Business philosophies and popular management theories

A business philosophy or popular management theory is any of a range of approaches to accounting, marketing, public relations, operations, training, labor relations, executive time management, investment, and/or corporate governance claimed (by their proponents, and sometimes only by their proponents and selected clients) to improve business performance in some measurable or otherwise provable way.

These management theories often have their own vocabulary (jargon). They sometimes depend on the business insights of a single guru. They rarely have the sophistication or internal consistency to qualify as a school of philosophy in the conventional sense - some (branded "biz-cults") resemble a cult religion. They tend to have in common high-cost consulting fees to consult with the "business gurus" who have created the "philosophy". Only rarely do such schools transmit to any trusted students the capacity to teach others - one of the key requirements of any legitimate non-esoteric school of thought or academic discipline.

Most of these theories tend to experience a limited period of popularity (about 5 to 10 years). Then they disappear from the popular consciousness. Occasionally one has lasting value and gets incorporated into textbooks and into academic management thought. For every theory that gets incorporated into strategic management textbooks about a hundred remain forgotten. Many theories tend either to have too narrow a focus to build a complete corporate strategy on, or appear too general and abstract for applicability to specific situations. The management-talk circuit fuels the low success rate: in that circuit hundreds of self-appointed gurus queue in turn to sell their books and to explain their "revolutionary" and "groundbreaking" theories to audiences of business executives for phenomenal fees.

Note too, however, that management theories often undergo testing in the real world. Disciples apply or attempt to apply such theories, and find them sometimes consistently applicable over time, sometimes merely an "idea du jour". The relevant and valuable principles become recognized, and in this way may get incorporated into academic management thought.

As rightly said:


"The beginning is the most important part of the work."

"Great works are performed, not by strength, but by perseverance."

"Hard work spotlights the character of people: some turn up their sleeves, some turn up their noses, and some don't turn up at all."

"A man to carry on a successful business must have imagination. He must see things as in a vision, a dream of the whole thing."

"A leader is one who knows the way, goes the way and shows the way."

The purpose of a business

Some would argue that the main purpose of a business is to maximize profits for its owners, or in the case of a publicly-traded company, its stockholders. The economist Milton Friedman is a proponent of this view. Others would say that its principal purpose is to serve the interests of a larger group of stakeholders, including employees, customers, and even society as a whole. Most philosophers would agree, however, that business activities ought to comport with legal and moral strictures.

Anu Agha, ex-chairperson of Thermax Limited, once said, "We survive by breathing but we can't say we live to breathe. Likewise, making money is very important for a business to survive, but money alone cannot be the reason for business to exist". Profit maximization is extremely relevant when top management is mandated with the job of selecting the right strategy for the business. According to Michael Porter, the primary goal for any business strategy exercise must be that of maximizing profitability.

Peter Drucker defined the very purpose of business as creating a satisfied customer. This definition is also useful in evaluating to what extent a business is succeeding in fulfilling its stated purpose.

Many observers would hold that concepts such as economic value added (EVA) are useful in balancing profit-making objectives with other ends. They argue that sustainable financial returns are not possible without taking into account the aspirations and interests of other stakeholders (customers, employees, society, environment). This conception suggests that a principal challenge for a business is to balance the interests of parties affected by the business, interests that are sometimes in conflict with one another.