Evidence That Demands A Verdict

21 September 2006 at 8:28 pm Peter G. Klein 6 comments

| Peter Klein |

The first time I heard the term evidence-based management I was bewildered. What other kind of management is there? Faith-based management? A priori, praxeological, apodicticly certain management? The concept seems empty and trite, akin to “faith-based religion” or “water-based boating.”

Imagine my surprise to discover that evidence-based management (EBM) is an established approach, or school of thought, in management theory. Its major proponents, Stanford’s Jeffrey Pfeffer and Robert Sutton, write that EBM “means finding the best evidence that you can, facing those facts, and acting on those facts — rather than doing what everyone else does, what you have always done, or what you thought was true.” Hard to disagree with that. But can this be said to constitute a theory? A conceptual approach? A movement?

Evidence-based management is certainly a catchy phrase, generating a Harvard University Press book and articles in such journals as the Academy of Management Review and Harvard Business Review. Nice work if you can get it!

Entry filed under: - Klein -, Management Theory.

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6 Comments Add your own

1. Lasse | 22 September 2006 at 8:02 am

Tell me Peter, what’s the difference between EBM and (intended) rationality?
2. Bob V | 22 September 2006 at 8:30 am

If institutional theory is a theory, why can’t EBM be?

It seems to me that every management theory portrays firms acting in some unique boundedly rational way. Doesn’t it make sense to set up another theory of straightforward rationality bounded only be experience and uncertainty? One could argue that this is just neoclassical economics, but the fact that economics covers something doesn’t mean that management shouldn’t have its own version.

We’ve accumulated so much research on bounded rationality of various forms, perhaps it makes sense for a practitioner-oriented HBR to present the alternative.
3. Peter Klein | 22 September 2006 at 9:10 am

I’m not qualified to say if EBM is simply intended, or unbounded, rationality. Hopefully readers who know this literature can comment.

What isn’t clear to me, however, is what EBM rules out. Look again at the quote from Pfeffer and Sutton above. What constitutes “best evidence”? What does it mean to “act on this evidence”? The articles on Pfeffer and Sutton’s site seem to contrast EBM to decision making based on gut instinct, precedent, or herd behavior. But those too can be consistent with “rational” behavior, if rational simply means making best use of the information you have. Gut instinct could refer to rules of thumb or cognitive frames that help simplify a complex problem. Relying on precedent, or past behavior, is completely sensible in a Bayesian-updating sort of way — when new “facts” emerge, you don’t completely throw away your old conclusions, but rather update your beliefs according to the strength of the new information. Finally, following the crowd can also be fully rational, if there is reason to believe that members of the crowd possess information you don’t.
4. Siyaah | 27 September 2006 at 9:17 pm

I’m glad someone finally brought this up!

I had the same thought listening to an entire presidential talk on this at an academy meeting (was it AOM 2005?). Ruined my lunch for sure.
5. Peter Klein | 28 September 2006 at 12:00 pm

Yep, it would have been Denise Rousseau’s Presidential Address at the 2005 AOM meeting in Honolulu. The talk is here:

Click to access 2005_presidential_address_amr_apr06.pdf
6. Siyaah | 28 September 2006 at 1:55 pm

And this is reproduced in AMR?! Ughh.

(thanks for the link Peter).