

            Pioneers get the arrows — many revolutionary ideas are commercial failures.

          2. Mansoor H. Khan

            Ishmael said,

            “The good news is research into high technology statups finds that many of the truly revolutionary ideas need very little funding.”

            They key is creativity which comes from a culture that encourages questioning, creativity and use of the right brain (as well as the left brain). We don’t have sufficient consensus on the way forward because of lack of creative solutions (so far). But they will come (inshallah) as need/pain is the mother of creativity.

            As a immigrant from Pakistan (at age 13) that is the main difference I find between the (current) east and the west.

            mansoor h. khan

          3. Nathanael

            “The good news is research into high technology statups finds that many of the truly revolutionary ideas need very little funding”

            Yep. The folks I know with the super solar panel and super battery? Currently total funding needs appear to be under $10 million, and may be as low as $1 million.

        2. Fiver

          The world is drowning in “new” things. It’s the old stand-by’s like constant war, widespread poverty, environmental degradation of a planetary scale, a culture built around greed and fraud, lawless government, and a number of others that need our undivided attention.

    2. LeonovaBalletRusse

      Lyle, quite right. In 1980, “capital gains” meant gains on stocks held “long term” (meaning several years). No problem for Neoconlibs: just change the definition of “long term” to whatever serves the 1%.

      Changing the definition of words to suit your purpose is Standard Operating Procedure for the 1% and their agents in *government*. Pure Orwell: 1984.

  14. ibilln

    “Or maybe prolonged use of PowerPoint makes people stupid.” Ha!

    Or, maybe stupid people are drawn to prolonged PowerPoint use

  15. Ishmael

    Let me say this is not a matter of smarts etc what has happened in the US is a general decline of ethics. Twenty some odd years ago I did work in areas that would be considered third world or something close to it. I would shake my head over some of the business type behavior I would see and think someday they would come to US standards. Well just the opposite, we sunk to third world standards. I was watching a program where Dole was spraying banana plants in Nicaragua with pesticides not allowed in the US for 19 years and it is causing kidney failure there. That is an extreme example, but that is the kind of thing that is becoming acceptable thinking. I knew a Harvard MBA that quit working at a major drug company due to unethical behavior. I also know a MD and Phd in psychiatry who was over a major drug company’s approval process for a major drug and when she did not receive her approval she started receiving death threats. It is a matter of right and wrong and unwilling to accept wrong behavior even when it enriches you. That is the failure that has permeated all parts of society in the US.

    Many of you would say I was part of the 1% and look at me as part of corporate america but I have been asked to resign many times when I do not toe the corporate PR line due to it was not right. This probably has cut my net worth to 10% of what it would be other wise. But hey I can sleep at night and I make my living because people know when they hire me that I attempt to say what I understand the truth to be.

    1. ScottS

      I know you’re fishing for pity, but just so we’re clear — standing up to abuse like that doesn’t make you part of the 1% problem. The 1% problem is social, wealth, and health [in]equality, and the more people at the top of the corporate apex who try to even those things out, the better.

    2. LeonovaBalletRusse

      Ishmael, my “track record” was ruined by my quitting jobs which turned out to be subtly criminal enterprises in some way, in whole or in part. Such establishments seek those with “high credibility” to front for them. They present their best face and good compensation at the interview stage. Within three months, ensconced in or near the heart of the business, you are expected to “go along” with criminal conduct (beyond unethical) that the owners consider acceptable. Those who comply are rewarded, as they become part of the “crimenogenic environment” (Bill Black). Those who don’t comply must resign or be fired–or worse! The longer you remain, the greater your risk of complicity in crime. If you are not a willing participant, you might find yourself “holding the bag” for a complex crime you may not comprehend.

      For the last thirty years, it has been a very dangerous world out there, but many an American has avidly sought riches in “crimenogenic environments,” no matter at what cost. The cost of *success* can be dire: loss of reputation and self-respect (how quaint), entrapment in complicity, imprisonment, “disappearance,” death. As we now see, criminals rule from “the top.”

      Ambitious MBAs long to “make good” within these golden frames.

      1. Nathanael

        I’d probably end up fired — or shot — in one of those environments, because my immediate reaction would be to tape everything, then go to the cops and the newspapers (simultaneously).

        Probably just as well for my health that I’ve avoided them…

  16. Crazy Horse

    If only finance managers were incompetent!

    Example #1: Two renowned architecture firms creating residential designs for the most expensive market in the US, where the typical client is a billionaire. Neither one understands that a triangular truss must have three sides, with the expected result when the snow builds up on the roof.

    Example #2: I’m touring the plant where the carbon fiber molds for the Boeing Dreamliner are being built. I knew immediately upon seeing them (based upon an error I made earlier in my career) that the parts produced from the molds would likely not match up. This was not the only billion dollar error in the Dreamliner program, but this one alone set the program back a year and threatened the survival of the company. A project manager without a single engineering class on his resume could recognize the problem immediately, yet the world’s largest aircraft manufacturer either lacked somebody who had basic manufacturing experience with composite materials (highly unlikely!) or had such ossified channels of communication that their knowledge could not surface. And that is precisely the trouble with a company like the Lazy B. or a Soviet era collective farm.

    Both of these cluster****** could only come about in a situation where there were idiots in charge and underlings afraid to point out that the emperor was stark naked.

    1. aletheia33

      i think a point gets reached where the individual cost the employee faces incurring for him/her self if he/she does the job properly is simply too high to be worth undertaking. (i.e. we’re talking costs way more than 10% of $$pay here.)

      the more people are pushed to the limit of their endurance, the less they really can give from hour to hour and day to day. eventually, they have to start sussing out the ways to fake it.

      deception, not contribution, then becomes one’s arena of mastery and pride. one becomes detached and cynical, having been forced to surrender the last reward of being productive that has remained to one: some minimal sense of satisfaction in the work one has done. finally, one pretends to oneself that one has utterly ceased to care about the quality of one’s work, or about doing any real work at all.

      by necessity, one has learned to devote one’s creativity and mental energy to manipulation of people, to not getting caught as a manipulator (by following the script with a straight face), to finding clever ways to make sure one will not be among the next batch laid off.

      and thus, with everyone pretending not to notice, and no one saying much of anything out loud about what everyone knows is really going on, a whole society falls apart.

      1. Nathanael

        This is how the Soviet system collapsed. I think the US will collapse much more dramatically.

  17. ScottS

    Speaking of management running something into the ground:

    Once a high flier, Kodak has been burning cash as it tries to transform itself from a company dependent on film sales to one built around commercial and consumer printers. The company’s problems intensified in 2011, as Chief Executive Antonio Perez’s strategy of using patent lawsuits and licensing deals to raise cash to fund the turnaround ran dry.

    Well, how could that go wrong? Lawyering up and suing everyone who actually makes stuff isn’t a viable long-term business strategy?

    1. Ian Ollmann

      it seems clear that it was a short term business strategy designed to fund the long term strategy that needed more time. It was probably a move of desperation born of having few other options.

      Kodak’s mistake was clinging to film too long and refusing to disrupt it’s own business by going into DSLRs. This is pretty standard stuff and is how very successful companies find themselves suddenly undermined by cheap crappy products that are nonetheless good enough for most consumers. They don’t see the threat until way too late. The fundamental problem is really that their products are too good and over serve market need at elevated price.

  18. scraping_by

    From observation, the decline in successful business management comes from (1) less capable people going into management (2) education in things that don’t work or actually make things worse or (3) the expected behavior of those who have manager’s jobs. Or, some combination of all the above.

    Most of the young Americans I see these days are the product of long indoctrination in political correctness and emotional intelligence. They show few intellectual skills, a paltry fact base, and no great ethical discrimination. The foreigners are little better, or perhaps they just keep to themselves.

    Business school graduates often really do think management is unrelated to what’s being managed. After a few weeks on the job when they find this isn’t true, they fall back on abstractions and stupid numbers tricks in the company books. Not pretty.

    Most of the fad surfing in middle management is often just time filling for functions that went away with the arrival of the Internet. Upper management is well paid for literally doing nothing. I once knew the CEO of major US corporation who spent every work day passed out drunk. The company made record revenues and profits. He gave himself a million and a half.

    Most executive behavior these days comes down to strip and flip. Quickly with borrowed money. Slowly, with bonuses. Extraction without regard.

    And, again, these are not mutually exclusive.

    1. LeonovaBalletRusse

      Yes, “strip and flip” is the name of the game. This happened also in real estate, especially after Katrina in 2005. In *hot money* Florida, blue prints sold as “condos” in quickflip Ponzi schemes, where profits were extracted from the process (quickflip) rather than from the ostensible product. A blueprint sold as a condo, at the finished condo price; the mortgage on the “condo” was sold by the original banker to a slice&dice “Bank” out of state–at times even before the Act of Sale on the *property* took place, if you can believe it. This led to criminal speculation on “naked” compound derivatives.

      Believe it! This did in fact happen. The crimes are unimaginable, and unimaginably vast. We the People must come to grips with this fact, and do something. But what? The criminals, the psychopathic profiteers, are in charge. Why would they permit the Law to intervene? Obama_serves_them.

      “Oh, my People.” See Abraham Joshua Heschel: “THE PROPHETS.”

      1. Crazy Horse

        Since the primary mode of Vampire Capitalism is “Strip and Flip”, our political system is doing a remarkable job in putting forth presidential candidates that epitomize that skill. Representing the Know Nothing Party we have Mittens, who made his fortune breaking up companies and firing their workers. In the Ass Party corner sits Mr. Oreo, the wholly owned subsidiary of Goldman Squid, the greatest strip and flip artist of all time.

      2. gs_runsthiscountry


        RE: “Believe it! This did in fact happen. The crimes are unimaginable, and unimaginably vast. We the People must come to grips with this fact, and do something. But what? The criminals, the psychopathic profiteers, are in charge. Why would they permit the Law to intervene? Obama_serves_them.”


        Crime-what crime? [sarcasm]

        Why I was just watching Michal Oxley (yes the’ Michal Oxley of Sarbanes-Oxley fame) this morning. He proceeded to tell America that there was no fraud and everything surrounding the financial crisis was legal. (In all fairness, he was answering in regards to Sarbanes Oxley and accounting fraud; however, I find it hard to believe he could be so dense as to not understand the context of the questions he was being asked.)

        For those interested, dial up the clip titled “Protecting whistle blower rights” and watch from the 6:50 min mark on. Still laughing – you can’t make this stuff up or write it for that matter.

        BTW: Mr. Oxley’s new title is priceless “Chairman of the Board of the Ethics Resource Center.”

    2. rotter

      Im not sure the problem with “young Americans” is a supposed “indoctrination in political correctneness and emotinal intelligence”, as much as the inevitable result of the decline in every other aspect of culture. First of all “political correctness” has to actually be defined, before we can accuse it of anything.Its a hobgoblin of talk radio. More importantly, How the hell were working class Americans supposed to absorb the effects of tens of millions jobs and livelihoods being (purposefully) destroyed by offhsoring and de-industrialization, while simultaneously the country was (purposefully) flooded with drugs and cheap (asian made) electronic entertainments, without falling apart? I think in the neoliberal world of the likes of Rubin, the working class falling apart was a desireable outcome. When wuill rush limbaugh be ranting about that for 4 hours straight. As soon as he can find a way to blame it solely on the worthless, meaningless, democratic party. Or maybe not.

  19. Eric L. Prentis

    Please read Roger L. Martin’s new book (he is Dean of the Rotman School of Management at the University of Toronto), “Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL.” Harvard Business Review Press 2011.

    Martin calls “Maximizing Shareholder Value” a foolish policy, resulting in top management’s primary focus on managing Wall Street expectations. Martin says, “A pervasive emphasis on the expectations market has reduced shareholder value, created misplaced and ill-advised incentives, generated inauthenticity in our executives, and introduced parasitic market players. The moral authority of business diminishes with each passing year, as customers, employees, and average citizens grow increasingly appalled by the behavior of business and the seeming greed of its leaders. At the same time, the period between market meltdowns is shrinking, Capital markets—and the whole of the American capitalist system—hang in the balance.” Rather, top management should predominantly focus on the “real market,” that is, satisfying customers’ needs, wants and desires through innovative, effective and efficient products and services.

    Martin wants to relegate “maximizing shareholder value” to its rightful place, as the resulting measure of management effectiveness, rather than the primary measure that top management focuses on and manipulates.

    My research on the Efficient Market Theory (EMT) bolsters Martin’s position. Neoliberal economic philosophy, starting around 1980 and now mainstream in academe and American politics, promotes laissez-faire economic policies of smaller government, reduced regulations and privatization. Neoliberal economists base this philosophy on the belief that neoclassical economic theory is correct. That is, “markets are efficient” (my research shows that markets are NOT efficient). Consequently, the primary focus during the credit crisis is on fixing the financial markets (Wall Street banks) and not the “real economy.”

    Again, just like in Martin’s example, incorrectly, the focus is on the stock market measure, rather than the “real economy” that produces the measure. Cause and effect goes only in one direction: “real market” to “financial market.” Reversing the order just puts the cart before the horse.

    1. rotter

      “Neoliberal economists base this philosophy on the belief that neoclassical economic theory is correct”

      The moral degeneracy, which is inherent in capitalist economies, has become the ruling anti-ethic. The problems we are facing now, have no rational explanation and are mainly caused by a culture that rewards (in the short term) behaviors such as lying, stealing, cheating, etc., I see no possbility of a happy ending, or even of a dignified one. These values of a rotted culture have been passed on to the past two generations and so have become normative. Rotten, Corrupt and incompetent buck passing are normal now, how do you turn that around? I dont think you do, not in any way in which the old order survives.

      1. LeonovaBalletRusse

        rotter, you speak stark truth. See “Debt Slavery: Why It Destroyed Rome, Why It Will Destroy Us Unless It’s Stopped” by Michael Hudson (“CounterPunch” on December 2-4, 2011; “Frankfurter Algemeine Zeitung” on December 5, 2011; “Global Economic Intersection” on January 4, 2012–

        What compounds the problem is drug addiction and the drug trade, especially among the 1%, but largely among the 99%. Cocaine addiction is almost impossible to kick, and there is a very high recidivism rate. Our nation is awash in deeply addictive drugs: heroin, crack, smack, cocaine, alcohol, marijuana, TV, cellphones, instant messaging, Facebook, computer games, pornography. It’s the “Opium Wars” writ larger. The addicted are *done*: ruined, compromised, enslaved, complicit in crimes. They cannot face reality.

        Only the sober can rise to the occasion to deal with the reality before us. But how?

        As for an alternative to Late Stage “Market” Capitalism–a proven humane Capitalism exists. Its model is the benevolent cycle of funding and assisting of “local” visionary leaders with solutions and creative alternatives on the ground, world-wide. At the risk of being shot at sunrise, I reveal what the model is: the Open Society Foundations and their beneficiaries globally. This is the vivid open democracy of Pericles and Karl Popper’s “open society,” the efficacious result of “scientific experiments” in the field of political economy, creating change based on empirical evidence, in test after test. This is a Just Design for replication throughout the world, bringing change for the good of HUMAN society, “in the blink of an eye.”

        Why not set this model to work in a New Capitalist System of, by, and for the American People in C.21? We have nothing to lose but our enslavement to the “NOBILITY and Analogous Traditional Elites in the Allocutions of Pius XII,” our slavemasters in C.21. Who will say: “I am Spartacus?”

      2. Fiver

        Agree. The most self-centred generation ever seen, the Boomers, made ideal fodder for a resurgent business ethic that was the antithesis of the public good across the spectrum, private sector and public sphere. That disastrous fusion of unfortunates has in each subsequent iteration grown explosively in power and crude lust for same.

    2. Aquifer

      Thing 2 – Companies should not be run in the interests of their ownwers

      from “23 Things They Don’t Tell You About Capitalism” by Ha-Joon Chang

      i love this guy – it would be great if somebody could do an interview series with him for NC …

    3. Nathanael

      I am still invested in the stock market, but I now make a point of buying only:
      (1) family-controlled companies — where I like the attitude of the family

      (2) foreign companies — in a country which actually regulates corporations

      and preferably both.

      This tends to avoid the looting, manipulation and cult behavior which characterizes American listed companies.

  20. Anonymouse

    Consider the flip-side of the theory that a person doesn’t need technical expertise in a particular field to be a good manager or leader.

    The majority of management at my work (quasi-government agency) are economists. Most of them have excellent technical skills, but far too many of our senior-level leaders have poor leadership skills or training. They are not trained in practical problem-solving, and collaboration doesn’t seem to be a skill acquired in economics PhD programs. The proverbial house is burning, and we spend inordinate amounts of time debating the validity of the methodology used to rate fire extinguishers.

    When all is said and done, if more is said than done, then what was gained? Or in the words of Pooh – the wise are not always learned, and the learned are not always wise.

    1. Ian Ollmann

      I am not a manager. Watching those around me, who arguably are actually pretty good, they seem to spend a lot of their time greasing the wheels so to speak, keeping the various cogs from coming at odds with one another. While they do generally have technical knowledge, they are no longer practitioners of the art and usually can’t compete with the rank and file. They collate information from below, reconcile with information and directives coming in from elsewhere and generally try to keep their units on task and working towards the greater whole. They also work hard to make sure that the rank and file have what they need to get their job done. Everything is product focussed.

      The company where I work regularly grows at 30-80% per year.

  21. Some Bloke

    In my old days in fixed interest management at an insurance company, they got in an MBA guru to develop an on-line receipting system for the 11 branches, so we’d know immediately the type of insurance deposit, and invest accordingly, rather than a couple of day lag.
    We told him that we sometimes deposited cheques over 10 million (pre EFT), so off he went and ordered an 8 digit system, installed it and on the first two transactions home insurance payments it worked a treat.
    Then our receptionist tried and failed to deposit a cheque for a $2 million 11AM withdrawal.

    Seems the good old MBA whiz had forgotten about decimal points and the 2 digits required for cents….

  22. craazyman

    I doubt they’ve gotten any worse on an absolute basis. But they’re getting paid more and more to be bad, so you could say they are getting worse on a relative basis.

  23. Adrian Haiwei

    I think its the collapse of character more than anything else.

    My CEO manages entirely to try to optimize his own paycheck (regardless the cost to our franchises and employee retention). He definitely fits the “high functioning psychopath” model that was all the rage a few months back – he lies like Kaiser Sose/Verbal Kint.

    He is a proud baby boomer. I think maybe progressives have made a big mistake protecting Medicare – because I’m coming to the hypothesis that the sooner the baby boomers all die, the better.

    1. LeonovaBalletRusse

      Adrian, thank you for this confession. It may be that a critical mass of our Confessions on NC, of our “whistle-blowing”, of our rising to the occasion to be well-informed “traitors against our class/caste” will serve the cause of true, open democracy of We the People, who have had more than ENOUGH!

      BASTA! Let’s roll. It’s now or never. “I am Spartacus.”

      BillBlack/YvesSmith 2012: JUSTICE NOW OR NEVER

    2. Maximilien

      Adrian: As a boomer myself, I gotta admit I’m ashamed of my generation. But by the looks of things we aren’t going to die anytime soon. Forget about “Hope I die ‘fore I get old” or “Better to burn out than to rust”. No, the boomers have got religion: The religion of health and fitness.

      Facing mortality, they suddenly have changed their minds about dying young and now want to live forever. To reach the age of 100: that has become the crowning achievement of life for a boomer. Self-absorbed all their lives, they now pursue the self-absorption of obsessive exercise, diet-watching, and supplement-popping.

      All to extend their lives a few miserable years, not to die but to fade away—from the degenerative disorders of old age—while ignoring the costs imposed on the next generation, of which you are presumably a member.

      You have my sympathies, Adrian. You’re stuck with us for a few more decades.

      1. LeonovaBalletRusse

        “miserable years”–HAH! they screw like rabbits in “assisted living” luxury, with the “poor” waiting on them hand and foot, and they don’t give a damn about anyone but themselves. But they are, they are, they are AFRAID to die.

        I wonder what would happen if ALL of “The Help” in posh palaces of the 1%, in their chalets and fancy restaurants from Vail to St. Moritz, and those toiling miserably in assisted living & nursing home institutions serving the 1% went on strike tomorrow! Now that would be change we could believe in.

        When will Solidarity of the 99% come? “In the blink of an eye,” it has been said.

      2. Fiver

        We Boomers will certainly go down as the most despised Generation in history – we had everything required to create decent societies and a sustainable world and opted to go on a multi-decade, ego-feeding consumption binge, our own and that of 2 generations of our trained progeny, that has made it so very difficult for future generations to avoid a human and ecological catastrophe unless we turn on a dime and pull for all we’re worth – I see no evidence whatever we’re prepared to do that. It is in fact OUR refusal to admit our wealth was largely built on total bullshit that has prevented any serious effort to take on Wall Street, or the Pentagon, or multinationals, or anything else that MUST occur if we are to avoid the whirlwind.

        1. different clue

          Boomers were brought up to do that by their Greatest Generation parents . . . the parents who moved to suburbia in their millions and created the car dependent gasburning lifeway which their boomer children were marinated in from infancy.

          Are we really going to blame the boomers for consumptionizing exactly as they were raised and indoctrinated to do from birth by their elders and betters?

    3. Aquifer


      As a senior boomer, i have more than once apologized to the members of the younger generations for the mess we have made and are leaving for them. I have no desire to live forever – my decision to stop smoking (tch,tch) was not to extend my life but because i got tired of burning holes in my clothes!

    4. different clue

      Well you know . . . the medicare you de-protect for baby boomers will be the medicare that has been de-protected for you if you get old.

      Anyway, are you making the common mistake of confusing “baby boomers” with “yuppies”? Are you applying your condemnation of baby boomers to, lets say, the $34,000 per year bi-weekly wage pharmacy technician? If not, should you perhaps sharpen up and precisionize your use of language?

  24. LTR

    The problem is Powerpoint, Excel and the mentality underlying them. When decisions were taken by 5 page papers with two pages of financials, people argued about the assumptions and the probabilities and risks. When they are taken on the basis of 40 pages of three line 24pt slides and an incomprehensible huge spreadsheet filled with macros, no serious debate or understanding is possible.

    Also, go back after the fact, and you mostly cannot even tell on what basis a decision was made – sometimes its not even clear what the decision was!

    1. LeonovaBalletRusse

      LTR, excellent insight. Indeed, “the medium is the message” — Duh in, Duh out.

  25. vlade

    I have to say that I’m wary of the analytic – the problem with it is that model is a model (and any analysis is based on a model – seven forces is a particular model – simplification – of how world works, so is SWOT etc.).

    Majority of people don’t understand models, and come to believe world=model. That leads to a few things. Firstly, most models in marginal situations (which is a lot of them, with the ambiguity of the world) can be bent to produce “required” results/recommendations (in fact, my experience is that the solution comes first, and then something is produced to justify it. Which, incidentally doesn’t mean that the solution needs to be wrong). Secondly, consequences are not well understood (which admitedly is very hard for complex systems anyways). Thirdly, and for me most importantly, because models simplify, we lose the view and respect for the complexity – and then wonder how we could overlook the in the first place!

    Re MBA – I believe that MBA should be killed off and fully replaced by EMBA. People doing EMBA in general have enough work and world experience to be able to tell bullshit and have less problem to do so in my experience. Moreover general goals of people who do EMBA and MBA are considerably different.

    1. Jim A

      ISTR that there was a Douglas Adams novel where the main character had made his fortune after he realized that what people wanted was not “decision-making software”, but rather “decision-justifying software.”

    2. Aquifer

      In short – The Fallacy of Misplaced Concreteness described by Whitehead some time ago. One of my favorites ….

    3. different clue

      Money is a model. It is a model for wealth. Perhaps money is often even less than a model. Then it is just a mere symbol for wealth.

      People should think about the difference between money and wealth. Perhaps if we respelled money as “munny”, it would lose its magical power over the mind of man.

    1. LeonovaBalletRusse

      Brick, if you’re a “crisis” or “transition” consultant who sees that the Boss is the problem (since “the fish stinks from the head”), prepare to find the problem elsewhere or prepare to be fired. The Corporation reflects the despotic politics of “ultraconservative authoritarians” who constitute the masses of the Republican Party. George Lakoff’s “MORAL POLITICS” can be applied to Corporations. They are Totalitarian Bureaucracies, where the ideal “paterfamilias” rules as a despot; the ideal “Wife/Mom” (Secretary/Exec. Asst.) serves and “comforts” him, and keeps order in the immediate environment; and the “children” are impotent subjects set to tasks, in hopeless revolt against their neglect and abuse.

  26. gs_runsthiscountry

    This article is dead on. The comments so far are not surprising at all. I’m guessing many MBAs are not feeling the love?

    This passage had me chuckling:

    “If that also sounds obvious, it isn’t what business people typically do. In the business world – as sometimes in the surgery – the reputation of the CEO or value of the consultant is measured not by the accuracy of the diagnosis but by the confidence with which the prescription is dispensed. Many business gurus resemble George Bernard Shaw’s doctor, Sir Colenso Ridgeon, who treated every ailment with an exhortation to “stimulate the phagocytes”. Their PowerPoint presentations reiterate the patient’s complaint and prescribe their universal template.”


    The bottom line, when you get too many MBAs in a meeting room the subject quickly turns from problem solving and strategy – to pontificating on the best ways to herd unicorn. My experience and 20 years of internal corporate meetings felt much like entering an alternate reality or a bad sci-fi movie.

    1. LeonovaBalletRusse

      gs_run — and was there any alternative if you wanted to get paid for work? No. The FIX was in for Neoconlib “stupid” rule by the Corporate despots and their underlings, eager to suck up for “prestige and top dollar.” The MBA Totalitarian Top-Down FIX rewarded the obedient, who fell in with fast *drugs and hot tub* culture; and if you aspired to rise in The Firm, you had to share the Executive addiction to cocaine. This was “business” in America, and if you didn’t toe this line, you were excluded for participation in “riches and glory.”

      Now we have seen the apotheosis of these practices, inculcated into the Grifter Elite by Elite Universities avid for magnificent endowments: the ROI.

  27. Diogenes

    PowerPoint may not make people stupid, but it certainly facilitates a more superficial approach to comprehending complex problems. Given the complexity inherent in the real world, “PowerPoint thinking” can often lead to inferior choices and bad decisions.

    I spent over two decades in and out of various investment banks where I did, for the most part, highly complex, analytical work structuring debt securities. I will never forget the final managerial review I received back in early 2005: I was strongly reprimanded for my inability to concisely summarize and present to management difficult problems and complex choices in memos of two paragraphs or less.

    My manager took me aside and attempted to get me to see that no one was willing to read anything longer than this and that the only way to be heard was to simply keep my comments very brief and to the point. Unstated, of course, was that when you prohibit complex feedback from those deep in the technical specifics of highly complex financial transactions, you also facilitate a corporate policy of denial regarding the risks such products may engender.

    From my own (biased) perspective, this attitude was a result of laziness, a desire (emenating from the highest levels of management) to discourage negative feedback, and the wish of management to foster their own ego-based illusions that they really understood what was happening. Some of this definitely was based upon the desire to maximize the immediate year end bonus, but a great deal was based on a simple self serving arrogance of those in charge. It was not lost on me that at the time I left investment banking that the culture of sales (not operations or credit analysis or financial product structuring) predominated among the managers of investment banks.

    1. LeonovaBalletRusse

      Diogenes – “two paragraphs or less” because they don’t know how to read, and they cannot sustain the weight of competent analysis. The Daisy Chain of Executive and Board positions at top Corporations, ensures the lifetime sinecure of DNA sets too inbred to allow a scintilla of “outsider” creative intelligence to challenge their comfort levels and criminal schemes: Insider Paradise for the “Chosen” from generation to generation.

      The top “Firms” are rackets, their Top Dogs sworn to *omerta*. Employess are meant to lick their boots, and come back for more.

    2. aletheia33

      this reminds me of the excellent movie margin call, where the higher-ups keep saying to the lower-downs, who know how to read the numbers, “just explain it to me, ok, i don’t know to work that thing (the computer),” with a mixture of embarrassment and desperate bravado (as they are beginning to realize that the entire edifice–that supports them in the style to which they have become accustomed and about whose actual construction they know precious little–is about to come tumbling down around them).

      every person who is forced to choose in the movie chooses to sell what integrity they have left in exchange for continued support in the style to which they have become accustomed.

      these seem to be people so afraid of the grit of ordinary life, so afraid of falling off the precipice of their elevation, their supposed exaltation above the average run of human existence, that they face that prospect as a fate worse than death. these are hollowed out people who are not living full human lives but just marking time inside this one room that contains only a giant $$$ gauge that they sit and watch compulsively. the world outside this insane space does not really exist for them. they are captives in a strange kind of mind game, hypnosis, delusion.

      the sad thing is that they really are still people, and they know on some level that they are trapped in that bizarre arid room, but they can’t see the exit. was it ever better said, “it is easier for a camel to pass through the eye of a needle than for a person with a lot of money to enter the kingdom of heaven.”

      i don’t think the speaker meant by that any place other than this beautiful garden we have inherited and can walk through and will feed us every day for free, or this beautiful physical body that will do that walking joyously on a few bites of that food freely provided. and the speaker probably didn’t mean “rich” literally, either, but prosperity as a metaphor for whatever we think we “have,” including our bodies, minds, expertise, loved ones, etc.

      so i have to include me in it, as i too sit in that empty room believing i am hooked up to the gauge, the clock, watching, watching to see if it’s still working (for me), praying the drip in the feed in my arm won’t stop, i think i’d die if i tore it off, i’m oblivious to the slit low down in the wall behind me through which i could make my escape, if i only knew it’s my heart’s dearest desire.

  28. proximity1


    “But Kay’s observations suggest instead that the effect of more “professionalized” management, perversely, is a greater need to be on the cutting edge of conventional wisdom in order to stand out, which makes them even more susceptible to hucksterism.”

    This is a “scoop”?

    The more I hear or read by or about John Kay, the more impressed I am that he’s the junk version of junk-thought.

    His comment above is true, but it’s also trite, obvious, and was yesterday’s “news” over twenty years ago.

    Here’s a reading tip: Skip everything by John Kay.

    The last interesting things I read on managers and management came from David Riesman’s The Lonely Crowd, (1950) and from Power, Politics and People: the Collected Essays of C. Wright Mills, (1963), edited by Irving Louis Horowitz, and, finally, less recently than these two, but very intersting, What They Teach You at Harvard Business School,(also published under the title Ahead of the curve : two years at Harvard Business School ) by Philip DELVES BROUGHTON

    When Kay is correct, he’s too often tiresome and old-hat. When he’s not that, he’s generally simply wrong.

  29. proximity1


    So that I don’t end on a sour-puss note, wanna know who’s comments and thoughts I regard as consistently cogent, interesting?

    Your site’s reader and commenter, “Hugh”. I look for and read everything in a thread which follows “Hugh says:…” and I am so far never disappointed.

    For my money, the Financial Times would do better to publish NC’s own “Hugh”.

  30. Cynthia

    Thanks in part to Harvard, most of our top business leaders lack any kind of brilliance to dazzle us with, but their ability to baffle us with all kinds of bullshit is brilliant beyond belief! Here’s George Carlin reminding us that the US leads the world when it comes to cooking up and dishing out bullshit:

    And after hearing that Harvard’s School of Business has a master’s program without having a bachelor’s program, I have absolutely no doubt in my mind that business degrees are nothing but bullshit!

    Any area of study that doesn’t first require that you have a bachelor’s in it before getting a master’s in it smells of bullshit to me. Law and medicine are the only other areas of study that I can think of that don’t offer a bachelor’s degree. But then, you must have a degree in law or medicine and pass a state board exam to practice law or medicine — something which you don’t have to do to practice business.

    But this is probably a good thing because there are far too many American corporations that have been looted and bankrupted by CEOs with MBAs. Harvard must teach them how to do this. If Harvard isn’t teaching them the art as well as the science of bullshitting, they are teaching them how to loot and bankrupt publicly-held companies for fun and profit.

    1. Fiver

      Back in the late ‘070’s, I was told by a Harvard Prof on a teaching swap with the school I was attending that I should be going to “the best school in the world”. I politely declined with “That institution has done more harm to more people than just about anything else I can think of.” We never spoke again.

  31. ep3

    yeah Yves, during my time at a factory (7 years), I hired in when 6 sigma, and other such stuff was really popular (1996). As soon as the 2000 recession hit, which didn’t necessarily affect our business too much, all that stuff disappeared. We also had gone thru several mergers and then finally taken over by blackstone cuz no one wanted to touch automotive. Like I said, the bigger the company got with mergers, the more that stuff disappeared and was considered not a wise use of company resources (basically cutting as much money from expenses as possible).
    In regards to management, I think back to the big 3. As you say there is the importance of short-termism, back in the 1970s they had already shifted to that mindset. That was when the junk started showing up and the japanese were just starting as well as the oil crisis. Yet the company found it more profitable then to force upon the public what the company wanted them to buy. I think companies are so greedy, they will forgo investment and forward thinking just to keep current cash flow going up up up. And the 1970s was when the big 3 needed to make those changes for the future. Instead they put it off while continuing to lose market share. So that by the time they started changing (sort of), it caused them to go bankrupt.
    And finally, for all their retirees, again the company never thought to the future to put that money away. To cry “the liability is overwhelming”, my dad and others gave them 30 years to plan and contribute to have enough to pay his retirement. I ask, where were they in the 1990s when the stock market was going gangbusters?

    1. MontanaMaven

      In Germany, the workers sit on the boards of companies. They have a say. In the 1940s, Reuther pushed for workers on boards, but it didn’t happen here. When Bosch wanted to open more factories outside of Germany, the workers said, “Fine as long as you don’t cut one job in Germany.” They did that. Guess what? Bosch is selling more stuff than ever. Their auto workers said, “Small cars are the way to go.” They listened. (Read Tom Geoghagan’s brilliant book “Were You Born on the Wrong Continent”.

      In the movie business, the apprentice system is still at work. And it works. Movies are one of our last things made in America. You learn to be a director of photography from a director of photography. Sure, lately you can go to film school., but cameramen still learn by doing. So too grips (set building) and gaffers (electricians). I often say that if they had hired the 3 line producers who were shooting films before Katrina hit to come in after the storm, New Orleans would have been up and running in a year. Get ‘er done! We’ve got two more hours of daylight!

      Occupy Wall Street has shown that you can get educated by coming together and having teach ins. You can read and discuss ideas with others like in the Greek and Roman forums. Didn’t Romans build aqueducts and amazing bridges? Didn’t Pompeii have heated floors and sewer systems? Basically OWS showed us that You can do direct action rather than sitting around practicing “cheap intellectualism”.
      Note: Susan Jacoby’s book “The Age of American Unreason” explores the middling mind; the middlebrow ideas that took over at universities.

      1. Nathanael

        “Note: Susan Jacoby’s book “The Age of American Unreason” explores the middling mind; the middlebrow ideas that took over at universities.”

        It’s not even all universities. Unfortunately, however, the most prestigious are often the worst. But don’t get me started on university administration, which has gotten taken over by the same psychopathic MBAs….

  32. Anonymous Jones

    As has been said by many people smarter than I, the great glow of nostalgia and loss over the bygone halcyon eras is mostly a deception born of the maturation process.

    When one is young, it is more difficult to see the incompetence, stupidity, deception and greed all around, but as one matures and gets more experience, the world reveals itself to be more nuanced and more detestable than one hoped when one was young.

    The ‘good old days’ are a function of our perception and our path from inexperience to experience, not a real thing.

    Yes, certain institutions deteriorate and certain institutions improve over years or decades or centuries, but the belief of some that it’s “all deterioration, all the time” is not sensible.

    I’m sure Harry Chandler had no lawyers at all who were willing to do duplicitous things at his bidding. Things have changed a lot since then, all for the worse, haven’t they? Oh boy!

    Analysis is hard. Management is difficult. If you only consider the best of the best ‘good’, then there’s going to be a lot of bad.

    It’s like the NBA fan who says Luol Deng sucks because he’s not as good as LeBron James. If only I were to ‘suck’ so much that I could play basketball for a living and a ten figure contract!

  33. anotherview

    as a baby boomer mba currently working at a graduate school of business, there is no question but that the current mba curriculum is anachronistic. It was relevant when “america ruled the world” – post WWII – early 21st C. no longer… needs to be reframed in the economic world that is.. global, more distributed, diverse values and expectations. And most importantly offered through the communication channels that are clearly in our present and foreseeable future.

  34. Aquifer

    Needless to say i was tickled to see the use of medical analogies …

    But I have also for some time railed against the market model of medicine – has badly screwed up the profession.

    In the small hospital where i worked, as competition between hospitals (grrrr) for dwindling healthcare dollars and the requirement for more expensive toys, er tools, increased, i would scurry down the hall when i saw the periodic invasion of the black suits (the women wore black stockings even) with their wheeled briefcases coming down the halls – mega expensive “consultants” hired to help us “stay in business”. Reminded me of a funeral procession, which it usually wound up being for some of my co-workers. All kinds of recommendations from folks who didn’t know an ass from a hemorrhoid telling us how to run an “efficient” operation. Invariably their suggestions were, in fact, asinine –

    Meanwhile, for the folks who worked there, who had a lot of good ideas, there was a “suggestion box” in the cafeteria – the first suggestion i put in was that they supply a pencil to write the suggestions with …

    i knew it was getting worse when, half jokingly, I said “hey, I’ll apply for the job!” as Medical Director when one of them (there were several while I was there) left and was told they were looking for someone with an MBA.

    I have concluded that for the sake of healthcare, no MBA should be allowed within 5 miles of a hospital (unless of course one could make them strip, put on a gown and bend over when they walk in the door ..)

    My small hospital, built by money raised from the community in the late 50’s has since been bought out by the big university hospital and, though i am no longer there, from what i gather, ain’t no community any more …

    1. proximity1


      Anonymous Jones says:

      January 5, 2012 at 1:13 pm

      As has been said by many people smarter than I, the great glow of nostalgia and loss over the bygone halcyon eras is mostly a deception born of the maturation process.

      When one is young, it is more difficult to see the incompetence, stupidity, deception and greed all around, but as one matures and gets more experience, the world reveals itself to be more nuanced and more detestable than one hoped when one was young.

      The ‘good old days’ are a function of our perception and our path from inexperience to experience, not a real thing.

      It can nonetheless very well be the case that ‘there never was a “golden age”‘ and that ‘things are getting worse and worse with every generation’– depending on how one chooses to evaluate what constitutes “better” and “worse”.

      Daniel Kahnemann’s recent book (which summarizes the main points of his career in studying people’s thought-habits has very interesting things to teach us. Among them, we are all endowed with a minds which operate in an incredibly complex synthesizing process but which is characterized by what he metaphorically calls a “system 1” approach–this is roughly speaking, our most basic intuitive impulses at work and may be associated with the mygdala’s evolutionary more primative reasonings (think of “fight-or-flight” impulses or the imperative to distinguish new and dangerous circumstances or opportunities to mate) , not the higher-order rationalizations which may be associated with other areas of the brain which he refers to as “system 2” and its work. System 1, intuitive, produces very quick hunches and in certain circumstances they are quite good. At the same time, whether good or not so good, “system 1” is constant, has no “off” position; we cannot disable or eliminate its profound influences over us, we can only try and learn to minimize these by recognizing when “system 1” influences are most likely to be determinative. (Bear in mind that this ia a metaphor only and that in reality, the minds operations are constantly a seamless interplay of neural networked exchanges).

      The up-shot here is that system 1 has little or no susceptibility to the ameliortation of “education”. On the other hand, “system 2”, which is the repository and operator of educatation’s work, is relatively “lazy” and often accepts uncritically prompts and hunches and stock rationals which come from one sort of experiential bias or another.

  35. Aquifer

    Just wanted to say this has been a great post with comments to match and i have enjoyed it enormously!

  36. Skippy

    Ahhh now think of chemical plants, nuke power, all the massive engines of stored potential and pollution, out there.

    Skippy… a mob of MBA’s of various pay grades are here to help, not to worry!

  37. Lafayette


    Yes, American management is clearly worse than it was, say, thirty or fifty years ago, because short-termism is endemic among public companies, and short-termism leads to all sorts of bad outcomes, like underinvestment and accounting gaming.

    This is a common complaint, the short-term management outlook of companies. It has always existed, but sharpened greatly since the hi-tech boom were colossal fortunes could be gained. Because it is all about money.

    Behind this Management Myopia that cannot see beyond the fiscal year balance sheet and the stock-options or bonuses is the quest for fortunes. Thus, its remedy is higher taxation.

    The effective rate on marginal income is only about 25% above half a megabuck of annual revenue (when all deductions are taken). So why shouldn’t managements “want it all NOW”?

    What if taxation was higher, let’s say back where they were before Reckless Ronnie took office and brought them tumbling down from their level above 70% to the present effective rate of 25% (after deductions)?

    It would also help if high-earners earn their bonuses only after a significant period of performance, but let’s not expect miracles from the present mentality of corporate BoD’s. They are all stroking one another’s backs, reaching for the Golden Ring on the Merry-Go-Round – before they get thrown off by the centripetal force of life’s vicissitudes.

    Higher taxation would nonetheless, I submit, attract management attention away from the short-term towards thinking further into the future. They would be keeping less money annually and they would be obliged to stick around to make more of it.

    So they would be more keen to assure future revenues, which entails wise investment and sound management strategy.

  38. Fiver

    The comments seem to fall broadly into 2 camps, both entirely valid: Incompetence and Greed.

    Greed’s effects (both feeding into elite management’s failure and its transmission by management both internally and in the marketplace/society) have clearly been appalling and will be exceedingly difficult to reverse.

    But on the incompetence side, apart from ep3, whose reference is more in passing, nobody has brought up the question of size, let alone size in a globalized context. How many senior managements of today’s 2012 S & P Goliaths could succeed in the US tax/subsidy/monetary policy/accounting and corporate law environment of, say, 1970, that is, generating real, reasonable profits in a world that EVEN THEN was loaded very heavily in favour of the corporate elite, but was at least somewhat more balanced? I’d say virtually none, because aside from everything else, they are far, far too big to be managed well over time absent these huge props. Ditto modern Government. Consider the Pentagon. When Rumsfeld attempted to clean up the books, they had to “force” account reconciliations of $2 trillion – they actually had, and still have, no f-ing clue what went on/goes on with huge portions of those stupendous sums. The whole “economies of scale” argument inverts beyond optimal size “x” if corporations are required to be ethical, non-monopolistic partners in capitalist society, yet that very argument based on scale was one of the most effective weapons in the pursuit of globalization and smashing regulation to bits. Globalization represents the supreme FAILURE of Management as its function was once conceived, not its success.

    1. Nathanael

      To clarify a point, most government agencies have very clear books and are actually small enough to manage. The Social Security Administration handles a huge amount of money for a huge number of people but is lean and mean on staff.

      The Pentagon is quite the opposite, of course; completely unmanagable. It should be dissolved. The US used to organize armies anew for each war, until the post-WWII period, when we never demobilized. Result: we still have a military organized to fight the Cold War, or really, the Korean War.

      Back when the Army was dissolved after each war, we always had a new Army fit for purpose when a new war started, which may have been one reason the US was so effective at winning wars for a while.

  39. Tony Frank

    While managements are much more incompetent, the thief executives are robbing from shareholders and employees to the largest degree in history.

  40. Nathanael

    “despite the greatly increased presence of MBAs in the corporate world, business practice has not improved and has maybe even regressed”

    “Despite” is the wrong word. You want “Because of”.

    The original MBA was a decent idea: it was a degree which you were only supposed to get *after* you were already running a division of a company. You would have your engineering (or whatever) degree, rise through the ranks, and *then* get an MBA as a sort of “top up” on knowledge.

    MBA programs stopped being like that almost immediately. Now they are factories for generating short-term thinkers and ideological economic cultists, as well as self-promoting psychopaths.

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