Evidence-Based Management

September 23, 2017

Life is a series of choices. Managers are frequently faced with making decisions that range from everyday business operations to pivotal choices about a company's future direction. The ability to make informed decisions is increasingly crucial for managers. What would you do if you were the CEO of Amazon? How would you handle challenges from competitors? These questions highlight the importance of adopting evidence-based management to enhance decision-making, moving conversations from personal preferences and opinions to logic and data-driven insights.

2017 09 23

Evidence-based management is an evolving concept that aims to utilize and analyze high-quality experiments and studies to achieve positive outcomes. These strategies generally rely on well-substantiated facts that have a high likelihood of effectiveness and a low risk of harm.

Regrettably, many managers today are not basing their problem-solving approaches on relevant evidence or best practices. Without quantitative data, the success of any initiative is left to guesswork and assumptions. Many decisions are still driven by dogma and belief, rather than creativity or innovation. There is a pervasive fear of failure and a lack of original thought, leaving the status quo unchallenged and problems unresolved.

In today's VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) world, there is an abundance of data. Managers and entrepreneurs should adopt a Sherlock Holmes-like mindset, formulating theories that can be subsequently tested and verified. Implement a scientific approach within your organization and treat it as an ongoing prototype, fostering a culture of trial and error. Evidence-based practice is an applied research field that incorporates the best intellectual contributions of the past two centuries.

When it was observed that many medical treatments were ineffective despite data indicating otherwise, the focus shifted toward evidence-based practice. For example, it took nearly 40 years for medical professionals to routinely wash their hands before surgery. Recent studies show that doctors wash their hands only about a third as often as they should, and only around 15% of medical decisions are based on evidence. Effective change requires leveraging proven psychological theories, not merely instructing individuals to behave differently.

In professional baseball, traditional beliefs often dictate perceptions about the best players and team composition. The general manager must think strategically to win games. Michael Lewis's book "Moneyball" illustrates how evidence-based methods can be used for player selection, even in an industry resistant to change.

Likewise, the corporate world is rife with outdated misconceptions. The first-mover advantage myth persists largely due to ideology, even though empirical data suggests that execution quality trumps timing. Amazon wasn't the first online bookstore, and Google wasn't the first search engine. Being first isn't as important as being good enough.

Another misconception revolves around the most significant factors contributing to a company's success. Surveys indicate that 17% of people have no goals, while 75% have clear goals that correlate with strong performance. Innovation and new initiatives contribute 25% to overall success, while leadership and CEOs account for 10%. Therefore, goal-setting is a valuable management practice. Organizations would benefit if their leaders utilized the latest research findings.

Contrary to the once-popular belief that criticizing employees would boost productivity, negative emotions actually impair performance. Criticism creates a fear of failure and demotivates staff. There seems to be a correlation between a cheerful demeanor and increased sales. If one were not to rely on studies, a campaign to ensure employee smiles might be launched, but this could backfire as employees may be too focused on other tasks to remember to smile. Moreover, there's limited evidence to suggest that equity rewards, such as stock options, enhance organizational performance.

In conclusion, managers need to alter their thinking and actions by placing greater reliance on scientific evidence. Gather quality data to avoid untested theories. This is crucial for your organization, as adhering to best practices can improve performance and give you a competitive edge. Leveraging technology for data and analytics can aid decision-making, and evaluating outcomes can provide a clearer lens through which to assess current strategies. This foundation of evidence supports a more informed, data-driven approach to organizational change and effort.

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Victor Leung, who blog about business, technology and personal development. Happy to connect on LinkedIn