Our (Strange) Love Affair With The MBA
There’s an interesting article in BD Africa about the growing demand of the MBA degree in Kenya, which is now being fueled largely by part-time students. I can see why the MBA has become such a popular degree to puruse: it’s the easiest option for those who want to get the high paying career.
Let’s face it — most Kenyans still believe that they are only a few professions that offer high paying salaries, but getting into those professions is very, very, difficult for many. It’s too hard to get into medical school, law schools are very competitive and unless you’re a straight A student, you can pretty much forget about Engineering. So, what’s left? The ubiquitious and overrated MBA.
On some level, I understand why so many young people are pursuing this degree: they believe it’s their ticket to corporate Kenya and to a high paying job, but is that true anymore? I mean, if you look around the world today, the only part of the economy that’s still showing signs of growth is the technology sector. So, if you are interested in making money in the future, wouldn’t you be better off studying computer science or learning a computer program? The computer language I’m seeing lately that’s really helping people earn money over the internet is PHP/MYSQL because that’s the language that allows you to automate vast amounts of information into a large database and today, every organization relies on these vast databases.
When I’ve talked to entrepreneurs in Kenya who are trying to set-up technology based companies, this is essentially what they are doing — they’re trying to learn how to build these databases because government offices that are trying to move away from using paper are going to need them in the future. Insurance companies that have to maintain vast amounts of records are going to need these databases. Universities in America cannot exist without these databases (all the information they need to raise money from alumni, to track where they are, etc, etc..is stored in these databases). Anyway, you get my point.
After spending years in school myself, I’ve come to realize that for the most part, what you learn in school, will pretty much be useless once you get into the real world. The only exception is if you go into the sciences and become a doctor or research scientist or something along those lines.
If your a young, entrepreneurial Kenyan, why on earth would you want to get stuck at a boring job in a bank, dealing with archaic and often times, bullshit {textbook deriven} theories about how “business” works? I mean, look at this global financial crisis. Who created it? a bunch of overated MBA’s who thought they were rocket scientists, but who really ended up creating a bunch of fake financial instruments.
Look at all the banks in Kenya and the debt loads they are now carrying because they foolishly decided to lend to people who’s credit history they hadn’t checked out.
The future is not in banking. It’s in technology, computers and the internet. The signs of this are so obvious, that I fail to understand why young people are not seeing it.
Discuss….
KE,
The MBA Thing. I’ve had my own opinion about it for a while.
In the U.S. I f you’re considering getting an MBA, It’s best you go to a top school because all the top companies recruit from the TOP Schools.
So, it makes a hell of differnce if you’re enrolled in Harvard MBA as oppossed to a no name state University MBA.
Technology may be growing but not everyone has a liking or a feel for it. Things work against you once you get into a career /profession for the wrong reasons.
I agree with these overated MBA’s who are largely responsible for the financial crisis meltdown we’re seeing. I mean most of them were from Ivy League schools, so that goes a long way in showing you how “bright” these MBA’s are.
Very informative piece.
Its very true that science and technology is becoming part and percel of everything….almost like oxygen and water. There is no way one can succeed without them.
Boy! have you gotten this one wrong..what makes you think everybody should do computers or engineering or be a scientist ? And , you mean, in kenya? Even the USA admits that less and less students are interested in math and sciences…that’s the FACT..fewer students are interested/talented in math&sciences…EXCEPT in china and india and russia..and thats where the future is looking.
Even in the US, engineers will rely on the projects from investments of those Wall-Sreet guys to get jobs..its the ECONOMY STUPID , KE ! Thats why USA will continue to lead in world economy as long as they control the “money” every time they sneeze they world will catch the flu . ( I used to think the europeans had it until I so how helpless they were without the USA)
And you are wrong again about the future…its not computers and internet… are you living in the 90s?…the future is ENERGY…mark my words…..ENERGY stuff.
Koffi:
I think you either read the above piece in a hurry and totally missed the fundamental point or you just didn’t get it. So, I’m going to have to re-explain some historical stuff to you so you can better understand what I arm trying to say.
America, did not become an economic superpower by relying on wall street or on investment banks. No. This is where you are missing a very important historical fact about America’s technological advancement. It really began in the 1960′s during the height of the cold war and during a time when America’s biggest enemy and biggest scare was the Soviet Union.
It was in the 60′s, during Kennedy’s era especially, that America decided that if it was going to beat the Soviet Union, they were going to have to do it through science. If you recall, this is when both America and Russia were competing to become the first country to put a man on the moon. In order to succeed at doing this, the government started pumping millions of dollars into university science programs hoping that they’d produce these scientists who’d then go on to build the space shuttle program, sophisticated weapons for the U.S. military and similar things — all in an effort to ensure that America going to beat Russia when it came to science and technology.
So, Kennedy really went out and encouraged boys to go into the sciences and he also made sure they’d have the scholarship money to pursue their studies and this policy worked! America ended up producing the world’s best scientists and their inventions (particularly from the 60′s onwards) is what turned America into the worlds super-power.
In 1985, after the cold war ended and after America had essentially won this “war” (both economically and militarily) — the support for science began to wane and it’s been on a downhill spiral ever since. Then of course, after 9/11, the government tightened it’s immigration rules and that made it very difficult for Asians to get scholarships to attend American universities and this too has had a detrimental effect on the countries production of scientists. The immigrants who tended to study in America, would end up becoming citizens and they were a very good source of top talent for America. Now, because they can’t get visas’, they are staying in China and India and those two countries are benefiting from their talents, but don’t for one minute think that America’s economic rise began with wall street. It began in the 1960′s with the government pumping millions of dollars into science programs at universities around the country.
As I’ve said on many occasions, bankers and people with MBA’s, do not produce anything. They don’t make cars, they don’t make planes, they don’t make drugs…nothing. All these things, which are essential for a countries economic advancement are produced by scientists.
You bring up the issue of energy. I’m not quite sure what you mean by that because everything I’ve been reading says that the focus today is on trying to find ALTERNATIVE FORMS of energy in order to decrease the dependence on oil and guess who is going to produce these alternative forms of energy? The scientists. Not the bankers.
This is also why I’ve been saying that Kenya’s economy is quite strange because people have been fooled into believing that bankers are the miracle workers when they are not. The result of this is now becoming clear: banks have been hit with a high level of defaulters because they’ve been loaning money to non-producers. Inflation is at an all time high and no real jobs are being created. Why is all this happening? Because without scientists, the country is producing nothing. The only people producing things in Kenya are the farmers, but outside of this core group, there’s nothing else.
Now, of course, not everyone can go into the sciences and what it’s increasingly looking like to me, is that this global economy is going to end up rewarding the extremists. In other words, if you are a scientist and you create or produce something of value, you will be rewarded monetarily and China and India are the best examples of this: Their home grown scientists are creating goods, which the world needs and which the world is willing to pay for.
Now, if you can’t be a scientist, the other extremism I’m seeing that’s being rewarded, is artistic talent and here, America still excels. Hollywood is still the draw the world over. They produce the best movies and the best tv shows and everyone in the world watches them and they pay for them.
So, if you can’t be a scientist, I’m beginning to think that being a total artist might even be better than being a bullshit banker who creates nothing. If your an artist, you can make music and if people like it, they’ll pay to listen to it; or you can write a novel and if people like it, they’ll pay for it. You see, people will always need an escape from the hardships of their daily lives and that escape is provided through art.
Anyway, I hope you are better able to get my point now.
http://www.bdafrica.com/index......temid=5813
KE, I promised on an old thread to send excerpts on what’s happening on the bio-tech front in Kenya especially as it pertains to agriculture. Small example on growing trends.
KE , KOFFI,
First , KE, I don’t think your assertion of america becoming a super power is totally correct. YES, Science and the advancement of technology in the 0′s played a role, however as Obama said, no country has survived as a superpower with a weak economy.
As KOFFI Piy it, It’s the ECONOMY.
I agree with you that America’s rise as a superpower was well underway in the 60′s. However I have a more basic reason for this. I believe America rose to prominence after World War II dURING EISENHOWER’S Reign.
I personally believe the introduction of the INTERSTATE highway system played a major rule in elevating america to economic powerhouse and later to a superpower. The idea that you could travel from one end of the U.S. to the other on super good roads was a very significant factor in it’s rise. Eisenhower’s reason for creating the intertsates was millitary at first. he wanted to make it easy to transport millitary personnel and weapons across the country in case of atack or for defence purposes.This had the effect of opening up the country for commerce. There’s no other country in the world that has a road system as advanced and beneficial as the U.S.
KE your dismissal of bankers/ commerce aganets in favor for scientists really, REALLY does not make sense.ask me why ?
Buisiness and science have a mutually benficial relationship. All the major technologies that have been invented in the U.S. had to have had a commercial interest to be xploited.These scientists need funding to develop their technologies and the government is not always able to underwrite these funding costs. as a result, most of these scientist turn to Ventur capitalists, Investment bankers and the like to help them raise capital for their projects.
Where would companies like Microsoft, Intel, Apple, Google, Sun Microsystems, Boeing, Genentech, ETC be without the capital, finanacing and advise from the banker types or capital providers ? absolutely no where! No one can do it alone, the scientists need the financiers for their projects while the finanaciers need able scientists to bring technologies to life.
So saying that scientists alone are the future is remarkably naive.
Boeing is a major supplier of weaponry and technology to the U.S. govt and military, and boeing would not have gone far without funding from venture capitalists like the rockefellers early on.
Even in china and india, the big tech companies receive funding9not from their gvts ) but from private money from investors. Look at Wipro, infosys, Satyam Computer, Baidu- Baidu was heavily funded by american venture capital firm Draper fisher based in Silicon Valley.
Second you mzeiya. you pretty much read my mind. I do not believe that either of the two could exist flawlessly without input from the other.
KE, I think you are very biased on this technology issue to a point where it clouds your judgment of the other sectors. You need to look at both pros and cons for each and not pros of one and cons of the other.
I really don’t think the world would run in a smooth manner without some sort of biz infrastructure. the main problem with the current financial crisis is the lack of regulation by the govt to some extent. I believe in capitalism but not free markets 100%. I think the govt should always have a stake in it to avoid situations like the current one which is based mainly on greed. its not like these guys didnt know what they were doing. they did and knew what was likely to happen but in biz we all know the bigger the risk, the higher the return/ loss if any. they just thought they could pull it off but guess things didn’t go their way.
I concur with KE this time.
A classic example is Israel. Israle is a small country full of bright people. It has invested much in technology. NO only have they managed to harness the harsh conditions of their arid land to export horticultural products to europe, they have have R&D facilicities and Technology centre that rival silicon valley. Infact he PHP language was invented by an Isaeli plus many other popular applications like the ICQ. Basically its economy is driven by science and technolgy and inspite the instability in the region the country continue to record growth.
I think ICT is an industry especially software enginering that can withstand many challenges because the resouirces are peoples brains. If we produced so much talent in kenya (software and systems engineers) we might as well realise the vision 2030 even sooner! WEe could see new breed of entreprenuerd that create soltuins for every day problems for selling locally and internationally. It would bring many multinationals to set base in Kenya to take advantage of talent base.
Yes, the government should invest more in science and technology in schools, review and update the curriculum etc
Unfortunately just like the MBA, many people rush to do IT courses and because they are not cut out for it, we end up with so many people who say they have done it but very few can write a piece of software. Right now we have a shortage of software engineers in Kenya.
I agree completely with KE on this one, if the emphasis is on getting MBAs to improve salary prospects, this is yet another example of where our national conscious has failed us! Emphasis on churning out middle and line managers rather than entrepreneurs and industrialists. I hope to God large segments see the pie in the sky for what it is and then use what they’ve learned to start their own businesses.
On more encouraging news, I found these two articles in BD Africa fascinating:
http://www.bdafrica.com/index......temid=5813
why I continue to be a proponent of Chinese presence in Africa
http://www.bdafrica.com/index......temid=5812
thine eyes have been opened to just how lucrative the mama mboga segment can be
noni,
You state that Israel has invested much in technology ….did you just say “invested”…thats what mzeiya is saying…you just clarified the point.
Another thing u dont understand is the ICT jobs are the first to go when the economies are bad…companies cut costs first in those areas.
KE.
I agree with your historical stuff..its your dismissal of non-scientists i have beef with..when you know most of the people going abroad with working-visas were in the financial industry.On the other hand, its good that most people returning to kenya are in the ICT sector.
Back to history,the internet you guys are calling the future was invented in the 60s..for the armed forces and gov..yet its commercial value was only realized after the USgov decided to give it up for public use. in the 80s..just like the interstate road system. Then the VC money moved in and the rest is history.
So to make things happen..who do you need more of? There are millions of inventions that could change the world but there is no funding. It didnt take many inventions/scientists to put a TV or viagra or a yahoo….but it takes money people to flood the markets. So whose your daddy when it comes to PRODUCING.
Back to the future..you are right about alternative energy..but there are all these ideas that cant get funding..although policy makers also come in here..like brazil. But I am talking about the e-energy phenomenon where the money has started flowing..but thats for another thread.
Interesting conversation. The MBA is overrated, even Venture Capitalists know that. Here is an excerpt from Guy Kawasaki about MBA’s
“Q. “Reality Check” includes a venture capital aptitude test in which you opine on the types of people who are best qualified for careers in venture capital. Your test awards points to those with backgrounds in sales or engineering and subtracts points for those with M.B.A. degrees or backgrounds in management consulting, investment banking or accounting. What’s behind this philosophy?
A. Ideally, a venture capitalist would add value beyond writing a check. This includes experience with difficult situations and insights into building a company. Consulting, investment banking and accounting do not provide you with “on the firing line” experience. You’re always the “outside expert” who zooms in, interviews a few people, creates a PowerPoint presentation and then tells people what they should do.
Unfortunately, analysis and ideas are easy. Implementation is hard. A consultant can tell you to reduce your work force by 10 percent, but figuring out who to lay off and looking people in the eyes when you do it is much harder. ”
As a side note, Guy has an MBA from UCLA, according to Financial Times it is ranked in the top 25 globally. (http://rankings.ft.com/busines.....a-rankings).
Management Theorist Henry Mintzberg has the following :
“Organizations are complex phenomena. Managing them is a difficult, nuanced business, requiring tacit understanding that can only be gained in context. Trying to teach it to people who have never practiced it is worse than a waste of time–it demeans management.
There was a book called Inside the Harvard Business School, published in 1990, that listed the great CEOs the school had produced. Harvard is very proud of its graduates who made it to “the top.” The book said little, though, about how those CEO graduates actually performed. So we tracked the 19 people on that list, from 1990 to 2003. The results were dismal. Ten failed badly, and the records of another four were questionable at best. So much for the fast track.”
http://www.fastcompany.com/mag.....enace.html
The MBA though is a good way to get into companies that don’t want to invest in building a leadership team, and also as a tie breaker in interviews for equally qualified candidates.
Worse still, if the Kenyan MBA is a replication of the US MBA, it does not take into consideration the unique social structure of a developing country like Kenya.
Oh btw, George Bush has a Harvard MBA.
Koffi:
Whose my daddy when it comes to producing? scientists. By the way, they are the one’s who invented the internet!
My basic point is that Kenya is doing it backwards. It is trying to develop this economy through finance and banking and neglecting to see that the financing comes AFTER the invention of the idea.
That’s why Kenya in some ways, is acting like Iceland (another country that thought it could modernize just by adopting arcane financial theories instead of getting the point that their economy was too dependent on fishing and they needed to diversify into more productively oriented fields: Things like high-tech or manufacturing).
So, yes, everyone needs financing, but banks should focus on financing entrepreneurs who produce goods or services that can be sold and primarily exported.
However, what appears to be happening in Kenya is that banks are financing civil servants and they are using that money, not to produce, but to buy homes with interests rates hovering around 25% and to buy stocks in companies which they know nothing about. That’s not production. It’s in-breeding and in-breeding always leads to genetic mutations and other forms of disabilities.
ke
you may not be an economist but you damn speak sense!! especialy on economics of production …..You see KE most Kenyans (plus all the educated do not know how AN economy grows or shrinks)….they talk rubish like this….
..Kenya was in the samelevel as Singapore /Korea 63
..Our economy just grew because i got a job as an accountant….
Look !!!We have never been like Korea or Singapore…The HR….The HR was the diference
…When last i posted here that LUOS are the people who mostly do production economics in Kenya albeit small( furniture,clothes,construction..Jua Kali) i was blasted by some ‘economist….’
We will NEVER DEVELOP so long as we have the HAWKER mentality (buy there sell here philosophy )..
.Listen to KE you burzaar Nationals
LORD
Ati ” The economy grew coz I got a job as an accountant”…..lol…….
KE + The rest
I think for acountry to experience overall gowth in major sectors, the incentive HAS to come from the GOVERNMENT!
Government is the major player in this. All other parties will act out of self interest. Take for example the banking situation in kenya. The Bnak’s agenda is not to make Kenya the next singapore, It’s agenda is focused on return to it’s owners and shareholders. If an Opportunity comes up to make profit be lending to civil servants, then hell yeah the banks will engage in it to the MAX! If they get burned as a result of a poor business strategy, then they lick their wounds.
Science and Finance go hand in hand. which came first, the goose or the egg ?
GE Is one of the worlds best known companies. They deal in everything from MRI Machines to JET Engines, to Light Bulbs to Banking. If anyone is familiar with GE Culture, then you know that GE Is run by the finance guys. It’s all about investing in technologies that will have a healthy return on capital.
The government has the task of setting policies to encourage industrilization , not bankers or scientists, It’s the GOVERNMENT.
KE You are looking at the kenyan banks and blaming them for a flawed strategy. i..e making loans to people who produce nothing. Yo’re right froma macro view, but from a busisness stand point, the banks don’t think in those terms. To them , it’s “we’ll lend money to you civil servant since you have a salary at the end of every month”
and KE One thing you have to remember is that BANKS in general, especially retail / commercial Banks are very RISK AVERSE. It’s VERY VERY UNLIKELY to hear that commercial Bank has funded a scientific project, No way. They are always funding the same safe investments as real estate, stable enterprises.
The type of financing needed to propel nations ahead is done by Venture Capitalists. It is HIGH RISK FINANCING.of which they cannot even produce income statements or cash flow statements coz they do not know what the future will hold.
As a result, if you have a promising technology in Sub Suharan Africa or any other thrid world part of the globe, chances of u getting finding from kenya or other african nations will be hard. The funding mostly will come from the west. Case in Point- Celtel/ kencell. Mo Ibrahim got the bulk of his funding from wetsern V.C firmsn who saw OPPORTUNITY first, and national development a distant second.
My point is, anything that has to be funded will only do so with economic interests from the financiers as the main motivational factor behind it.
I am concerned that KE you really overgeneralize your take on bankers versus scientists.
If you are saying that MBA’s need more training on innovation and commercilazation of technology, to enable them to be adept at funding entrepreneurs or even they themselves taking the reap to be one then we would be in agreement.
For instance that is what Stanford has strived to do and the record of its engineer/scientists MBA’s who have created Global ventures does speak for itself.
Mzeiya
Hi..Its seems you never read (how then will you answer)….please read what i wrote again
Ndiang’ui
What KE is saying all economies that ever grew were because of production (NOT bank products~)
England ~Industrial Revolution
Germany~Leader in Precision Engineereing to date
US~ICT
China ~Industries
India~ Industries
All this countries in common sell finished products that they make hence geting money…..Just imagine how many bags of coffee/tea you need to sell to get one new Grand Cherokee Jeep ..then that may triger what production (creation) is vs natural products
Ndiangui:
What Stanford has done (and it’s not stanford’s MBA program that has done it) – is raise private money from already rich individuals and give it to these scientists (particularly those in the engineering programs) who go out and create these innovative programs.
So, I’m not saying you don’t need money. I’m saying that the real brains are not the MBA’s. It’s the scientists and engineers who are actually creating these products.
Example:
The founders of google raised one million dollars from friends and family members before they ever went to a venture capitalist for money and by the time they got the VC money, their alogorithmic equation that produced their search engine, was already written.
Kenyan bankers are not giving money to scientists or other innovators. They are giving it to civil servants and wage earners who are producing nothing of value.
They may also be giving some of it to entrepreneurs who then fly off to dubai or china to buy goods and resell them, but even these people are producing nothing. They are just reselling goods that are manufactured elswhere.
The kenyan economy is not going to be able to sustain itself if it keeps doing this. At some point, the government is going to have to invest in either telecommunications in order to get the IT/outsourcing sector going or it’s going to have to invest in science and engineering programs at local universities.
Mzeiya:
Banks in Kenya have loosened up their lending standards and that’s why so many people have been able to get loans, but this always leads to a crisis. It’s what happened to America when it loosened it’s lending standards for mortgages, it’s happening in Iceland and it will happen in kenya.
KE
I don’t think Commercial banks are keen to fund these “risky” start ups. This kind of finanacing only comes from V.C.’s.
I do not see all those kenyan banks funding start ups that deal in tech.
For that V.C’s and pro startup ploicies from the government are needed hand in hand
KE
I do agree that the sudden rush for MBAs is ill-informed. As Workingstiff has quoted above, trying to teach management to people who have never practiced it is a waste of time and resources. Should this trend continue, the Kenyan economy will continue to suffer from the ills of pseudo-experts and white collar criminals armed with MBAs.
That said I do not agree with your advice to young Kenyan entrepreneurs i.e. focus on acquiring IT skills. Though IT is a fast growing industry with a lot of potential, Kenya is – and will continue to be, a net importer of IT. The sad reality is that even when local IT skills and technology is available, most buyers opt for imports.
From a competitive advantage point of view, the young Kenyan entrepreneur should focus on developing technology to improve agricultural productivity and to scale up the value chain in agric prodn. The GoK should develop incentives to ensure Kenya becomes The regional hub for financial services, education and health services.
From your posts it is evident that you have sth against bankers since they supposedly dont “procuce”. From my basic economics the material wealth of society is determined by the goods and services provided to its members. This productive capacity is a function of the real assets of the economy – land (farmers), knowledge (scientists, bankers, entrepreneurs), buildings and machines, that are used to produce goods and services.
Financial assets also contribute to the productive capacity indirectly by enabling the transfer of funds to firms with good investment opportunities. FYI loans by Kenyan banks to the consuming retail borrowers constitute about 52% of total advances, the rest goes to the productive sector. It does make sense to finance both the producers and consumers, the only problem is that the consumers mostly buy from foreign producers.
At the end of the day real assets produce goods and services, financial assets determine the allocation of income or wealth and bankers (including serious investors such as VCs) get paid twice for owning both assets. Love us, hate us, we get PAID!
What will MBAs be masters of if they don’t have an innovative, useful, attractive product/utility from the scientists to sell or manage, like a mobile phone or portable latrine for instance? KE is absolutely right and i don’t see what some of you are arguing with him for. His point is straightforward commonsense. Ridiculous.
Let me give abit more detailed take on this.
I like analysans point from a basic macro-econmic view on the ne t production of goods and services.
Infact more importantly is that looking at the value chain of the banking industry, it is one of the key enablers of any economy and the very innovations of financial products meant to fulfill the needs of the society for wealth preservation or wealth creation, be it derivatives, bonds, unit trusts etcetra requires great depths of knowledge and at the end of the day it drives an economy’s performance. Ditto these products do leverage on the new or existing technology to give it a market to thrive. i.e where the synergy between such products and those who innovate them i.e the demonised bankers and the technologists who automate the sell/buy environments cannot be decoupled. Take for instance the emergence of Chicago Board Of Trade (CBOT) ; the futures products that emerged from future contracts on pork bellies have contributed immensly to the development of Agriculture in the United States. Now we can measure the jobs that this organisation has created and whether they have been sustainable.
And your take on the financial disaster is not really diffrrent from the dotcom products that had flawed business models due to the fact that the technologists didn’t take time to think through the ‘theory’ (as you refer to it) of how value is added for technology to be commercialised. These sort of inflection points are common ; We saw Rail companies go burst not long ago and it I think these events are healthy to keep us in check on excesses and they also provide lessons of how better to organise our economies and organisations.
The argument on who contributes to an economy the most of a Banker and a scientist will lend us to gross generalizations.
I really do not see anything wrong by everyone garnering an MBA , as long us it is used intelligently to create and preserve wealth. Infact most of the education courses around whether science or arts have lacked that element of ‘wealth creation’ paradigm and more less they have not produced wealth creators. So really may be the question should be the quality of the course and the motivation of the student and ways in which incarcinate an entreprenurial/innovative mindset as well as the ability to commercialize ideas . I say ideas because ‘technology’ is not only about raw science but the application of it in ways that meet basic jobs to be done by the society. And so innovation can be around business models or Products/services .
We have seen the growth of Wal-mart and it might not be very differrent from the age of mercantilism when british and France merchants thrived, only that this time the supply chain management is backed up by technologies but the technologists didnt offer an iota of merchandizing knowlege to Sam who saw a need to get goods closer to the small town people. Has wall-mart created jobs and wealth ? I leave that to you to answer.
We have also seen the growth of Equity Bank and its ability to mobilise financial assets , create financial products and then disburse them at lower costs to those who need them , previously left out by mainstream banks i.e a classical business model innovation. An enterprise thrives where there is a need by a consumer not just for the technology’s sake. We have seen big failures in both financial products innovation as well as technology products innovations from minicomputers to dotcoms and now the failure of Asset Backed Securities.
So the theory that scientists contribute more than do bankers would be without casuality if not backed by any data that sets this clear. All we can continue to hack through are mere collerations.
Infact I fnd it offensive of you being critical of financial or management theories which are not much differrent in their objective to scientific theories of trying to represent reality better in order to understand it and advance societies that live in it.
I mean the theory of economic management including the definations of ‘ecoomies’ or measuring the performance of economies through things like GDP , and even the new Gross National Happiness whether they work to represent reality or not are not really different efforts to theorizise as is the theory of DNA.
Turning to VC’s , I see them backing bankers as well as scientists. Infact I see many VC firms having a combination of these skill sets in their employees; mostly scientists/engineers with MBA’s. And so I don’t see what you can call these ones ; MBA’s or scientists ?
To put my life in the line in the defense of MBA’s , I am in that category too where I have been in both worlds of ‘technology/engineering’ , ‘banking’ and management consulting.
manta ray:
Thank you for summarizing my point so clearly.
Without a product (and a product could be anything from food, to clothing to an ipod) – without such products, what on earth will bankers sell?
Ah yes,
They will sell you a bunch of financial instruments, which have no real value and which nobody can measure. Isn’t this why America is in trouble right now? the bankers began to believe they were scientists and they foolishly believed that these products they created were real, but as we have now seen, it was all just a bunch of worthless paper.
This is why warren buffett says that they are 3 kinds of people when it comes to business:
Innovators (scientists)
Imitators (chinese manufacturers )
Idiots (bankers and the consumers who believe them)
KE
When you refer to “Bankers” are you talking about the kenyan bankers who are mostly retail bankers? Or are you talking about
The U.S. Investemnet bankers?
It seems to me you have a healthy loathing for kenyan bankers but at the same time, you’re accusing them of the sins commiitted by the American INvestment Bankers
NDIANG’UI
Very interesting post from someone who’s both an MBA and Engineer/ Scientist.
You said
“Infact more importantly is that looking at the value chain of the banking industry, it is one of the key enablers of any economy and the very innovations of financial products meant to fulfill the needs of the society for wealth preservation or wealth creation, be it derivatives, bonds, unit trusts etcetra requires great depths of knowledge and at the end of the day it drives an economy’s performance.”
I agree with the above, in that, that’s what ‘s been going on. However, of what benefit is to society/ the economy as a whole if the Financial Products being created cannot be understood by anyone? i.e. they are too complex to be understood and end up being labeled “Toxic Assets” ?
KE
You’ve quoted Warren Buffett referring to bankers as idiots. Is this the same man who was Chairman and CEO of Salomon Brothers in 1991, who also recently forked out $5 billion to buy Goldman Sachs?
Kindly provide us with the context of his quote.
analysans:
I got that quote from warren buffett after watching a segment of his on the charlie rose show. I think the context (if i recall) was really about this hoarde mentality to investing, which he obviously has not fallen prey to.
I think he was essentially saying that the majority of people don’t do their homework when it comes to investing.
KE
Thanks for the clarification…if that was the context, then the idiots he was referring to are the financial analysts [investment bankers] who sell hype and the lazy investors who believe their BS.
Another apt quote by W.E.B…”Never ask a barber whether you need a hair cut.”
In future posts, please be making a clear distinction between IBs and commercial bankers [we are the good guys].