What Managers Really Need from Academics
As business academics, our job is to help managers tune into approaching challenges or opportunities – sooner rather than later. To do that successfully, we must focus on the parts of the environment that matter most and make sure the tools we carry are fit for the purpose.
Academics are often criticized—fairly, on the whole—for working in ivory towers far removed from the needs of real-world executives on the ground. (In this sense, Bob Sutton and Jeff Pfeffer's idea of evidence-based management is a useful reality check for managers and academics alike.) In my view, we can do a great deal more to realize "gains from trade" between our two worlds. There are at least four areas where we can improve.
We're focused on too narrow a definition of rigor.
We need rigor. But there are different types: the rigor of abstract analytical models and rigor in behavioral research, which documents and tries to understand how and why individuals, groups, and institutions actually work.
So far, we've expected too much from research that might be analytically rigorous but still doesn't accurately describe reality. I'm thinking particularly of work that comes out of economics, such as game theory or financial economics, which can help, but can also obfuscate.
When we confuse beautiful models with messy reality, we all suffer. In the run-up to the financial crisis of 2008, for example, many policy makers deluded themselves into thinking that markets could regulate themselves, while regulators remained blissfully unaware of the business models and structures that had developed in the financial sector. Academics and their models share the blame for these oversights.
Behavioral work, though, is far more promising. We're learning more and more about behavioral biases and the way individuals really make decisions. Now we need behavioral and evolutionary economics to step up and show us how organizations make decisions—and why we can expect them, quite predictably, to make bad decisions and to stick with the wrong behavior. The more we know about organizational pathologies, the better the outcomes we can achieve.
We need to better understand the reality of decision making.
The importance of investigating these organizational dynamics speaks to a related issue: as academics, we don't spend enough time looking at the way strategic decisions are really made. Often, what we call strategy is less about navigating to a distant shore and more about allocating resources among competing projects or people in the here and now.
Even our infatuation with innovation may have to do more with making sure the organization keeps its focus on customers (as opposed to internal politics) than it does with new products and services. Strategy acts as a motivating and disciplining device, which helps avoid organizational pathologies.
By leveraging behavioral and evolutionary work, we can get a much clearer picture of the organizational reality of strategy and a better understanding of how to add value through frameworks, analogies, and a focus on the most relevant parts of the business environment. And without focusing too much on the negative, we need to understand strategic failure better and to identify the process that drives it.
We focus too much on individual firms and not enough on context.
There's a growing body of research, in institutional and evolutionary economics and economic sociology, looking at the web of relationships within a sector and in the economy: how complex production systems emerge, evolve, and interact and how value migrates within and between sectors. Whether you call these webs industry architectures, ecosystems, or organizational fields, they are a lens for viewing reality and can show us some very valuable new perspectives.
These ideas have some big implications for competition—implications that we're only just beginning to understand. In many sectors, winning doesn't just mean finishing first; it means changing the rules of the game to your own advantage. Consider how Google and Facebook have redefined the way we interact with information, while also creating ecosystems that collaborate and compete with Apple. (Ron Adner's 2012 book The Wide Lens provides a research-founded analysis of ecosystems.)
We need to validate and re-test established frameworks.
Finally, academics and consultants can come together to revisit popular ideas, even those that have profoundly shaped practice, such as Clay Christensen's views on disruptive innovation or Michael Porter's five forces. Models like these are widely used and accepted because they come from some of the most highly respected scholars, are user-friendly, make complex ideas simpler, and reassure executives that they've acted on well-substantiated knowledge.
But should established firms try to be disruptors? Is Porter's famous model universally applicable? Academic research challenging such well-established theories is limited and mainstream academic journals aren't often as interested in revisiting well-established strategy frameworks as they are in publishing new theories.
So as academics, we should strive more to add value by being objective and rigorous about the conditions under which established views do and don't work well. We can also point out some new, valuable ideas that don't get enough play in the popular business press and the consulting community. For example, Costas Markides and Paul Geroski's Fast Second debunks some popular myths about the need to finish first, and Freek Vermeulen's Business Exposed and his blogs publicize research findings that bear on practice.
In all of these areas, what really excites me is the prospect of a stronger link between practitioners and academics, so we can apply the research we've done and shape the research we need to do. Together, we can simplify reality without distorting it and uncover the social laws that we don't yet understand but shape our world.
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