BUSI 103 - Introduction to Business (Chapter 1)
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What do you teach someone about business when they have never worked in one?
The students I taught arrived with almost no experience of organizational life, and most business curricula are built as though they had it.
I spent almost seven years teaching business to United States Military Academy Army cadets. These young men and women were incredibly talented, worked hard, and were intensely focused on pragmatic things. There was a selection effect in play, since they were opting into the profession of arms and into West Point itself. Over the course of their lifetimes, their experience will help them be, in many different contexts, amazing leaders who have to make decisions about how to mobilize and motivate people, resources, and opportunities to create great impact.
Here’s something else. At the time I taught them, they were all undergrads, and almost all of them had close to zero experience working in an organization, achieving goals with others, and working in a business, let alone running a business.
As someone who has taught undergrads and was an undergraduate of business education myself, I think there’s one big flaw here. A lot of programs borrow from a curriculum that was built for a different audience, namely MBAs. These are people who have had four or five years of work experience, who have already gotten an undergraduate degree, and who have lived and worked in organizational life before coming back to school. They are prepared and battle-tested from a range of lived experiences. When we present them with theory, an amazing thing happens. It immediately activates all these memories they’ve accumulated in a way that helps them make sense of the theory. They can also draw upon the experience of others in their class, what classmates saw in their own organizations, and come up with collective insights.
MBA students are older, and they’ve had the opportunity to work with other people, setting and pursuing joint goals as a team. They have experienced the benefits and frustrations of organizational work life, the importance of being a team player, the satisfaction of learning and supporting the learning of others, all while working to produce an outcome. This is difficult to do, and we learn it gradually through experience. That experience is what a typical MBA student has.
Undergraduates are different. Most don’t have this experience, and because of this, many of these management theories don’t land with them because they have no experience to connect them to. I wrote this book with this audience in mind: those who really want to learn about business, but are starting from a thin background. Like the cadets in my classroom, some don’t have a lot of accumulated business experience. For them, an MBA (or MBA-lite) is not the best way to learn, since the missing contextual background interferes with the absorption of the content. Rather, they need the theory and practice to arrive together.
Some of what matters most in management is close to invisible to anyone who has not yet had to do it.
Here is one example I have seen. When we do a personnel review, some human resource teams provide the reviewer with language outlining the capabilities you are looking for in demonstrated performance. There are descriptions of what this looks like at a high-performing level, a middle-performing level, and a low-performing level. Very often students don’t see any appreciable difference between having those levels specifically laid out and just having a general description with a rating of 1 through 5.
If you have ever performed a personnel review with somebody who takes it seriously, these can be very important. Well-written descriptions help convey expectations; they also help calibrate across different reviewers. The kind of conversations you have are different. People might approach reviews with more seriousness. Finally, the whole process lends itself to more opportunities to improve the system as a whole.
Of course, a good performance review has a balance of structured assessment and more fluid conversations. The structure makes vague judgments more coherent, but some of the conversation is unstructured, more speculative counsel. Striking this balance is both difficult and important.
Students who have never seen this before find it hard to appreciate the nuances of performance reviews. When they role play it, there are no genuine stakes, so it feels like a boring exercise with little insight. Simulations don’t surface what these interactions are really like. Because students don’t have long working histories with others, role plays feel awkward and inauthentic.
Teaching people who have never been a part of a workplace performance review about how to do them well isn’t easy. This is just one of the many things in business where detailed descriptions of principles don’t help much in conveying what is valuable to learn.
A course that makes you good at describing business is a different thing from a course that leaves you able to do something.
A course that makes you good at describing what business is about is boring. A course that teaches you how to make decisions in that context is useful.
I have taught Introduction to Business for almost ten years. I have never liked a single introduction to business book. Too often, they’re focused on terminology. We start from a point that is true - many people don’t know very much about business - but then we proceed to catalog the whole world, full of descriptions and definitions and frameworks, with heavy focus on concept clarity. So many concepts:
It’s really easy for somebody taking an intro class without going further to think business people are only focused on acronyms and light touches of concepts, without getting into detail on anything specific.
With the exception of a couple of managerial economics books that actually get into the details of cost models and how they inform manager decision-making, many of these textbooks are left wanting. They are focused on getting people prepared to have a great conversation about business using business terminology, but not on getting into the interesting part about making decisions.
Business books focus on functions like marketing, operations, human resources, finance, and accounting. These functions are generalized across many different industries. Such texts focus on what is broadly true in every situation, which ends up being incredibly high-level and not particularly interesting or useful. Many think this is the best place to start an intro class. But I don’t find it a very exciting place to start, and many students don’t pursue beyond this.
Fewer concepts, more reps.
There are a great many small issues that really are not fundamental to what general managers think about. The basic questions are these: should I grow, and what would happen if I did? Do I have the right formula, technology, and cost structure to accomplish my goals? How do I compare to other competitive offerings in the marketplace? I understand that knowing my customer is important, and marketing has plenty of frameworks for thinking about that - but how do I really figure out who my customer is, or should be? How do I create alignment between what I do and their perception of value?
The textbook I am trying to write here is a collection of a handful of very particular concepts and tools that managers use every day. Mastering them is not about breadth or depth - it is about reps across different contexts.
In application, we learn something every skilled craftsperson knows: that theories, frameworks, and tools don’t match up precisely to how the messy world works. They generalize, and that’s what makes them useful. They just don’t generalize perfectly to everything, and sometimes, they don’t generalize well at all. Business professionals need the wisdom to apply theories judiciously, without being slavish to them and ignoring the important contextual pieces that limit their application. There’s a craft in reading the circumstances and finding a tool that doesn’t quite fit, yet finding the best way to apply it and get some insights anyway.
The same principle behaves differently in healthcare than in financial services, and learning a context quickly is itself a skill.
Students new to business often don’t have intimate familiarity with many industries. In fact, many people with years of work experience don’t know many industries. I’ve had the benefit of a consulting background that has introduced me to many industries - media, healthcare, industrials, and high-tech. There, I learned that industry context really matters. Financial services work very differently from healthcare, and that context changes how we apply the principles from our business knowledge.
A lot of novices, especially undergraduates, don’t have any industry knowledge, so they face real hesitation when applying principles to anything in particular. They don’t know much about how the real world works in many different settings. I don’t believe we should avoid that. Instead we should jump in with both feet. Rather than abstracting away all specifics, I’m a big proponent of diving in even before we know a lot about a specific industry, and learning as we go. It quickly reveals gaps in understanding, sharpening what we need to understand next to push problem solving forward. That conflict and friction help us learn a lot more and a lot faster about the context, and about how to use the theory too! It’s not a challenge that I try to hide away from students, but one that I encourage them to grapple with immediately. That means having students wrestle with specific problems in one industry and then switching to another, so they see how priorities change - what becomes important to look at, and what fades into the background as the context shifts.
Learning this way can feel overwhelming when you don’t feel knowledgeable about industries. That is fine. The different settings test how flexible and fluent we are in our mastery of concepts. At the same time, the friction and difficulty we face in applying them to new settings heighten our awareness of the limitations of theory, forcing us to imagine new theories to reconcile the shortfalls.
That’s a lot for instructors to orchestrate and for students to absorb. What is the answer here? You have to have fewer concepts and more reps.
When you’re dealing with an audience that is learning business from the starting point, the answer is not to avoid the contextual pieces. That is the lifeblood of what makes business interesting - it’s what differentiates those who can apply what they know from those who can merely describe it. Reps refine our understanding and deepen our wisdom.
The scope is narrow on purpose. The depth comes from the applications.
More reps in different settings means covering fewer core concepts. This book is my best attempt at curating a starter set of topics for grasping how business leaders think through decisions.
We spend a lot of time up front understanding why businesses exist. Businesses exist to create value, and the value creation framework helps us understand both what a business does for its customer and how it creates value that sustains itself. An entity that consumes more resources creating something than people are willing to pay for doesn’t survive. By understanding the value creation imperative, we get our first taste in diagnosing business health and performance as a system.
Next, we focus on understanding the basic economics of production: the behavior of different types of costs, how those economics are communicated in the model of financial reporting, and how these data can guide decisions about growth, capacity, new innovation, and investment. A chapter also asks where the firm itself should stop and somebody else should start - the important question of where firms play within the value chain.
Then comes the common standard toolkit for understanding investment - projecting forward, then reasoning back. How do we know the resources we are committing today will pay off in the future? This unit covers the classic tools of net present value (NPV); it also covers the framework of payback period and break-evens. We look at real applications of how such tools are used to shape investment decisions in an uncertain world.
Marketing is next. We introduce the basic elements of marketing strategy, of course, but we also layer upon this the connection to the economics at work. Every business does more than produce a good or service. It also has to account for the costs, efforts, and techniques required to find customers and build a pipeline of demand. This is a part of what businesses do, and for some it’s a very substantial part of how the value is created. We introduce how marketing, often treated as qualitative and conceptual, is also influenced by returns on investment, just like the production side.
After marketing, we introduce topics in sales. Sales is so much more than promotion and messaging. It’s about building a system and a process of how businesses find and engage with customers.
The book closes on strategy. We emphasize the importance of competitive advantage, the challenge of sustaining it, and how firms orchestrate talent, assets, and opportunity to win in marketplaces.
Now count the tools. Cost behavior. Contribution margin, break-even, operating leverage. Relevant cost against sunk cost. Present value, payback. Customer lifetime value vs. acquisition cost. Segmentation, targeting, positioning. Three lenses on competitive advantage. That is close to the whole kit, and the mechanics of all of it could be taught in an afternoon.
These eleven chapters are not eleven separate subjects. They are a small set of tools that jointly provide the analytical structure to diagnose opportunities and prescribe solutions across many business settings. The cost behavior you learn in the cost chapter (Chapter 3) is what makes operating leverage legible in the chapter on profit and loss (Chapter 4), and what informs which costs count when deciding whether or not to take a discounted order in the operating decisions chapter (Chapter 5). The logic from the investment chapter (Chapter 7) returns in the chapter focused on difficult-to-quantify opportunities (Chapter 8), and again in the marketing chapter (Chapter 10) when we compare lifetime customer value against the cost to acquire.
Description and prescription go together, and waiting until you understand everything means never acting.
Description and prescription both matter.
When I worked at McKinsey, we were driven by the two questions: “So what? Now what?” After wading through all the data, what is the implication, and what is the action? Describing the world is important - but so are prescriptions. What are we as a group going to do, and to what effect?
In school we often learn that one comes before the other: don’t act until you fully understand everything. That is one of the most useless lessons to learn in the world, because it’s never happening. We never have all the data that we want to make a full decision. We never have all the time to think about the data, or all the time to think about every possibility.
In the real world, time and data are always short - how should we think about problems within those constraints? What can we know from the data that is available, in the time that we have, to come up with the best decision to take an action? Sometimes, of course, we take action to learn more. We experiment and we test to get a better sense of how the world works. But even here, it is action that reveals truth. The insights seldom reveal themselves.
Prescription and description often go hand in hand. We act, and we learn more about the world, enabling us to describe it with more insight. That enhances our ability to make prescriptions that are more nuanced and have higher impact. In this approach of taking action, understanding the world, pivoting, consolidating learning, and repeating the cycle quickly and reliably, not only individuals learn but whole organizations can learn. This is a craft, and it’s something that we learn, like many crafts, through doing.
I think it’s really important to have theory and context where we practice that. We practice decision-making in the presence of imperfect information and without enough time, we see how those decisions go, and afterward we reflect on how we can make better calls. Life is messy. Sometimes we have to get creative and explore how much of a problem we can solve in the constraints presented to us. That practice is something that we should do from the very beginning, not because it’s merely the best we can do, but because that is a different way of thinking, a different craft that is fundamental to business education.
A frictionless plane is an amazing construct that helps us learn different things by guiding the focus of what we want to look at versus what we want to abstract away for a moment. When it comes to solving real problems, we have to practice reintroducing the friction, the imperfections, and the authentic messiness of the world. In some sense, being an experienced engineer is what helps us become a wise physicist as well.
Experience only becomes wisdom if you go back and harvest it.
Judgment and wisdom are something we learn with practice, and this often takes some time. But it doesn’t mean that we get judgment from years alone.
In the end, expertise is about wisdom. It’s something that many people assume happens with time: that old people have wisdom that young people don’t, and that it is fine that learners make mistakes all over the place. In time, it is believed, wisdom will come. I think that is too low a bar to set.
Judgment and wisdom do correlate with time, because over time we have a chance to do reps and to reflect on them. That said, there are some senior leaders who are being counted on to make wise decisions, and who don’t, because they haven’t actually extracted the full measure of wisdom from those experiences. You can have many experiences and, without reflection, consolidation, and the humbleness to recognize there is still more to learn, harvest very little from them.
Wisdom comes through more reps and the thoughtful consolidation of our insights. This is something that can happen in the planning, doing, reflecting, acting loop of continuous improvement. It is not too early to talk about that, and to model that as a mode of learning that our students can enact.
To do this, learners need to act and take a stand. It requires nerve to put thoughts and perspectives out there and expose them to critique. But that habit builds a way for students to develop stronger versions of themselves and their perspectives.
The bias for action, the humbleness to learn, the grit to do the hard work of revisiting what you know (and don’t), and cycling through it over and over again: this lies at the heart of just about every capability-building model. Some call it a process and others a habit - some even situate this in character. Whichever makes the most sense to you, it is the same with all crafts and all craftspeople. Capabilities are not absorbed or discovered - they are constructed.
© 2026 Eric Lin. All rights reserved. This chapter is provided for students in BUSI 103 - please do not repost or redistribute without permission.