Theorisation isn't just about preserving the past—it's about empowering the future.

The Lost Legacy: Why Companies Fail to Preserve Their Intellectual Capital

One of the key reasons why certain legacies fade away is the absence of a structured, theoretical approach. Founders often build successful enterprises through sheer conviction, trial and error, and the methods they develop along the way. India, in particular, has witnessed many semi-literate entrepreneurs and non-MBA, non-engineer visionaries create mammoth business empires. These founders possess a wealth of intellectual knowledge, yet it seldom gets passed on to their teams.

Even stakeholders remain unaware of the precise factors behind a company's success, having only a general understanding of what drove the journey.

Feel-Good Stories: The Reliance Example

Take Reliance, for instance. How did it grow into one of the world’s largest conglomerates? What were the founder’s approaches, and how have they been sustained by those still working there?

Answering these questions would lead to a lengthy, fragmented narrative, pieced together from multiple stories within the company. But ultimately, the clarity fades, leaving us with little more than a feel-good story devoid of actionable insights.

The Power of Theorization: Lessons from Global Giants

Some of the world’s most successful companies didn’t just succeed—they theorised their success and turned their unique practices into widely accepted frameworks:

• Six Sigma: Originally developed by Motorola, this methodology revolutionised quality management.
• Sloanism: A strategic management philosophy shaped by Alfred Sloan during his leadership at General Motors.
• Fordism: Pioneered by Henry Ford, this approach transformed industrial production through assembly line practices.
• Lean Manufacturing: John Krafcik, after studying 90 manufacturing plants across 20 countries while working at New United Motor Manufacturing, Inc. (a Toyota-GM joint venture), concluded that lean plants had significantly higher productivity and quality.

These companies didn’t just build wealth—they created intellectual property worth trillions, freely available for the world to adopt and adapt.

A Practical Path: Reverse Engineering Success

Not every company has the resources or inclination to formalize their unique practices into management theories. However, there’s an alternative approach—reverse engineering.

1. Document the Practices: Capture the company's processes, strategies, business models, and approaches in detail.

2. Match with Existing Frameworks: Identify popular management theories or frameworks that align with these practices (without force-fitting them).

3. Build a Narrative: Present the company’s story through the lens of these frameworks, ensuring clarity and coherence.

Unlocking Long-Term Benefits

This approach offers multiple advantages:

• Clarity for Stakeholders: It helps communicate key aspects of the company’s functioning to all stakeholders, especially investors.
• Leadership Development: Budding leaders can inherit this intellectual capital, further refine it, and drive continuous improvement.
• Sustainable Growth: By embedding practices within a structured framework, companies ensure their success story becomes a living, evolving guide rather than a fading anecdote.

Theorisation isn't just about preserving the past—it's about empowering the future. Companies that embrace this mindset will safeguard their legacy and equip the next generation to build on it.

For more details on how theorisation can help in investor communication, please mail [email protected]