It is a scientific fact that decision-making requires
reasoning using research, facts and details, combined with emotion or gut feel.
For example, Antonio and Hanna Damasio’s work demonstrated that when a person
only has the capability of reasoning, it diminishes his/her aptitude for
planning and deciding on actions.1 In translation, emotion
integrated with reason is an essential building block to decision-making –
removing emotion reduces the capacity to evaluate effects, which renders
decision-making inert.
There are two perspectives about decision-making that are
important from a leadership perspective. First, only rational reasoning is
necessary for decisions, a fact rebuffed by the research described above. This
bias may be been exacerbated by the logically thinking Spock character in Star Trek. Alternatively is the belief
that emotions are dominant in decision-making and that, as long as a decision
has intuitive appeal, confirming evidence is not required.
In this publication, the focus will be on the latter
problem. When gut feel becomes sole support for a decision, it usually happens
at the higher ranks of the organization. Unfortunately, unchecked power can
lead to flawed decisions with disastrous consequences. For example, Ron
Johnson’s decision, as CEO of JC Penney, to discontinue promotional sales and
discount coupons turned out to be very costly. His decision relied on a
strategy from his former employer, Apple (“If it worked at Apple, it will work
at JCP.”). The strength of his conviction led him to implement without a market
test. Sales plummeted from $17 billion when he arrived in late 2011 to under
$12 billion when he left in 2013. JCP has been teetering on the brink of
bankruptcy ever since.
There is research supporting the importance of experience
and intuition, but few recommend it as a stand-alone decision mechanism.
Evidence-based decisions are essential in business today, and confirmation of a
decision’s veracity should be discovered in advance to support what one
emotionally or intuitively believes might be a good decision. Leaders can
energize this issue in organizations by making sure decision-making bodies
always appoint someone to play devil’s advocate or by asking someone to
deliberately present opposing views using evidence.5 Without a
process like this, humans tend to filter information that is contrary to
ingrained beliefs. The Groupthink literature (see Irving Janus, 1971)6
provides helpful suggestions to prevent bias from entering the decision-making
process.
What is evidence-based management? “Evidence-based
management (EBMgt) involves thoughtfully
and explicitly gathering, evaluating, and integrating the best available
scholarly research evidence, local evidence (i.e., facts of the situation,
organizational characteristics), viewpoints of affected parties, ethical
considerations, and the practitioner’s knowledge and judgment in the process of
managerial decision-making.”2 (p. 322)
One question that often arises is how much evidence is
necessary? I recently worked on a consulting project where the charge was to
develop an initial cost benefit analysis for a series of strategic projects.
Calibrating the right amount of effort to get a preliminary look is not always
easy. Thus, an initial effort to find evidence may only lead to a 40%
confidence level that the project is viable. Once the initial round of evidence
is gathered, and the metrics look good, the project can accelerate toward a 70%
level. Why not 100%? It is too expensive to attempt to locate perfect
information – instead, all decision-making is under a condition of ambiguity.
Generally, the objective for evidence-based management is to
reduce the variation between what business leaders think they know versus what
is supported in the research.3 The first steps of acquiring evidence
is to do a search using a search engine.3 This is how the 40%
confidence level is attained. In parallel, one can conduct the same research on
an academic database; many college libraries are open to the public, and some
larger public libraries also may provide access. I have also found Google
Scholar TM helpful. The
benefit of using scholarly searches is that many of the journal articles are
peer-reviewed; this means scholars in the field have previewed and accepted the
research as valid and consistent with current knowledge.
Beyond just finding the evidence, a manager must also assess
its credibility. One way to do this is to find more than one piece of research
to support a research conclusion.3
Even with the soundness supporting evidence-based
management, leaders remain hesitant for a number of reasons. Here are a few
outlined on Slideshare:4
- It takes longer to make a decision; managers want things to move fast – do it now rather than wait.
- A leader may have found recent information that suggests an easy solution to a problem – why wait if it is simple?
- Organizational rewards may be aligned with quick action rather than tied to outcomes.
In addition, hesitancy may exist for other reasons:
- The sense that the leader looks impotent if he or she does not have the answers.
- A misunderstanding about leadership – leadership is co-sponsored by followers and leaders.
- Loss of control. If the leader needs evidence for decisions, what’s to stop all significant decisions from using evidence and diminishing the leader’s value to the company? Finally, what if workers start to challenge the leader based on evidence?
I can see all the points made, but frankly, too many
decisions bypass the appropriateness of finding evidence, and I propose it has
pushed organizations toward mediocrity or failure.
Evidence is important for all significant decisions in
organizations. Leaders must redefine their role as facilitators of decision-making
rather than the decision-makers.
Please feel free to leave comments.
References
1 Damasio, A.R. (1994). Descartes' Error: Emotion, Reason, and the Human Brain. New York,
NY: Avon Books, Inc.
2 Goodman, J.S., Gary, M.S., & Wood, R.E.
(2014). “Bibliographic Search Training for Evidence-Based Education: A Review
of Relevant Literatures.” Academy of Management Learning & Education,
13(3), pp. 322 - 353.
3 Kepes, S., Bennett, A.A., & McDaniel, M.A.
(2014). “Evidence-Based Management and the Trustworthiness of Our Cumulative
Scientific Knowledge: Implications for Teaching, Research and Practice.”
Academy of Management Learning & Education, 13(3), pp. 446-466.
4 CEBMa Center for Evidence-Based Management,
Slideshare, EBGMgt Course Module 4. “Evidence-based
Management: What is Stopping Us?” Retrieved 2-24-15 from: http://www.slideshare.net/barene/4-eb-mgtwhatisstoppingus/1
5 Janis, I. (1995). Groupthink. In J.T. Wren
(Ed.), “The Leader's Companion” (pp. 360-373). New York: Free Press.
6 Janis, I.L. (1971). Groupthink. Psychology
Today, pp. 43–46 and 74-75.