In the end, a really good business idea has five key qualities. (1) It is timely: It addresses, in a new, compelling way, an issue that is important to people right now. (It’s no coincidence, for example, that supply chain management became an important concept just as manufacturing became much more global.) (2) It has explanatory power: It reveals the hidden patterns and interrelationships that shape the phenomena we see, and that other theories or disciplines have not fully explained. (3) It has pragmatic value: It can be put into practice to produce replicable results. (Even relatively “soft” concepts like organizational learning have a nuts-and-bolts edge, helping to build human capabilities.) (4) It has a robust empirical foundation: It can be tested with real-world experience, and ideally with measurable data, and can survive theoretical challenge. (5) It has a natural constituency: A group of key people are ready to hear it.
I think all the ideas listed in our top 10 have those qualities. Or at least I hope so, because the stakes are high. Ideas about business, from the invention of accounting to the “invisible hand” of Adam Smith to the thinking of present-day economists, have had impact not just in the business world, but beyond. If these are the most enduring business ideas, then the rest of the world will be shaped accordingly.
Reprint No. 05404
Art Kleiner ([email protected]) is editor-in-chief of strategy+business.