Why Engineers Make Good Business People
Note: The following represents a speech presented by Sy Sternberg, chairman and CEO of New York Life Insurance Co., at Duke's Pratt School of Engineering on Saturday, Nov. 3, during Parents Weekend. Sternberg is an engineer by education, with bachelor's and master's degrees in electrical engineering. Download his power point slides.
It’s great to be here this week with so many other Duke parents. My son, Matthew, has just entered his senior year at the Pratt School. He is majoring in biomedical engineering and minoring in economics. And while that might seem like an unusual combination of curriculums, it really makes perfect sense for two reasons.
Reason number one: Both the biomedical engineering and the economics departments at Duke are acclaimed as among the nation’s best.
Reason number two: Even though Matthew may not be planning to enter engineering as a profession, he was wise enough to listen to one piece of his father’s career advice. And that advice is the subject of my remarks to you today Â– “Why Engineers Make Good Business People.”
Although many undergraduates may not yet realize it, engineering students don’t have to be engineers for their whole life. Their academic studies have provided them with a foundation that creates far more career flexibility.
Engineering grads can work for an engineering company, and then rise up the ladder to general management.
They can move to an entirely different industry. They might choose to go into financial services, working at Citigroup. Or consumer goods, with Procter & Gamble. Or real estate, with Starwood. You show me a successful Fortune 500 company, and I’ll show you an employer who values the talents of engineering graduates.
I should tell you up front that I bring a personal bias to this topic. I’m an engineer who has for the past ten years been CEO of a life insurance company. If you bear with me a few minutes, I will tell you how that happened.
I graduated in 1965 from CCNY with a Bachelor’s degree in electrical engineering. My first job was at Raytheon Company’s missile systems division in Bedford, Massachusetts. At the beginning, I worked on engineering projects, such as the radar for the F104 fighter plane, and Hawk/Sparrow missile systems. About three years into the job, when I was 25 years old, I was given the opportunity to be project manager for the development of the company’s first automated drafting system. This work exposed me to software and computer systems. And it was love at first sight.
I was asked to join a group of young Turks Â– some Harvard and Dartmouth MBAs - to review the work processes at the plant, and this eventually led to an assignment to run the first management information system group at the company. My management skills were also recognized, as I was one of the youngest engineers nominated for Raytheon’s advance management program.
But in 1973, I was offered the opportunity to join a consulting firm that had just won a contract with the Mass Mutual Life Insurance company to design and develop an online computer system that would tie all of their agencies into a national network. It was an opportunity to leverage my skills in online systems development within an environment where systems were the backbone of the enterprise.
In 1975, I was hired away from the consulting firm and offered a full-time management position in Mass Mutual’s information systems department. I moved up the ranks within the department, and by late 1980, I was in line to succeed my boss as Mass Mutual’s head of information systems Â– but that was not to be.
The Mass Mutual CEO called me into his office one day, and asked me if I wanted to take over the company’s group health insurance business. They were losing $25 million a year, and their thinking Â– which they didn’t share with me - was: “Let’s take a chance on Sy. If he doesn’t turn the business around, we’ll shut it down.”
I reminded the CEO that, except for the systems side of group insurance, I really didn’t know much about the business. He said that he wasn’t concerned. I had 24 hours to accept or decline the position. It wasn’t an easy decision as I had built a reputation in on-line systems development. Did I really want to leave this discipline where I had excelled Â– and plunge into a new world of insurance?
I took the risk. I accepted the job. We turned around the business, and for the rest of my career, I have been in general management Â– at Mass Mutual through 1988, rising to senior executive vice president and board member; and since 1989 at New York Life Â– starting as head of their health insurance business, and rising to CEO on April Fool’s Day, 1997.
Although it sounds like a very unusual story, I am not the exception. 23% of the current list of Fortune 500 CEOs have undergraduate degrees in engineering Â– twice the number as those who earned business administration or economics degrees. Just to name a few, the CEOs of Exxon Mobil, DuPont, Sprint Nextel, both Google and Yahoo, Nissan Motor Company, Amazon.com and Hartford Insurance are all engineering graduates.
Okay, so why do engineers make good business people? Why is engineering a good foundation for top management jobs? I see five reasons:
First, engineers understand that good problem solving starts with fact gathering.
During school, the engineer is constantly reminded to look for all relevant facts before starting to solve a problem. The process of fact gathering before diving into problem solving also works exceedingly well in business. Problems that I face every day require an understanding of the fact base before drawing conclusions. Bad decisions are often the result of not having all of the relevant input.
When I sit around the table at a meeting, I can often pick out the engineers. They do a good job separating fact from conclusions Â– they are probing for data, alternative scenarios Â– before jumping to the answer. That’s the right way to do things, and it results in a better decision-making batting average.
The second reason engineers do well in business is because they process data well.
Now that the information is collected, it’s got to be processed. And here again, the engineer’s skills are extremely valuable.
Engineers are proficient in both paper and pencil analysis Â– and mathematical modeling. The computer is second nature to them Â– they know how to reduce a problem to logical terms Â– they know how to create and work with databases Â– and they know the latest programming languages.
I know that many investment banks seek out engineers because they can dive right into substantive work.
Third, engineers understand risk assessment.
Although analyzing data is important, what’s more important is making good decisions Â– and engineers are equipped with the analytic tools necessary for sound decision-making.
Engineers are comfortable with risk assessment and decision trees Â– processes that lead to probabilistic ranking of likely outcomes. Whether an engineer is explicitly doing a decision tree, or thinking it through in his or her head, this process of risk analysis results in better decision-making.
At New York Life, we have trained our lawyers to do a decision tree on likely outcomes (and probable costs) Â–before recommending the settlement of a lawsuit.
Engineers have a fourth advantage: They don’t often let emotions get in the way of decision-making. As an extreme role model, think of Spock from Star Trek Â– always right, never emotional.
I don’t want to suggest that human factors shouldn’t enter into the decision making process. At the end of the day, people issues Â– and other non-quantitative factors Â– must be reflected in the final decision.
But engineers recognize that good problem solving requires isolating the factual from the emotional. The key word is isolating. An engineer will analyze the problem, first on the basis of the facts . . . reach a tentative conclusion . . . and then add any emotional component. And that’s the right way to do it.
Finally, engineers are creative and intuitive.
Everything I have been talking about has emphasized the left-brain strengths of the engineer Â– fact gathering . . . analysis . . . risk management Â– and logic over emotions.
But the good engineer has another skill set: creativity and intuition. All the analysis in the world will never get you over the finish line. At the end of the day, you need the ability to connect the dots, by drawing upon your intuition and creativity. And again, the good engineer has this skill: The ability to create something from nothing; the ability to solve a problem by thinking outside of the box; the ability to design something that no one has ever thought about.
Objective analysis coupled with creativity is a winning combination. It’s a combination that equips the engineer with many of the requisite skills for business success. But even though the engineering degree is an excellent foundation for business management and leadership, it is still not sufficient.
Beyond the analytic and innovative skills that I’ve already mentioned, when I speak to our up and coming managers, I share a list of ten other attributes that I look for in candidates for employment, and candidates for promotion.
Here they are:
Good communications skills are number one on my list. It’s not enough to be competent in your field; it’s just as important to be able to express yourself well in conversation and in writing. In spite of the old saying, “You can’t judge a book by its cover,” the truth is, senior managers and board members do this all the time.
At the end of the day, the truth comes out Â– the solid performer rises to the top, even if their communication skills are a little weak. And the superficialÂ…all showÂ… individual is eventually found out. But why start off with a liability.
Second on my list is a reputation for hard work. That doesn’t necessarily mean coming in at 6:00 AM, or working later than anyone else. But, it does mean a person who goes beyond being an assignment-taker. Instead of being told what to do, the hard worker figures out what has to be done, and does it with a sense of urgency.
Number three on my list is good people skills: the ability to interact with others effectively and respectfully. Good personal relationships are supremely important Â– simply because no one accomplishes very much in the business world without the cooperation and support of others.
Fourth is the skill to handle multiple issues at the same time.
We always look for individuals who can multi-process, and handle multiple issues simultaneously. And when I say handle, I mean juggle many balls at the same time Â– and not drop any.
Attribute number five is accountability. What I mean is taking responsibility, taking ownership, even if it’s not within one’s scope of duties. For example, we’ve all had the experience of calling a customer service line, only to be told by the person who answers the phone that you need to speak to someone else in another department to solve your problem. Wouldn’t you feel better if, instead, she said, “Don’t worry about it Â– I’ll take care of everything.” The same applies in business: telling your boss that you own it Â– that you’ll take care of it Â– is music to your boss’s ears.
Skill number six is the ability to set priorities. Regardless of your position, you’re always deluged with more than you can handle. Figuring out what’s most important, what’s time critical, what will have the greatest positive impact for the least amount of effort Â– is an essential skill. At the highest levels of management, where the action item list is infinite, this skill is really all about time management. Each week, I have to figure out what is the best use of my time Â– what will have the greatest positive impact on the organization.
Skill number seven is the ability to deal with ambiguity. As a decision-maker, you quickly learn that most issues are not simple matters of right or wrong, black or white. Often, the answer requires choosing the alternative that presents the least number of downsides, or the one that poses the least risk in execution. (Notice that I said “least risk,” not “zero risk.”) In the world of business Â– in the world of people Â– not everything can be predicted. There is often no clear right answer.
The eighth attribute I look for is a strategic orientation. Too many people let themselves become preoccupied with day-to-day tactical problem solving. A leader’s job is not only putting out fires Â– it’s seeing around corners and into the future, anticipating what the playing field will look like next week, next month and next year.
Ninth on my list is the willingness to take risks. Not foolish risks, but ones that are carefully considered, with all the possible upsides and downsides weighed and measured.
I elected to take a calculated risk when my former employer, Mass Mutual, asked me if I wanted to make the leap from information systems to general management. In retrospect, that may have been the fork in the road that eventually led me to the CEO’s office in a Fortune 100 company.
Finally, the tenth attribute is leadership ability. Management and leadership are two very different skills. Here’s how I would differentiate and define them:
The manager sets out plans, creates schedules, assigns staff, oversees execution, and solves problems along the way.
The leader is an individual who can personally create a vision for the future, has the ability to effectively communicate that vision to his team, and gets the team to follow.
Most organizations have many managers, and a few leaders. Clearly, the superstar is both a manager and a leader.
So, that’s what we look for. We love the engineering foundation. But we also want to see the basic skills for business advancement.
Now, let me conclude with a roadmap. How does one navigate from engineering to business management? There are many paths, and the good news is that none require a decision while in school, and most do not require a decision immediately after graduating. Here are some possible routes:
First, there is the traditional route.
In this approach, the student graduates as an engineer, and takes a job at an engineering company. During the first few years with the new company, he or she demonstrates the problem solving skills that were learned in school Â– and some of the other traits that we have discussed. If the senior management of the company is on its toes, your son or daughter will be identified as a management candidate, and may soon be redirected out of engineering.
Alternately, an engineering graduate might choose to bypass engineering entirely.
Your son or daughter could apply for a summer internship at a non-engineering company. My son has followed that path. As I mentioned earlier, he is graduating this year with a degree in bio-medical engineering, but for the past two summers he interned at Goldman Sachs Â– and he now has a full-time offer from Goldman after he graduates.
I should note that Goldman, and many other top-flight non-engineering companies, come to Duke to interview engineering students for internships and full-time positions. They like the skills that are developed here at the University.
As a third option, there is the path I call the MBA Transition.
The undergraduate works in engineering for two to three years to build up work experience, and then applies to business school for an MBA. In this case, the business school becomes the platform for reaching out to non-engineering employers. Your son’s or daughter’s credentials would now include not only the undergraduate engineering degree, but also an MBA.
Management consulting is another possible path.
Some graduates might like the idea of joining McKinsey, Boston Consulting, or another management consulting firm right out of Duke, or after receiving an MBA. Management consultants often impress Â– and get job offers from -- the company that they are providing consulting services to. That is how Lou Gerstner made his way into corporate management.
Finally, you could follow my path: the opportunistic switch.
Start out in engineering, and down the road, look for the opportunity to change direction. If the risk-reward makes sense, take the chance.
Any one of these routes might get you to the top. The point is, as engineering graduates, you have the luxury of many good career paths to choose from. And, with that in mind, let me make one final, important statement.
Engineering is a great profession. Our country desperately needs engineers to compete in the world of globalization.
Engineering is an exciting profession. I marvel at the front panel of my HP 6300 Â– and at the brilliance of the engineer who designed it.
I marvel at the breakthroughs in bio-medical engineering Â– and at how these engineering innovations will save lives.
So, please understand that my advice is not about turning away from a career in engineering.
It is about the flexibility that this degree provides.
Engineering . . . business . . . management Â– all of these worlds are open to you with an engineering degree from Duke.