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Ken Iverson: The Cure for the Common MBA

We’ve written before about the legendary businessman Ken Iverson, the former CEO of Nucor Steel, who took it from a tiny steel operation to a true steel powerhouse in his own lifetime.

To recap, in Iverson’s tenure, Nucor:

  • Compounded its per-share profits at 17% per annum for over 30 years, in a dying industry (steel production) even while foreign steelmakers competed hard and with lower per-hour labor costs, severely harming most U.S. steel producers.
  • Engineered the lowest per ton of steel labor cost despite paying the highest wages.
  • Did not lay off any employees or close any facilities in his long tenure. (In the steel business!)

And so on. He was incredible.

His short business memoir, Plain Talk, describes a much different kind of company than most; one where a culture of teamwork and group winning trumped personal fiefdom. He also got the incentives right. Boy did it ever work.

Turns out Iverson had some thoughts on business education as well.

What are we really missing?

In his recommended curriculum, Iverson highlights just how different his thoughts are: No classes on grand strategy (Henry Singleton would agree), or sales, or marketing, or financial structuring. (Not that those can’t be useful. Just not enough.)

His idea? Teach aspiring managers how to truly interact with, understand, and lead the people who work for them by forcing young MBAs to take on an “internship” as a leader similar to the way doctors take up residence before being given the full leash. 

In the epilogue to Plain Talk, Iverson calls this the Cure for the Common MBA.

Here are some of the subjects that might form the core of first-year MBA curricula:

Earning Employees’ Trust and Loyalty

Far too many managers have no clue how their employees feel or even what their people’s work lives are like, day to day. Employees pick up on this lack of insight in a heartbeat, and that realization taints everything their managers say to them from that point forward. Conversely, employees clearly give the benefit of the doubt to managers whom they see as understanding “what’s really going on” and “what we’re really up against.” That’s only natural.

I’d suggest, then, that every MBA candidate be required to spend at least a few weeks engaged in manual, clerical, and/or other forms of non-management labor.

Further, they should be required to keep a journal of their experiences—the kinds of problems they encounter, their frustrations, their successes, and so forth. They will find that what seems a small thing to them as managers often takes on great significance to them as employees.

Developing managers should also contemplate the implicit and explicit commitments they will make to the people who work for them. They should understand their obligations under those commitments as well as the limitations of those obligations. And they should grasp the consequences of failing to be consistently trustworthy.

Active Listening

Listening is among the scarcest of all human skills, in and out of management. Listening requires concentration, skill, patience, and a lot of practice. But such practice is a very sound investment of the developing manager’s time.

Real listening enables managers not only to hear what people say to them, but to sense what may be behind what is said (i.e., employees’ emotions, assumptions, biases).

Better still, their reputation for competent listening will encourage others to bring them information. Listening proficiency is an immense advantage to any manager. No MBA should be sent forth into the business world without it.

The Hazards of Hierarchical Power

Inexperienced managers tend to lean heavily on formal, hierarchical sources of authority. This is understandable. They have not yet had the opportunity to develop other forms of authority such as experience, expertise, and seniority.

The problem is, young managers don’t often comprehend the hazards of hierarchical power. They do not understand that, by setting themselves above and apart from their employees, they may actually be digging themselves into a hole. I think it is only fair, then, that we warn inexperienced managers of the hazards of hierarchical power.

Principles of Equitable Treatment

Few managers receive much in the way of explicit instruction in the principles of equitable treatment of employees, either in business school or in the course of management development. All too often, managers fill that vacuum with their own self serving precepts of what is equitable. A few common- sense principles, clearly stated and strongly advocated in the business schools, could make the business world a better, more equitable place for employees and managers alike.


The notion of an internship for managers has a precedent in medical education, of course. Doctors intern for a number of years before they are turned loose on the world. There ought to be a comparable transitional step in completing the requirements for an MBA. Further, that transition should focus on providing the management candidate hands-on experience. Any MBA who ventures into business with the intent of managing people should first develop his or her skills under the watchful guidance of an experienced manager.

The fact is, few business school professors have ever managed anything, and their lack of hands-on experience shows in their students. Medical school faculties, in contrast, are comprised of the best and most respected practicing physicians.

MBA candidates should preferably complete their internships within relatively small, self-contained operations, so they can perceive the operation in its entirety and grasp the overall dynamics of a business.

People throughout the corporate world lament that other parts of their company don’t understand them or what they do. They’re usually right. It takes an extraordinary individual to understand aspects of a business to which he or she has never been exposed. We are expecting far too many managers to be extraordinary.

Still Interested? Check out Plain Talk, and our post on some of its main themes.