Since KAMs are CEOs of their accounts, it doesn't hurt to extend the boundaries of our discourse and talk academically about the field of business management.

The below theories were taught in MBAs across the world, including at Harvard (and in some cases still are). Infact not only were they the academic standards of the time, but they were also being used in the industries. I still remember the toils of going through them in at my uni. They are now defunct and disproved which makes you ask some existential questions about business education.

1. Modern Portfolio Theory and CAPM

I was reading The Misbehavior of Markets in 2020 by Benoit Mandelbrot when I got curious about when the book was published. It wasn’t difficult to find the answer—I went to the first page, and it said 2004. Right. So this was two years prior to when I did my course on Portfolio Management. And the textbook had significant coverage of the Efficient Markets Hypothesis, Modern Portfolio Theory, the Efficient Frontier, and the Capital Asset Pricing Model.

These theories talked about how an investor can optimize their return for a given level of risk by diversifying assets, using Beta to calculate the risk of an asset relative to the market. But, as Mandelbrot mentions in his book—which he must have taken a few years to write, at least—it was well accepted that markets did not follow a normal distribution but instead had “fat tails,” meaning a small number of rare events can have extreme implications (such as the 2008 financial crisis wiping out more than a century of accumulated banking profit). The curriculum of finance around the world was grossly outdated.

Also, markets are not efficient because investors actually have behavioural biases. So that course was not time well spent.

2. Bell Curve for Performance Evaluation

This was another victim of the normal distribution. In management, we were taught that employee performance in organizations follows a bell curve. Many of us found it frustrating to be categorized in the middle of the bell curve in our performance reviews because a certain percentage of employees had to be.

Besides demotivating employees and discouraging collaboration, it was later discovered that performance in organizations actually follows the Pareto Principle (Power Law)—20% of employees deliver 80% of the performance and results. This was taught in Organization Behaviour, Human Resource Management and other Management courses.

To hell with the bell curve for performance evaluations.

3. Frederick Taylor’s Theory of Scientific Management

Perhaps no one did more damage to the field of management than one of the fathers of management himself. In 1911, Frederick Winslow Taylor formulated management theories based on his observations of labourers loading pig iron bars at a steel company. A proponent of centralization, accountability, and efficiency, his work took a “scientific approach” to management—seeking scientific answers to unscientific questions.

Responsible for turning management into a pseudoscience, his approach—originally meant for blue-collar jobs—snuck its way into intellectually rigorous functions too. Thus were born the doctrines of centralization, disempowerment & efficiency. Doctrines now unanimously shunned by industry and academia alike.

"Principles of Management" was the course that taught us about this.

4. Deterministic Approach to Product Launches

Market research and long product development cycles took their most famous hit in the late 1950s with Ford’s Edsel failure—where four years of pre-launch hype and $2.5 billion (in today’s money) couldn’t prevent an absolute flop.

Market research showed that consumers want one thing, think they want something else, and then say they want something entirely different. (I’m sure Jaguar’s 2024 rebranding was well-researched too.)

New product launches benefit very little from market research and meticulous planning. What succeeds and what doesn’t is a work of the gods—i.e. randomness. Hence, the fail fast, learn fast, trial & error approach of the tech industry has now come into vogue.

5. Macroeconomics

Sorry, not a theory but a whole discipline.

As Nassim Taleb—my biggest influence—puts it, "An economy is closer to a cat than a washing machine."

The former is a complex, organic, adaptive system, whereas the latter is a predictable, engineered system. In an economy, there are innumerable forces at play, and even the impact of a single one of them cannot be predicted—let alone their interaction with each other.

A common topic in macroeconomics courses was General Equilibrium Theory, which posited that an economy naturally settles into a stable equilibrium. But that almost never happens.

That said, macroeconomic indicators and their definitions are useful for tracking an economy. But macro’s predictive function? Almost zero.

No wonder I just didn’t get it in uni.

6. Actually, most of Economics

The basic assumption of microeconomics is that the consumer is rational and maximizes utility. But as it turns out, they are not.

Daniel Kahneman proved in 2011 (I graduated in 2006) with Prospect Theory that people are actually loss-averse and often make decisions influenced by cognitive biases and heuristics. In other words, there are systematic errors in human judgment.

I can safely say my grade in microeconomics did absolutely nothing for me in practical life.

Anything else you think we studied in our business education that was useless?