INSIGHTS

CRM and MBAs

On Sunday, July 10, Time Magazine posted a book review of sorts by Rana Foroohar. “Driven Off the Road by MBAs” is really a riff on Bob Lutz’s new book, Car Guys vs. Bean Counters: The Battle for the Soul of American Business.

Lutz should know something about his topic since he spent a 47-year career in the halls of power at Ford, BMW, Chrysler and GM.

Lutz’s argument is not new, and I should say here that I haven’t read the book. But I did read David Halberstam’s magisterial book in the 1980s, The Reckoning, which makes the same argument. In many ways, Lutz is Halberstam redux.The argument of each book can be reduced to this: Engineers build cars (or any other product) with the customer in mind. They don’t worry about price and cost, and they persist in the belief that as Emerson said a long time ago, if you build a better mousetrap, the world will beat a path to your door. It’s pure Americana.

Lutz, Halberstam and loads of others aver that the MBA grads focus on the balance sheet with the customer as an afterthought. Lutz has his share of myopic management-by-balance-sheet examples, which you can find in the review and also in the book to make the point.

Product Guys

The review dutifully summarizes how we got into this position, citing the rise of World War II Wiz Kids, led by Robert McNamara, who made that war more efficient — whatever that means — before moving on to Ford and the Defense Department under Kennedy and Johnson. In each successive endeavor, the Wiz Kids were less successful, as the penultimate posting at DOD and Vietnam amply demonstrate.

The article takes an interesting turn riffing again off a line Lutz puts forward in his book: “Shoemakers should be run by shoe guys, and software firms by software guys.” This is the whole rationale for CRM, and the preceding paragraph in the article is worth quoting in full:

It’s interesting to note that the one area of the U.S. economy that’s adding jobs and increasing productivity and wealth is also the one that is the most relentlessly product- and consumer-focused: Silicon Valley. The company off Highway 101 that best illustrates this point is, of course, Apple. The only time Apple ever lost the plot was when it put the M.B.A.s in charge. As long as college dropout Steve Jobs is in the driver’s seat, customers (and shareholders) are happy.

I might add that I know a lot of Harvard and other top-school MBAs in the Valley too. So it’s not simply having the degree; there’s something about the culture as well. However, the point is that the list of dropout billionaires who became wildly successful by asking simple questions like “What does the customer want?” is long and still growing. Let me add Bill Gates and Mark Zuckerberg.

Why Doesn’t Everyone Know This?

Back to the rationale for CRM. We who are deeply involved in CRM may occasionally take it for granted that the world thinks like us, but if Lutz and his acolytes are to be taken seriously, we must be mistaken in our belief. Now and then when trying to distill CRM and especially social CRM — which I think have become one — I am perplexed because I think some of what we say and do should be common sense. We should have learned at home or in grade school about how to treat other people, how to empathize and understand their needs.

Social media changed much about CRM because in its earliest incarnations, even CRM had a few nervous moments. Recall that when it was first introduced, CRM was largely a tool for capturing data so that managers (many with MBAs) could apply their balance sheet logic in an effort to deal with customers — or perhaps markets.

The social revolution started with customers, not vendors, and the empowered customer finally got the leverage needed to deal with the Wiz Kids on something like an equal footing. It may seem strange to those of us who are on the front lines of CRM that the rest of the world might not think like us, but we all have a lot of work left to do.

Lutz may be right in his assessment that software firms should be run by software guys, and by extension car guys should run car companies. But the real context, I think, is cultural. Lutz and Halberstam have documented a culture shift in business, and one that has a long trajectory. Social CRM is an attempt to rectify some parts of that shift, but I doubt we’ll ever go back to the way things were. With modern technology and perhaps the enlightenment that comes from being proven wrong, perhaps we can fashion a new culture that is both financially responsible and customer-centric.

Denis Pombriant

Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and website. He is the author of Hello, Ladies! Dispatches from the Social CRM Frontier and can be reached at denis.pombriant@beagleresearch.com.

1 Comment

  • A major problem with the way MBAs are trained by our b-schools is not merely the disregard they acquire for the customer, but an equal if not greater disregard for employees (or, in spreadsheet management-speak, "headcount.")

    In conducting anthropological studies of MBAs over the years in their native habitats, I have observed at least 3 other common drawbacks:

    (a) They are taught to delegate everything, so they have no hands-on management skills, particularly when it comes to taking accountability;

    (b) They rarely know how to actually do anything, or to understand how anyone else performs the work that they do;

    (c) They would have no idea how to talk to a customer. (I have always felt that a prerequisite for success in business is a customer-facing position — e.g., sales — in a retail environment, where you actually get to interact with real people.)

    Now, don’t get me wrong — I have known and worked with a number of fine MBA’s over the years, who have managed to rise above their training. In fact, I am collaborating with one as we speak. But I hold little hope for organizations who have been brainwashed that an MBA is a "must have" for success in management.

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