Evidence-Based Management– Fact-Based Decision-Making: Forget Folklore, Fads, What You Think is True: Get the Facts…

Evidence-based management is a way of thinking, looking, acting… at the world. The mind-set rests on two disciplines: 1.) a willingness to put aside belief and conventional wisdom– the dangerous half-truths that many embrace– and instead hear and act on the facts; 2.) an unrelenting commitment to gather the facts and information necessary to make more informed, intelligent decisions and to keep pace with new evidence… and use the new facts to update practices…

According to Jeffrey Pfeffer and Robert Sutton; if doctors practiced medicine the way many companies practice management, then there would be far more sick, dead patients and more doctors would be in jail… managers are seduced by far too many half-truths; ideas that are partly right but also partly wrong and that damages companies over and over again. Yet, managers routinely ignore or reject solid evidence… Evidence-based management (EBM) is a process that explicitly uses current, best available evidence in management decision-making. Its roots are in evidence-based medicine– a movement that applies scientific method to improve medical practice, and the essence is–get the facts about what works… that’s the whole idea behind evidence-based management…

In traditional management we fall back on basic methods, for example; come up with an idea, try it out, test it, measure it, modify it, based on what you learn… And, evidence-based management can help with this process by looking for risks, drawbacks… in what people recommend; which may avoid making decisions just based on untested, strongly held beliefs… rather than the facts. This is all fine and good but it’s simply not reasonable to expect managers in today’s fast-moving, competitive business environment to slog through masses of research data, studies… On the other hand, making decisions based on often unverified, incomplete information is one of the things that makes management an art…

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However, at end of day, managers have to pull together information, recommendations… as best they can and make their own decisions… According to Stephen Gill; my immediate reaction to evidence-based management was; Duh! What have companies been doing for the past hundred years of modern management… managing by the-seat-of-their-pants? I suppose the answer is, ‘Yes’…  

If you ask corporate leaders if they use research to make their decisions; most if not all, would say– of course I do’. Most leaders already believe that they practice evidence-based management, but they tend to look for data that confirms what they already believe to be true and disregard the rest of the data that might say otherwise…

The issue is not that leaders choose to ignore evidence; it’s that they, like most humans, suffer from a ‘confirmation bias’ and a ‘illusion of cause’ (i.e., action causes outcome)… The challenge is to help managers become more aware of bias, and overcome their flawed way of thinking…

In the article Evidence-Based Management by Jeffrey Pfeffer and Robert I. Sutton write: A bold new way of thinking has taken the medical establishment by storm in past decade; the idea that decisions in medical care should be based on the latest and best knowledge of what actually works... According to Dr. David Sackett, he is the individual most associated with evidence-based medicine; defines it as the conscientious, explicit and judicious use of current best evidence in making decisions about the care of individual patients…

It may sound laughable, after all; What else besides evidence would guide medical decisions? If you believe that then you are woefully naive about how doctors have traditionally plied their trade: Yes, the research is out there– thousands of studies are conducted on medical practices and products every year… but unfortunately, physicians don’t use much of it.

Recent studies show that only about 15% of doctors’ decisions are evidence based… Instead, very often doctors rely on old common practices, for example; obsolete knowledge gained in medical school… long-standing but never proven medical traditions… methods gleaned from experience that they believe in and are most skilled at applying… information from hordes of vendors with products, services to sell…

The same behavior holds true for business managers looking to cure their organizational ills. Indeed, we would argue that business managers are actually much more ignorant than doctors about the most appropriate business cure, prescription… and, they’re less eager to find out. If doctors practiced medicine like many companies practice management, there would be more unnecessarily sick, dead patients… and more doctors in jail or suffering other penalties for malpractice…

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Many experts say, it’s time to start an evidence-based movement in the ranks of business managers. Admittedly, the challenge may be much greater in business than in medicine… Simon and Garfunkel were right when they sang; man hears what he wants to hear and disregards the rest… It’s hard to remain devoted to the task of building full proof, evidence-based cases for action when it’s clear that good storytelling often carries the day. Indeed, often we reject the notion that only quantitative data should qualify as evidence.

As Einstein put it; not everything that can be counted counts and not everything that counts can be counted… When used correctly; stories, cases studies… are powerful tools for use in building management knowledge, but there are limits beyond which they are ineffective…

According to Gordon MacKenzie; good stories have a place in an evidence-based world, e.g.; in suggesting hypotheses, augmenting other (often quantitative) research, rallying people who are affected by change… As with medicine, management is and will likely always be a craft that can be learned only through practice, experience…

Yet, we believe that managers (like doctors) can practice their craft more effectively if they are routinely guided by logic, facts, evidence… and they must relentlessly seek new insight knowledge, wisdom from both inside and outside their companies, and keep updating their assumptions, knowledge, skills…

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In the article Evidence-Based Management Can Make Business Competitive by Chris Malcolm writes: Evidence-based management is a process in business management that emphasizes planning, problem-solving… based on careful research, analysis… rather than intuition, ideology… Popularized by Jeffrey Pfeffer and Robert I. Sutton, it emerged from research into clinical practice in medicine, and its principles may help businesses approach their operations more rationally, and even improve their competitiveness in the marketplace.

  • Evidence-Based Decision-Making: Encourages business leaders to go beyond their personal experiences, avoid management fads and treat their own ideological beliefs with skepticism… When managers check their beliefs against real-world data, they will be less likely to make costly mistakes based on misleading impressions…
  • Experimentation and Learning from Mistakes: Test assumptions through experimentation, testing… before approving expensive, large-scale projects… Even failures provide reliable evidence on which to base future decisions… Mistakes learned can cut wasted time, resources… and affect a company’s bottom line…
  • Seeking New Information: Seek new knowledge, insight… from both inside and outside the company… Managerial, organizational openness to new ideas can help a company improve its market position. By systematically exploring alternatives to its normal ways of doing business, a company can discover more efficient ways to operate, and even develop entirely new business models…
  • Potential Problems with Evidence-Based Management in Business: The fact is that relatively few business managers practice it… To put EBM principles into practice, managers must wade through mountains of information-evidence, much of it incomplete, misleading or only partly relevant to particular business. In addition, EBM may diminish personal authority of business leaders by elevating facts over intangibles, such as; experience, business savvy…

Evidence-based management is a simple but not new idea… It just means finding the best evidence, facing the facts, acting on facts… rather than doing what everyone else does, or what you have always done, or what you thought was true… According to Jeffrey Pfeffer and Robert I. Sutton; leaders must have the courage to act on the best facts they have right now, and the humility to change what they do, as better information is found… Yet surprisingly few leaders actually do it.

Decision-making is the essence of management, which explains why so much attention continues to be focused on how to do it better. In recent years, much is written about evidence-based, or fact-based, decision-making. The core idea is simply that decisions are supported by hard facts, sound analysis… and these decisions are more likely to be better than decisions made on the basis of instinct, folklore, informal anecdotal evidence…

Many organizations are heeding the call and are investing heavily in big data infrastructures, analytic tools… assuming that evidence-based decisions will result in better over all decision-making… However, there is a downside; the primary risk of making decisions by relying exclusively on hard evidence-just the facts is that the algorithms, models… used to transform evidence into a decision can provide an incomplete, misleading representation of reality…

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According to Bret L. Simmons; I am strong advocate of evidence-based management. But, it can be very difficult to implement, for example; when doing research for evidence to support  management  decision-– I often, after reading an article in an important journal or study… have one of three reactions when I think of how I would explain the relevance of the research to practicing managers: 1.) Huh? What the heck did they say? 2.) Ok: I get it, but what am I supposed to do with it? 3.) Is that it? There is really nothing radically new or different with it... Even more challenging– the best researchers-experts often disagree about the meaning of the same evidence…

According to William Kelvin; EBM changes how managers– think, act… It’s a way of seeing things differently, and to manage in ‘reality’ without emotion or bias… EBM uses only hard facts, it discards opinions rejects it as total nonsense… There is no room for dictatorial, opinionated, discriminate thinkers… who often feel they already know all the answers… In many cases, managers pay little or no attention to quality-source of evidence that they rely on to make decisions.

As a result, decisions are mostly based on so-called ‘best practice’, which may include; unreliable, non-relevant sources of information, e.g., experiences, stories, success, failure… Whereas, an evidence-based decision seeks to guide managers in thinking in terms of; clear logic, key facts, unbias data… and validated sources, which all supports the best possible decision-making… According to Richard Feynman; first key principle is not to fool yourself when making decisions when, in fact, you are the easiest person to fool…