Practical Application Of Business Theory

In many of my previous articles, I have discussed how business academia can be misunderstood and dismissed by some strategic practitioners for all the wrong reasons. Studying and teaching strategic management has undoubtedly saved my company or business units within it from unsustainable decline, on numerous occasions. So what are owners of companies or managers missing out on if they choose to ignore the potential impact that business academia has to offer?

I mentioned in my previous article that I worked with a legend of the tool industry called Alan, after acquiring his measuring tool company AHD Ltd. Whilst Alan held a degree in economics from LSE, he had never even read a book on any form of strategic management let alone embraced business academia, in terms of undertaking a post-graduate degree. During numerous conversations with him, it became clear that his brilliant mind had thought through many of the concepts and theories I had been exposed to. For every concept I introduced to him, he would identify with it through his metaphors or analogies, and whilst not a perfect interpretation of a particular framework he always came very close. We are not all blessed with this level of reflective intelligence. Alan's reflective intelligence had given him the ability to think through a situation from multiple perspectives.

We all have a unique view of our business world, and there can be no doubt that a business owner or manager will understand their world from multiple perspectives. However, nobody has all the answers to every unique situation, including academics. All we can do as academics is provide practitioners with more, new and novel strategic lenses to look through to help make creative decisions. As much as I would like to say differently, this process can never guarantee success with so many interconnected variables at play, but the new perspectives I came across during my MBA saved my business.

After struggling for many years to turn around my declining B2B company, I finally took a step back from my day-to-day business decisions and stopped doing the same thing over and over again. (reduce price and promote more). Whilst I could explore and deconstruct the strategic analysis that I undertook before the inception of buybrandtools, and the nuisances of my methodology that gave me the idea to create an internet retailer and move away from being a B2B company, I want to use a different example of a practical application of a theory.

After the inception of buybrandtools, I employed my first graduate from Sheffield Hallam who is now the company's managing director. He knew nothing about the hand tool industry but was a brilliant analyst when it came to internet retailing. Whilst the first year was a process of trial and error he eventually found the right marketing mix to get the company off the ground. I love core-competence theory, sad though that sounds. Undergraduate students find it hard to understand the difference between conceptualizing strategy from a purely outside perspective or an internal one. I have never heard of a good reason not to attempt to formulate a strategy that results in business concepts that are difficult to copy, sustainable, valued by the customers, or one that can help us enter new markets. Hamel and Prahalad's core competence theory became my go-to concept. My practical application of this theory was to resist the temptation to hire industry experts and employ people who could build competencies around Internet marketing. This formed the basis of my decision to take on placement students every year. Before this change in direction, I had been actively seeking a new sales director from the industry to change the loss-making B2B company, to outmanoeuvre the competition typical of an outside-in approach.

This concept gave me a completely new perspective that I should build an internal competence that our competition would find difficult to copy, especially if they came into internet retailing much later than us. I could see this competence building before my eyes, and each year I would invest resources into any activity that would expand this competence further and further. During this strategic process, there were times when small detours came to mind, such as taking on a direct B2C salesperson, but I always quoted our concept which brought us back to making decisions solely to build the competence further. Compared to what it was when we first built up this new competence, seeing the company now has been life-changing. Would I have had this idea had I not been exposed to this concept; no. This was a new and novel way of viewing my world and the lens I looked through informed my decisions every step of the way. In some respects, this is not rocket science and seems rather obvious now, but sometimes simple interpretations of complex concepts prove incredibly useful. I find it rather frustrating when undergraduates become fixated on the strict application of concepts such as a PESTEL, where I might receive a concerned email asking whether a factor is political or economic. Whilst I correct them for the sake of academic clarity, for me, any model or theory that generates new ideas has done its job no matter how well executed it has been. If a new theory or concept resonates with you it can be mind-changing. Whilst new thoughts and perspectives can be gained through experience, many practitioners including me, do not have the reflective intelligence that my friend in the industry had, and have to find an additional method of learning- academia.