The Example Dilemma in Business
At a superficial glance, their utility or value is rather obvious. Whether we try to compare the performance of the same company over time, or its performance relative to its competitors, we develop descriptions of various business instances. And, depending on the context, these approximations of the observed world range from simple stories to highly structured accounts that play a key role in pattern recognition and, subsequently, in theory development. But their use in business has a dark side that has grown more problematic over the years.
While examples and the more elaborate cases have always been an essential tool in business education, they made even more sense in the discipline’s infancy, since very little of the business phenomena was meaningfully codified at that time. Unfortunately, they became increasingly seen “as being most valuable when they encouraged students to abandon the search for theory and to learn how to make realistic and difficult decisions on their own,” creating a vicious cycle, as “generalizable business theories did not spring forth from case studies” (Gleeson et al., 1993). The lack of integrative, “big picture” theories led to an over-reliance on cases, which in turn diminished the perceived need for such theories.
Beyond the classroom, however, the consequences have been even more troublesome. Attracted by the lucrative field of management consulting or driven by the need to consolidate their respective professional careers, an increasing number of industry professionals have been putting forth a swelling amount of business advice of questionable quality. Enabled by the discipline’s lack of an integrative theoretical underpinning, they have been employing selective evidence (“cherry-picking”) to create compelling stories that tend to obscure the need for a solid theoretical foundation (Rosenzweig, 2007). Nevertheless, by their very nature, examples are always narrower interpretations of the actual accounts that they describe.
As a result, especially when referring to broader issues (i.e., a struggling company’s sudden turnaround), the process of identifying all key causal relationships can be very difficult due to the sheer number of factors involved. Besides, not only that human behavior is partially irrational (Kahneman, 2011), making it rather impossible to talk about a fully predictable chain of events, but the way we see our surroundings is more limited than we think (Simons & Chabris, 1999), and even what we see and experience tends to be remembered differently (Kahneman & Riis, 2005). And it is this duality of value brought on by examples — they can be useful, yet misleading learning tools — that [we should always be acutely aware of].
Gleeson, Robert E.; Schlossman, Steven; & Allen, David G. (1993), Uncertain Ventures: The Origins of Graduate Management Education at Harvard and Stanford, 1908-1939, Selections, Graduate Management Admission Council
Kahneman, Daniel (2011), Thinking, Fast and Slow, Farrar, Straus and Giroux
Kahneman, Daniel & Riis, Jason (2005), Living and Thinking about It: Two Perspectives on Life, in N. Baylis, F. A. Huppert, & B. Keverne (Eds.), The Science of Well-Being, Oxford University Press
Rosenzweig, Phil (2007), The Halo Effect ... and the Eight Other Business Delusions that Deceive Managers, Free Press
Simons, Daniel J. & Chabris, Christopher F. (1999), Gorillas in Our Midst: Sustained Inattentional Blindness for Dynamic Events, Perception
This article is a slightly-edited excerpt from a draft manuscript of the "letter to the reader", which was intended to be included in Cristian Mitreanu's 2013 book Spointra and the Secret of Business Success (The Aged Edition). As is, it was first published here.