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The MBA Myth and the Cult of the CEO

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Re: The MBA Myth and the Cult of the CEO

#111

Post by Sebguer »

vasilipupkin wrote: post #109

I just want to point out to those who are excited about confirming their preconceived bias that MBAs don’t matter: according to this result, MBA CEOs outperformed non MBA CEOs by 0.04% per month. That’s quite a bit of alpha. EDIT: yes, the individual means are not statistically significant but given the large effect a) where is the p-value b) there is no statistical significance reported of the difference between MBA…

Except... the study also points out that this is not a statistically significant difference. How do you miss that?

Re: The MBA Myth and the Cult of the CEO

#112

Post by vasilipupkin »

Sebguer wrote: post #111
vasilipupkin wrote: post #109

I just want to point out to those who are excited about confirming their preconceived bias that MBAs don’t matter: according to this result, MBA CEOs outperformed non MBA CEOs by 0.04% per month. That’s quite a bit of alpha. EDIT: yes, the individual means are not statistically significant but given the large effect a) where is the p-value b) there is no statistical significance reported of the difference between MBA…

Except... the study also points out that this is not a statistically significant difference. How do you miss that?

I didn’t. Statistical significance is complicated. In a noisy data set, you have to also look at the magnitude of the effect - and its huge here. Note that they don’t report p-value magnitude, which matters. They also don’t report statistical significance of difference, only of individual effects.

Re: The MBA Myth and the Cult of the CEO

#113

Post by megablast »

lordnacho wrote: post #2

This is great work. It's a real job gathering and analysing all that CEO performance data. My guess is that most people were suspecting this anyway. The fact is the CEO is there for a few years making a few key decisions, a large company is like an oil tanker, and markets are quite hard to predict. Taleb has cooked a fair bit of soup on the fooled by randomness idea, but in this case his observations are correct. It…

> This is why it's not such a big deal for most people that Ronaldo or Messi get paid a lot more than their teammates, and the rest of society.

This is not why, and has nothing to do with it. Players get huge wages, because they are the best on their teams, and the sports generate a lot of money. If it wasn't going to the players, it would go to the owners.

Re: The MBA Myth and the Cult of the CEO

#114

Post by megablast »

75dvtwin wrote: post #84
lordnacho wrote: post #2

This is great work. It's a real job gathering and analysing all that CEO performance data. My guess is that most people were suspecting this anyway. The fact is the CEO is there for a few years making a few key decisions, a large company is like an oil tanker, and markets are quite hard to predict. Taleb has cooked a fair bit of soup on the fooled by randomness idea, but in this case his observations are correct. It…

What most long-term investors would prefer is a cult of a 'process', rather than a cult of 'personality'. A process' is a combination of know-how + culture + rules + compliance. Every business goes through cycles (eg startup, growth, pivot, then repeat) At every cycle, different personal qualities of a CEO would be more beneficial. However, a property of a company with a cult of 'process', is that the process will or…

> So, yes it reasonable to assume better performing sportman will get paid more than their team mates. But it is not reasonable that they get paid this much... that bothers me.

Would you prefer that the money just went to the owners, instead of the players on the field?

Re: The MBA Myth and the Cult of the CEO

#115

Post by Aeolun »

com2kid wrote: post #110
Gibbon1 wrote: post #81

Earlier quoted context omitted.

My experience after 35 years is nothing scares me more than when a team of out of control developers are adding more and more features to the spec. Most baffling is it's obvious they think they are accomplishing something and you're a meanie for trying to rein them in. It always ends the same way. A lot of things can go wrong in a project. But that's that one 100% guaranteed to sink it.

On the flip side, a team of developers who aren't even interested in adding anything of their own volition is also a bad sign. There has to be a balance.

Can’t say no to everything, or soon you won’t have anything to say no to any more.

Re: The MBA Myth and the Cult of the CEO

#116

Post by lotsofpulp »

pembrook wrote: post #68
lotsofpulp wrote: post #27

Earlier quoted context omitted.

An important part of an executive’s job is hiring the right people to execute, which requires some level of skill or networking in my opinion, even if results aren’t always guaranteed.

But the data here says there is no statistically significant benefit to picking an “in-network” (ie. Former McKinsey, Goldman Sachs, Harvard, etc) executive. Which is the homogenous network that these people will continue to cultivate. This data says the parochial boys club doesn’t deliver any difference from the average state-school “rose through the ranks” type of executive.

The person I was responding to was postulating what would happen if a janitor was made CEO, to which I am saying there are some important skills or experiences that not everyone will have.

Re: The MBA Myth and the Cult of the CEO

#117

Post by maxxxxx »

di3sd wrote: post #24
lordnacho wrote: post #2

This is great work. It's a real job gathering and analysing all that CEO performance data. My guess is that most people were suspecting this anyway. The fact is the CEO is there for a few years making a few key decisions, a large company is like an oil tanker, and markets are quite hard to predict. Taleb has cooked a fair bit of soup on the fooled by randomness idea, but in this case his observations are correct. It…

We don't need Presidents and Popes either. The world is a much more complicated place today, than during the time of kings, and the accumulating data is going to keep revealing the complexity is too much for one man or woman to be responsible for it all. But when a Deepwater Horizon type event happens and the whole herd starts baying for blood, are we sophisticated enough to say hey look at the data whats the point o…

:Of late the US seems to have attained that level of maturity, given how they have dealt up with Wall St after 2008, or the Pentagon for the 20 year war or dear Mark Zuckerberg. So maybe it's time."

I don't think 2008 was a sign of maturity when the people who caused and benefitted from the meltdown got bailed out and could keep their money. Maturity would have been that the people who ran the banks before the crash would have lost all their money since it turned out that their contribution was overall negative. We have reached a point where the people who make the most money can hide behind big faceless corporations. They reap most of the profits while the losses go to the rest.

Re: The MBA Myth and the Cult of the CEO

#118

Post by skookumchuck »

kochikame wrote: post #100
skookumchuck wrote: post #86

Earlier quoted context omitted.

The CEO's decisions matter. For the most obvious example, see Apple. A series of CEOs drove Apple to near bankruptcy, then Jobs became CEO. With the same employees, plant, equipment, culture, etc., he turned it into the largest company in the world. He did something similar to Pixar. Microsoft is another example. Same company, same staff, same products, 3 CEOs, stark difference in results.

Your examples show that CEOs "can" matter, but not that they "do" matter. I think anyone would agree that there are plenty of CEOs who happened to get their jobs just as pipelines come through, the economy rebalances in their favor, long-term HRD plans come to fruition etc. but they get all the credit anyway

The man in charge always gets the credit.

I have some AMZN stock. I wouldn't trade Bezos for someone cheaper. Would you?

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