Why Hard-nosed Executives Should Care about Management Theory

Christenson, C.M., Raynor, M.E. (2003, September). Why hard-nosed executives should care about management theory. Harvard Business Review, 67-74.

Have you ever made a significant business decision based on a convincing book jacket blurb?  Harvard Professor Clayton Christensen and Deloitte Research Director Michael Raynor warn readers of this article that executives and top managers should hold themselves – and the experts – to a higher standard.

The authors lament that the word “theory” in management literature and practice has an unpleasant reputation among managers because it’s associated with the word “theoretical,” which implies “impractical.”  The authors, however, make the case that theories are valuable for two fundamental reasons.  First, they help us make predictions; and second, they help us “interpret the present, to understand what is happening and why.”

The authors use several examples from early aviation history to illustrate these fundamental reasons.  For example, understanding the lift/drag mechanisms wasn’t itself quite enough to make manned flight perfectly predictable.  Early aviation pioneers needed, more importantly, to identify the circumstances under which such a mechanism did or did not work.

Thus, good theories are circumstance contingent: they define not merely what causes what and why, but also how the causal mechanism will produce different outcomes in different situations.  They write, “Circumstance-contingent theories enable managers to understand what it is about their present situation that has enabled their strategies and tactics to succeed.” (p.71)  Although demonstrating causation provides a good starting place for theory building, good theories must include a causal mechanism that explains how and when a system works – or doesn’t.  For instance, if the presence of a humble CEOs is correlated with increased shareholder value, good theories extend the explanation to demonstrating what it is that most likely produces such value.

In another section the authors highlight the importance of failures.  The authors lament that most managerial innovations are quickly disposed of when they just “don’t work.”  However, the authors encourage readers to further their thought by asking the question: “When doesn’t it work?”  By asking that question, readers will get closer to understanding the causal mechanism driving success or failure.  The authors warn readers to be suspicious of work urging that revolutionary change of everything is needed.  Because things usually are the way they are for pretty good reasons, it is important to know not only where, when, and why things must change but also what should stay the same. 

In summary, this article provides a very convincing argument for the utility of theory-building capabilities – an argument that comes across in a majority of Christiansen’s work.  For readers seeking to become savvy, discerning consumers of management theory, this article provides an excellent starting point. 

Back to Aslan News