How does management science advance? Of course, in the hard sciences the field moves forward when some academia researcher develops and tests a given theory, and either proves or disproves it in an experimental setting. However, a free marketplace, with thousands (if not millions) of unpredictable people serving as influencers on the outcome of a test on a given business theory represents too complex an environment to prove or disprove anything (kind of makes you wonder why they bother to describe such a field of inquiry as “management science”). So, with the clean laboratory setting denied management theorists, how does management science advance? Clearly, it advances via the entrepreneurs. In a sense, each time an entrepreneur launches an enterprise, she is staking capital on either a new management theory or an established one in a new environment.

One of my favorite tests for validity in professional sports is how that sport is played in the Olympics. Olympic boxing is indistinguishable from professional boxing. Ditto for hockey, or basketball. But pro wrestling bears no resemblance to Olympic wrestling, save that both take place in a ring – a sure give-away that professional wrestling isn’t an authentic athletic venue.

Now compare and contrast the entrepreneur, staking most (if not all) of what he has to test his theory, working as hard as he can, interacting with customers, employees and suppliers, with the professors from your university’s business school. With the exception of those universities that go out of their way to maintain current practitioners on their faculties, the contrast could hardly be more stark. If the entrepreneurs’ ideas are invalid or mis-applied, he goes out of business, and usually fairly quickly. If the professors’ theories taught are invalid, then … he can go on teaching for decades. And, if such a one is published, then the invalid theories can be advanced well past his retirement, or even death. The bad theories in academia could go on for centuries.

Take the old saw from the accountants, that the point of all management is to “maximize shareholder wealth.”

This assertion has become so axiomatic among business school instructors that to even challenge it is perceived as a sure-fire indication that the one doing the challenging has absolutely no concept of management. It is actually the entrepreneur who provides the most intuitive refutation of this theory: when a new company is launched, how often are the owners basing their decisions on maximizing their wealth? Are they not, rather, focused (or even obsessed) with attracting and satisfying their customers’ demands? And, once we’ve stopped focusing on things like the best way of managing inventory, and started paying attention to how or whether our products and services are meeting or surpassing customer expectations, haven’t we moved foursquare into the realm of project/product management?

Consider the example of Frederick W. Smith getting a “C” on his economics paper that detailed the structure that would become the underpinnings of the FedEx corporation. Smith had a management theory that he thought would work, and was willing to bet millions of dollars on it. His professor disagreed, and gave him a “C.” The free marketplace gave him an “A+.” I believe that one of the reasons that Thomas Peters is so popular and successful is because, as an academic, he made it a point to leave the campus and get out into industry, find the successful ones, and uncover the reasons behind their success.

Compare In Search of Excellence (Harper Business Essentials, 1982) with Quantitative Models for Management (Davis, K. Roscoe, and McKeown, Patrick G., Kent Publishing Company, 1981). If you don’t have ready access to these volumes, take my word for it: the contrast in approach is as dramatic as Olympic wrestling compared with professional wrestling. One draws almost exclusively from the real world – the other, well, doesn’t, which is probably why people will voluntarily purchase the former, but will probably only buy the latter if their professor requires it.

While I readily admit that I have no idea which management theory will next be advanced in the business world, I do hope that the next invalid one to be overturned is the codex developed by the academic statisticians, risk management theory. With the exception of insurance companies and pharmaceutical organizations, which rely heavily on statistical models, nobody follows the risk management theories laid out in documents like the Guide to the Project Management Body of Knowledge, or just PMBOK Guide® in order to improve project/product performance. These theories – hypotheses, really, since they are singularly untested in an experimental setting – are usually observed due to some institutionalized procedural requirement, but they produce no improvements in organizational performance. They waste time and money, and are virtually never observed in start-ups.

Which is why the risk management-types, as well as other managerial academicians, should fear the true advancers of project management theory, the entrepreneurs.