Managers need good practical models, based on good theory

Visiting the Academy of Management conference this year in San Antonio was again an inspiring event. 6000 management scholars meet and discuss the newest management research developments. Many sessions of the entrepreneurship division and the technology and innovation management division focused on high tech entrepreneurship & business development.

One very inspiring event was the award session for Clayton Christensen, he was awarded the innovation award of the technology & innovation division for his career. Professor Christensen accepted this award with an inspiring and moving speech about his lessons learned in his research and consultancy on disruptive innovation. He had several messages for universities on how to teach management students, and for managers.

One common thread in his thought is that managers need good practical models, based on good theory, as one cannot base decisions on data from the past alone. Especially in innovation, the future is expected to be different than the past, therefore the predictive power of analysis of data from the past is limited. Models of innovation development, however, are informative to guide entrepreneurial managers in their quest for realizing an innovation process.

As an example, consider how difficult it was for IBM to understand the possibilities of the PC when they developed it in the late seventies/early eighties. Looking into the past was not useful, as there were very few practices to analyze. The imagination of entrepreneurs like Steve Jobs, Bill Gates determined the development of new innovative applications of existing IT such a windows based computers or Apple I-pad, but add to this imagination obviously the business potential of opportunities conceived by the entrepreneurs need to be assessed.

In the Venture Lab Twente, we use value creation modeling to estimate the possibilities of creating a business in future with certain products. Jim Anderson, professor of marketing, Kellogs business school, Chicago trains our entrepreneurs to make better assessments of their financial value. His work also fits the norms of Clayton Christensen being well based in strong theories and developed into practical modeling of value creation in market networks.