Jobs in America: Puritan values must replace MBA values
Jobs in America will return if hands-on managerial culture – the kind the Puritans exemplified and which created US prosperity – replaces the 'professional' MBA approach to business.
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This way of doing things would evolve to reach a peak of ability in what we call the Golden Age of Management (1920-70). Milestones leading up to it included: the adoption of a federal constitution by the former colonies in 1787, creating a secure political framework within which society could prosper; the establishment by the 1830s of the Springfield Armory, which historian Daniel Wren has described as "the first mechanised manufacturing plant" in the country; the integration of geographic and functional divisions at the Pennsylvania Railroad in the late 1850s; and the relaunch by Pierre du Pont of his family company in the early 20th century, providing the model for an alphabet of "blue chip" companies – AT&T, Boeing, Chrysler, John Deere, Eastman Kodak, Ford, General Motors, Hewlett Packard, IBM, and so on.Skip to next paragraph
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America's great managerial inheritance would be successfully transplanted into Japan under the US occupation (1945-52).
Japan's internal communications systems had been destroyed by bombing and neglect. As a result, a Civil Communications Section was created within the Supreme Allied Command to re-create them. It was necessary first to teach local suppliers how to manufacture to US standards of quality.
Before World War II, "made in Japan" had meant "of poor quality"; increasingly after the war, it would imply the opposite. Japan's communications equipment manufacturers evolved rapidly into a world-beating consumer electronics industry; other industries, such as automobiles, followed suit.
Japan would teach the very same lessons that it had learned from its US occupiers to the future Asian "Tigers" – notably to Taiwan, which imparted them to mainland China in the 1990s, and to Vietnam a decade later. About 70 percent of China's electronic exports are said to originate today in mainland factories owned or managed by Taiwanese.
The rise of the professional manager
Sadly, under the influence of top-tier business schools, America would walk away from its inherited managerial culture after 1970. This lowered the quality of manufactured goods. And it contributed to disasters as diverse as the savings and loan crisis, the Enron debacle, and today's global credit crisis.
Before 1970, management was regarded as a craft to be learned "on the job" under the eye of an experienced executive. As a junior manager climbed the ladder, he would also acquire what General Electric CEO Jeff Immelt has called "domain knowledge." As a result, banks in the mid-20th century were run by people who knew a lot about banking, engineering companies by people who knew a lot about engineering, and so on.
Under the new dispensation, management was reclassified as a profession to be practiced by holders of a special academic degree (the MBA) – just like medicine or the law. It was no longer considered necessary for an executive to learn the craft of management or to acquire "domain knowledge." The holder of an MBA was deemed capable of exercising control over any kind of organization through the medium of its accounts department. "Financial engineering" replaced mechanical engineering. The effect on the quality of decisionmaking in both the public and the private sectors was catastrophic.
As we say in our book "The Puritan Gift," American factory managers have in large part reclaimed the secrets they taught the Japanese over half a century ago; the rest of American business and society must now follow suit.