Who should run firms, engineers or financiers?
A short post on why engineers may be better suited to leadership positions
So if you’ve been reading the news recently you may have noticed the Boeing door failure. But Boeing’s decline in quality has been an ongoing topic over a long time and I wanted to put in a quick piece. The big debate is whether Boeing’s management shift from “being ran by engineers” to “being ran by financiers” the reason for Boeing’s numerous failures in recent years.
I think the answer to that question is a fairly obvious “yes,” despite the fact that I have no data to back this up. I have a few reasons to think this.
Differences in training (college and above)
Different career incentives
Differences in work culture
In terms of differences in training, I’m thinking about different viewpoints about systems. Classically trained engineers (ie: excluding most software engineers and CS people) learn about complex systems in the context of systems engineering. They are often more adept at making hard tradeoffs in their design and production decisions because they put those decisions into an explicit systems framework where they directly consider the consequences of their actions on consumers.
On the other hand, most management/finance trained people take consumer behavior as a given and then work from there. You estimate a demand system (if you even do that), set prices accordingly, and then reduce costs as much as possible by laying off redundant workers. In fact in my experience the way these layoff decisions are made is that HR keeps tract of peoples “points” on various measures (time taken off, number of conflicts, etc.) and then fire people based off that (note that engineers are typically trained to explicitly avoid these kinds of bean counting targets). As you can imagine the unintended consequences of this are immense, as many of my engineer friends would concur.
Another reason comes down to differences in career incentives. Engineers typically change jobs every 4-5 years or so. An engineering resume is always a long list of projects and products that they have worked on and tangible results that they obtained in their careers. However, people also evaluate engineers on the quality of the firms that they worked at previously. If the firm is known to produce high quality products, you can assume that the engineer has good habits. Now a lot of this goes on for managers and financiers, but I don’t really get the impression that the profitability of a firm 5 years later has as much bearing on their careers as it does in engineering.
Finally I generally just think that engineers are just more cooperative people and team players than most finance/marketing people. Most economics classes I’ve been in feature few if any group projects, and group work is only sometimes used. In engineering most of my classes involved at least one or two group assignments. Experience and learning by doing matters. People who work with people more often get better at it than those who don’t. When I talk to my friends in finance the management culture often clashes with my intuitions on what good management looks like because they frequently set a bunch of (frankly bizarre) targets like quantity of sales, lines of code written, or quantity traded. Your taught fairly early on to avoid these kind of things in engineering school, at least if you ever do six-sigma/LEAN stuff.