Engineers do not really understand business. I heard that a large electrical engineering firm borrowed $400- million to “meet current liabilities”.

I looked up its balance sheets and found that, on paper, anyway, it had more debt than it had equity and, thus, to my lumbering brain, was in a worse position than my own consulting practice, which has no debt at all (touch wood) – our major liabilities are two cocker spaniels and a jack russell that chews up tender documents. My accountant friend disabused me of this. He spoke of ‘asset consolidation’ and ‘short-term notes’ and such stuff and proved, to his mind, that the large electrical engineering firm was doing just right.

It seems to me that, as you go higher up the management ladder in engineering firms, there comes a point where being an engineer is no good. You have to understand finance and sales and smoke and mirrors and forget the actual engineering. Or such seems the common belief.

But, as my friend says, “you don’t have to be able to milk a cow to own a dairy”. This is a typical response, which says nothing but sounds smart, like “You don’t have to be able to drive a bulldozer to own a construction company”, which is management speak for “You know nothing, dumb twerp, so shut yer gob”.

The fact of the matter is that, often, engi- neers are excluded from top management and the exclusion of engineers from top management in engineering companies is way stupid because the top management, not understanding engineering, often makes mistakes that an engineer would not make. I think the dumbest of these was in 1998, when a firm, Mercury Energy, took over the power supply to the New Zealand city of Auckland from the Auckland Electrical Power Board. The latter had kept Auckland supplied with power for years.

When Mercury took over, a simple cable failure resulted in other cables being overloaded. The engineers wanted to load-shed but the management would not and so power cable after power cable failed on overload – as any engineer could tell was inevitable. This turned into a three-week-long power outage for a major city, with diesel generators parked in the streets.

More recently, retired Siemens CEO Peter Löscher was, before joining Siemens, former president for global human health at global pharmaceutical company Merck & Co. He is now gone, after Siemens had lost a lot of money in the renewable-energy business. Maybe having a man from the medical world in the electrical engineering world was a bit like having a nun conducting an orchestra – there will be some sort of tune but you will not be able to hum along.

Oddly enough, in the mining business, most CEOs all come from mining backgrounds, as in having worked their way up from mining positions. The point here is that, with mining, you cannot really lose the plot – the profit you make (or not) is very dependent on getting the ore out of the ground, refining it and selling it.

I am sure that Anglo CEO Mark Cutifani might not have to dig out the stuff himself but he has a good grip of the process, having begun working on a coal mine when he was 18. Sipho Nkosi may have started at Ford Motor Company, but he was in the coal business for years before becoming CEO of Exxaro.

It is very easy for the nonengineer CEO of an engineering company to believe that the decisions made are producing good results rather than being market driven. In contrast, engineers are good at not being drawn along by popular sentiment. ‘Prove it’ is the engineering thought to any popular proposition, while the nonengineer management thought is often ‘True or not, we’d better follow this line of thinking so our company seems forward looking’.

My message is this: If you have an engi- neering company, it is a very good idea to have it run by an engineer. The finances may end up a bit on the conservative side, but the product, I promise you, will be good. Give it a try.