America can't make things because managers all learn finance instead of production

By at 9:50 pm Sunday, Dec 20

In a provocative New Republic article, Noam Scheiber proposes that the collapse of American manufacturing is due to a general shift in management to people who have MBAs, and to a shift in MBA programs to an emphasis on finance instead of production:
Since 1965, the percentage of graduates of highly-ranked business schools who go into consulting and financial services has doubled, from about one-third to about two-thirds. And while some of these consultants and financiers end up in the manufacturing sector, in some respects that's the problem. Harvard business professor Rakesh Khurana, with whom I discussed these questions at length, observes that most of GM's top executives in recent decades hailed from a finance rather than an operations background. (Outgoing GM CEO Fritz Henderson and his failed predecessor, Rick Wagoner, both worked their way up from the company's vaunted Treasurer's office.) But these executives were frequently numb to the sorts of innovations that enable high-quality production at low cost. As Khurana quips, "That's how you end up with GM rather than Toyota."
Upper Mismanagement (via Making Light)

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