More Bad Advice

An MBA is starting to look as useful as a 2:2 in Gender Studies.

The virus tsunami is crashing ashore. In the mayhem of churning fortunes, many commercial organisations will go under. Had they not sold their life-jackets or sub-contracted services would they still be afloat?

After all, the much-lauded market-forces we see at play are culling the weak and vulnerable. Isn't that what business leaders trumpet, as they demand the government gets out of their way. 

With Hong Kong's tourist industry down by 96%, it's evident that the double whammy of riots and Covid-19 is taking its toll. Airlines, hotels, restaurants, shops and resorts are all suffering. As we hear talk of a 'unprecedented and unforeseeable' situation — I ask really?

We've known since SARS the impact of such events. And yet, many of those lessons faded from the collective memory over time. 

Many businesses are now clamouring for injections of public money to sustain operations. That's after they've spent decades cutting resources to maximise profit. It appears none of that acquired income was set aside for these anticipated events. 

It cannot go unremarked that business leaders often speak of the government 'allowing' market forces to work their magic so that companies can flourish. Yet, in these dark days, the same people are scrambling for government interventions. A dash of hypocrisy me thinks. 

Is it too simplistic to say part of the problem is the overconfident-types with MBAs driving business models that cut contingency-capacity? So when the crisis arrives, the system cannot absorb the hit.

​With a constant focus on shareholder profit, costs get reduced. Thus, you see subcontracting to the cheapest bidder and the degrading of resilience—the very thing needed in an emergency. 

It's well known that many go for a top-ranked MBA because they believe it guarantees a massive salary and confers status. Along with that comes a sense of entitlement that breeds hubris.

​However, it looks like the emperor has no clothes as an MBA is about as useful as a 2:2 in Gender Studies.

As one pundit observed "You can learn more from Warren Buffett's collection of annual shareholder letters (which are available online for free) than what they teach in best MBA programs. After all, business models are all about context, something that's often overlooked". 

Besides, many of the economic theories taught as gospel ten years ago, now lay discarded in weighty textbooks. Proved wrong by events, MBA professors scramble to update their discredited ideas. 

I encountered these types as they came to 'reform' the Police. Until the mid-1990s, the Police could feed themselves in the field during emergencies. The Police Tactical Unit operated mobile kitchens with dedicated cooks; nothing fancy, simple staple food to sustain officers on long deployments. 

Then as part of the so-called 'efficiency-saving exercise' — in reality, cost-cutting— the Force catering unit was gone. Henceforth, catering came from outside contractors. 

Several of us pointed out the risks.

 Alas, we're told to can the 'negative' attitude. Come Occupy Central and the recent troubles, and feeding was a constant challenge. On occasions, private contractors delivered dodgy food, some of which was suspect. 

Pictures soon circulated of low-quality meals and insects in the food. Morale suffered. I have many other examples of this blind adherence to the latest management fad that had poor outcomes.

How many organisations flattened their profile at the behest of management gurus? They stripped out experienced middle-managers in the quest for a leaner company. In the process, they lost experience, knowledge and the savvy needed when the going got tough. 

There is a body of evidence that in emergencies, flattened organisations do not perform as well. A rigid hierarchy is not ideal for every organisation, but it is useful when intense, immediate action is needed. 

As emergency planners know, your capacity to respond must be immediate and flexible. Delays make matters worse, especially when you face a situation such as Covid-19. 

In the current crisis, there are signs the aviation industry business models are failing the stress test. This week Cathay Pacific Airlines sold six planes to BOC Aviation to generate cash. CX then leased back the same aircraft. This move is the business equal of going to a pawnshop. 

​Over in the UK, airlines are demanding government support; again, a euphemism for public money.

Thus we now see a perfect storm; short-sighted business planning and a lack of capacity to respond. Then atop that is public fear and governments scrambling to contain a situation that's run ahead of them.

The massive public bailout of the banks during the financial crash of 2008 left the public feeling cheated. Rightly so. The big banks proved a cesspool of greed, with unethical conduct and outright criminality.

​Yet none of those responsible for that mess faced jail, nor did it impact their fortunes. It was Joe-public who suffered.

Are we about to repeat the same mistake? Are we again about to pour vast sums of public money to prop up businesses that are failing? I'd be more sympathetic to business leaders if during the sunny days they'd been humble enough to recognise their civic duty. Plus, put some money aside for a rainy day.

So, given the situation, and to save people's livelihoods it's inevitable that taxpayers hard-earned cash will be deployed to protect faltering businesses. In that process, we have a right to demand sustainable enterprises that acknowledge broader issues beyond their bottom line. 

Likewise, some humility from the MBA holders please. Then we may drop the jokes about what MBA – Master of Business Administration – really stands for: "Mediocre But Arrogant", "Management by Accident", "More Bad Advice", "Master Bullshit Artist" and so on. 

For what's it's worth: if companies are to survive, take the advice of the insiders with 20-years at the coalface, and not some kids with no real-life experience, except an ability to pass exams. Because before the tsunami hits, the tide goes out to expose some folks aren't wearing any underwear.