The word theory is thrown around loosely in society. Anyone with an opinion is said to have a theory. In reality, people generally have a hypothesis (i.e. an educated guess) or an opinion…not a theory. To understand business-related sciences it’s essential that you understand the distinction.
A theory is a scientific attempt to explain a phenomenon. Researchers start with a research problem. For example, you might want to know if there is a relationship between customer service and customer loyalty. Most people probably have an opinion on this, one way or the other, but until these opinions (i.e. hypotheses) are tested: We don’t know.
To know conclusively, we would need to design a survey; collect the data; and arrive at findings. However, one study would not suffice. We’d need to run the same study multiple times — with new data — to ensure we receive the same results. This is called statistical reliability, which allow researchers to trust the data is accurate.
If we get the same results over and over, we have a theory, which will predict the relationship between service and customer satisfaction. You would know with about 95-99% statistical probability the effect service quality has on consumer satisfaction. If you see how measurement makes management and marketing easier and more effective, then you understand the central premise of leadership theory.
Practical Tip: It’s also important to understand what leadership isn’t. Theories are based on research, and all research has limitations. Therefore, all theories have limitations. This is why you have to know what exactly a theory is measuring.
For example, let’s say you want to conduct a job satisfaction survey with your employees. A popular survey used by companies is the Job Descriptive Index, which measures five dimensions of job satisfaction:
- Satisfaction with Co-workers
- Opportunity for Advancement
- Satisfaction with Supervisors
- Satisfaction with the work itself.
These are five important aspects of job satisfaction, but there may be other factors that influence job satisfaction too. Issues such as one’s commute, work-space, vendor relations, benefits etc. could also affect satisfaction. Knowing this, you might want to combine several surveys to get a better understanding of the complete workplace experience.
Also, theories are not designed to replace intuition. Nobody wants an army of statistics driven robots who put research findings ahead of common sense. Not everything can be measured, and not every decision should be based on a research study. Emotion is important too.
In fact, emotional intelligence is one of the biggest factors in leadership success. The key is to not rely solely on intuition and experience. Rather, use theory in combination with emotion and reason.