On the plane over I finished Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management by Jeffrey Pfeffer and Robert Sutton. This excellent book lays out why and how companies fail to drive their business based on evidence, and instead “miracle cure” advice and personal reactions – largely to the detriment of everyone involved. The book quickly lays out why you should take an evidence-based approach and some guidelines on how. The meat of the book comes in chapters on various half-truths that are dangerous in terms of managing people and organizations:
- Is work fundamentally different from the rest of life and should it be
- Do the best organizations have the best people
- Do financial incentives drive company performance
- Is strategy destiny?
- Is it change or die
- Are great leaders in control of their companies (and should the be)?
They wrap up with a call for evidence-based management. The book is well-written, funny in many places and slightly depressing (if you don’t see yourself or your company in any of the “how not to” stories I will be astonished) but very worthwhile. Some of my favorite quotes include:
- “If doctor’s practiced medicine the way many companies practice management, there would be far more sick and dead patients, and many more doctor’s would be in jail”
- “If you think you have a new idea, you are wrong. Someone problably already had it. This idea isn’t original either; I stole it from someone else
- “Treat your business as an unfinished prototype”
- “No brag, just facts”
In particular they recommend making sure you have identifed cause and effect when considering past successes, taking account of changing circumstances and establishing why something was effective before adopting it. They emphasize the importance of attacking assumptions and establishing which are pre-conditions for success. The book lays out plenty of evidence on the importance of narrow testing of new ideas before rolling them out, especially in ways analogous to the double-blind study used in medicine. They discuss the importance not of individual leaders being great but of them building a structure within which people can be successful (think Toyota) and they conclude by reminding us that wisdom is knowing what you know and what you don’t know while still acting on the best available data and being willing to change as new data becomes available.
I think establishing an adaptive control infrastructure (so you can try and track multiple approaches) is a great way to establish testing in business decision making and that the use of rules and analytics to automate decisions is a very powerful way to ensure that your front-line staff have an environment in which they can be successful. Enterprise decision management, EDM, can provide the IT infrastructure you need for evidence-based management.
I would also recommend three other books I have reviewed recently:
- Competing on Analytics: The New Science of Winning
Tom Davenport’s book shows one aspect of evidence-based management – driving company behavior with analytics – and uses some of the same examples (Harrah’s, for one)
- Making Robust Decisions: Decision Management For Technical, Business, & Service Teams
David Ullman’s book is a great discussion of decision-making in the face of uncertainty, a key skill in evidence-based management
- The Halo Effect: … and the Eight Other Business Delusions That Deceive Managers
Phil Rosenzweig’s book disses many of the same business trend half-truths with even more wit than this one. If you are cynical about fix-everything-with-technique-X books, and you probably should be, this is a great book
You can buy the book here, and you should.