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Manufacturing, MBAs, And Residencies

By Michael Collins, President, MPC Management Is an MBA degree worth it for the owners, CEOs, and General Managers of manufacturing companies who design and build industrial and technical products?

Masters of Business Administration degrees (MBAs) are beginning to cost as much as a small house and have been under constant criticism for the last 20 years from many critics -- including the college professors who teach the programs. So, is an MBA degree worth it for the owners, CEOs, and General Managers of manufacturing companies who design and build industrial and technical products?

These kinds of manufacturing companies make complicated products that usually require engineering, machining, fabrication and a large investment in plant and capital machinery. The products are usually sold to other businesses (not consumers) and many of these companies are suppliers to large manufacturers in a supply chain.  Managing these kinds of processes requires a fairly good understanding of technical processes, machinery, technical employees, technical buyers, and an understanding of how it all fits together.

Moreover, some of the most prominent names in manufacturing and technology are not MBAs. Michael Dell, Steve Jobs, and Bill Gates are all college dropouts. Jack Welch, the ex-chairman of General Electric, had an advanced degree in science.

However, three leaders in the automotive industry, Rick Wagoner of General Motors, Bob Nardelli of Chrysler, and Alan Mulally of Ford all have MBA degrees. And I am sure that a high percentage of the people who ran Wall Street before the crash had MBA degrees. This is not a condemnation of the MBA programs as much as it is confirmation that many people have been very successful managing manufacturing companies without MBA degrees.

To begin to answer the question of whether or not an MBA is necessary, I will use the MBA program from Harvard as a model of what is taught. Harvard offers a 2 year full-time program. One semester includes courses in operation management, marketing, financial reporting and control, leadership, organizational behavior, and finance. A second semester focuses on business, government, the international economy, the entrepreneurial manager, negotiations, finance II and corporate accountability along with some electives

As you can see from the course titles, there is no mention of manufacturing, engineering, capital equipment investment or cost accounting for manufacturers. The operations management course is the only course that comes close to being about manufacturing, but the course is generally theoretical and usually about big consumer products companies.
I think that the biggest failure of these types of MBA programs is that they always teach consumer marketing and almost never offer a course on industrial marketing, which is the course needed by most manufacturing companies trying to survive in a global economy.

Henry Minztberg is a renowned professor of business and is famous for revealing the weaknesses in the old strategic planning concept. He is also a critic of MBA programs and has written a new book, “Managers Not MBAs.” He makes two compelling arguments against the MBA programs.  First is that the schools don’t teach people how to be managers or leaders. And second, instead of the soft skills required to be a manager, the emphasis is on quantitative analysis.

After working in manufacturing for 20 years in jobs like production control, advertising, product manager, sales manager, and division manager, I decided that I would take time off and pursue an MBA degree. I was 43 years old and had a lot of experience managing people and I thought that an MBA could make me a better manager. The degree didn’t make me a better manager, and except for finance and managerial accounting, was a waste of time.

Here are my specific criticisms of the MBA program I was in:

1. Most of the teachers had never been managers in business for any length of time and most had always been in academia.
2. None of the teachers in the program had ever worked in a manufacturing company.
3. Most of the courses taught quantitative methods for solving problems which assumed that there was always time to sit at a desk to plan and do analysis.
4. There was very little useful knowledge about managing people or the real challenges of being a manager.
5. The marketing course was completely devoted to consumer products and never addressed any of the issues I had faced in doing industrial marketing in the real world.

After my MBA educational experience, I went back into the corporation as a general manager. My experience was that 90 percent of my time was spent managing people and 10 percent could be described as analysis and planning. My general criticism of MBA programs is that they are 90 percent analysis and planning and less then 10 percent about managing people.

I am not saying that MBA programs are all bad or aren’t useful to some people or industries.  An MBA degree from an elite school like Harvard might get you a job in a large corporation or possibly a higher salary. Maybe it is the perfect degree for Wall Street, or for large consumer products companies who want young bright candidates to train for higher jobs. I just don’t think the cost/benefit ratio is very good for people who have to manage manufacturing companies during these times when manufacturing has been declining and we need new solutions and fresh approaches.

In looking back at the MBA program in terms of my own experience, I can offer some positive suggestions on how the programs might be more applicable to manufacturers. When the MBA program was first invented at Dartmouth College in 1900, there was already a graduate school model that I think would have worked much better -- the training of doctors in medicine. Both medicine and business have a lot of art and both are training educated people who have to make serious decisions; sometimes very fast decisions without a lot of data or time for analysis.

Why not create a program for business where there is one year of rigorous book learning and then the student goes into a residency? Instead of going to a hospital the resident would have to select an industry like manufacturing and spend one or two years working with a company owner with the day-to-day decisions. Just as in the medical school the student would have to pay for his residency.

It would be helpful if the business had limited resources and was in some kind of financial trouble.  In fact, the company could be suffering a whole range of problems just like the elderly patient the doctor sees on his first day of residency who has diabetes, high blood pressure, obesity, and is taking 15 different kinds of medicines.

Doctors also learn by doing nurse work so that they know how to install IVs, take blood pressure readings, clean bed pans, etc. The MBA candidate would have to go out on the shop floor to occasionally work in assembly, find engineering errors on drawings, or perhaps learn to weld. Just as new doctor has to call on all kinds of patients, an important part of this residency would also be calling on all kinds of customers and suppliers.

With this kind of education, the MBA candidate would not only learn how things are made, he or she would also learn about people and what it is like to manage them. The program would find out if the candidate could possibly be a manager or leader or if they were simply a well-educated clerk/analyst.

Michael P. Collins is president of MPC Management, a manufacturing consulting company, and the author of the book, “Saving American Manufacturing."