FROM THEORY TO PRACTICE: HOW CAN I MANAGE THE DISCONNECT?
Any professional will concede that the world between the classroom theory (or the textbook) is often far disconnected from the reality we encounter in the real world. ‘Are You Preparing For Exams Or, Career Success?’ Off course, employers know this too well, but, faced with fierce competitive pressures to deliver to key stakeholders (e.g customers or suppliers), there is often insufficient time and resources devoted to your readiness to translate that ‘theory’, to help solve the real world problems -for which you were, or will be inevitably hired. In fact, most employers expect that you would have mastered this already from school; which is often not necessarily the case – see ‘Are You Preparing For Exams Or, Career Success?’
As opposed to the pure sciences or the liberal arts, the field of finance and business is a social science -so, one could underline some broad presumptions to clarify the disconnect between the theory and the
THE APPROACH TO REASONING REQUIRED TO GRASP THE THEORY AND, WHAT IS REQUIRED TO PRACTICE -ARE FUNDAMENTALLY OPPOSED TO ONE ANOTHER
A theory is a Body of Knowledge, typically codified in a textbook, usually, a system of ideas or mental models of perceived reality (assumptions, principles, rules, formula, conventions, propositions, or hypothesis) that attempt to account for a situation, or provide a plausible, scientifically-accepted or rational explanation of cause-
1.Deductive Reasoning: The basic premise of deductive reasoning (sometimes called inferential) is basic logic or rationality of the form: if A is bigger than B and B is bigger than C, then C must be bigger than A. Alternatively, if we assume the pass mark of an exam is set higher at 60% instead of 50%, then the student will work a lot harder to pass the exams. Deductive reasoning moves from the general to the specific –we want the students to study harder, so
we raise the pass mark, and say teach better; and then we prescribe the assumption that the students will do what is necessary to pass exams!
2.Inductive Reasoning: Under this premise, things move in the opposite direction to what deductive reasoning prescribes, that is, from specific to general. The precondition is that you observe a real world phenomenon e.g a meticulous analysis of the financial data of a company in one’s mind could be seen to form some patterns which one then uses to form some principled predictions about the future performance of the company, or in some cases, develop new thoughts for further testing.
Obviously, the financial data itself may be linked to non-financial or other data not apparent in the observations -hence the principles or conclusions drawn may be false, yet the iterative learning process of drawing such conclusions, from observing real world phenomenon, improves (or, helps to validate the theory) or, forms new theories that enriches the transition from theory to practice.
To continue reading this article, subscribe to the FREE February issue of The Future CFO Magazine.