Bob Sutton Responds
A response, of sorts, to my post on Evidence-Based Management by EBM co-founder Bob Sutton:
Perhaps the term is doesn’t do much for you, but evidence-based decisions and implementations are the exception rather than the rule. It may sounds obvious, but few managers are masters of the obvious. It may sound like common sense, but common sense is in fact uncommon. I travel back and forth between the academic and management worlds, and evidence-based practice is rare — faith-based management is a lot more common and so are management decisions based on dangerous and powerful cognitive biases. Indeed, if you look at some of the work that Kahneman won the Nobel Prize for, you will see that humans in fact have trouble spotting and responding to accurate patterns. Look at the bad merger decisions that are made over and over again. Look at the belief in creating big gaps between the best and worst paid employees despite a huge pile of data showing that the opposite is true. Sorry if it seems trite, but like evidence-based medicine, it sounds trite until it is your money — or your life — that is on the line. People also laugh when I tell them that only about 15 to 20% of medical decisions are based on evidence — until they think of what it means for them and those they love.
I submit that, if the term bewilders and you believe that “What other kind of management is there?” it is a sign that you have no idea how most managers do their work, nor do you understand how most human beings make decisions. Start by reading Max Bazerman’s book on managerial decision-making.
This deserves a full-length rejoinder, but for now a few brief remarks will have to suffice. Partly Sutton and Pfeffer’s problem is one of nomenclature; they seem to associate “making decisions based on evidence” as synonymous with “being free from cognitive biases.” But, as I indicated in a comment on the original post, “evidence” does not interpret itself; the use of heuristics is fully consistent with making good decisions based on evidence. Have they never heard of subjectivism? In short, if EBM simply means “rational” decision making, then Sutton and Pfeffer appear to have a grossly underdeveloped concept of “rational.”
Can it really be the case that managers — and the investors who monitor and govern them — are generally foolishly and “irrational,” consistently leaving vast sums of money on the table, just waiting for a consultant to come along and tell them about “evidence”?