A well-known business theory is Clayton Christensen’s, disruptive innovation theory, which describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. It’s the theory Apple used to make a dent in Microsoft’s holdings, and it’s the theory Netflix used to dethrone Blockbuster. You can watch the below video to see the theory explained in deeper detail:
But without these three things, business theories don’t work:
- Purpose – If you’re in business and don’t know why you do what you do, stop what you are doing, and figure it out. Purpose is what keeps you grounded in what you are doing.
- Passion – This is the fuel behind the work and it will always be your driving force if you allow it to be.
- People – A staff who feels appreciated thrives, and clients who feel appreciated buy. People are always the beneficiary of operating a business in the way it should be run.
PURPOSE+PASSION+PEOPLE=BUSINESS THEORY THAT WORKS
Management consultant, Peter Drucker, made a huge impact on business and leadership as a whole. His biggest business contribution states that all businesses have theories. He said, “The assumptions that shape any organization’s behavior, dictate its decisions about what to do and what not to do, and define what the organization considers meaningful results. These assumptions are about markets. They are about identifying customers and competitors, their values and behavior. They are about technology and its dynamics, about a company’s strengths and weaknesses. These assumptions are about what a company gets paid for. They are what I call a company’s theory of business.”