Management for skeptics

At some point near the end of last semester I checked out Hard Facts, Dangerous Half-Truths, and Total Nonsense by Jeffrey Pfeffer and Robert I. Sutton from the SFU library.

As a graduate student I had access to term loans from the library so I took the book out knowing that at some point I’d get through it. The book is due back this week, so naturally I rushed through and finished reading it just before I have to send it back. So here’s my review.

imageThe book was written in 2006 and is Pfeffer and Sutton’s attempt to apply the techniques of evidence-based medicine to managerial practices. Pfeffer is a professor of organizational behaviour in the Graduate School of Business at Stanford and Sutton is Professor of Management Science & Engineering in the Stanford Engineering School.

Browse any bookstore’s business section and you’ll find more gurus and magic solutions than even the health and self-help sections. This book attempts to lay out the basics of the scientific method for the business world: Hypothesize, observe, and evaluate. They argue that decisions need to be made by considering the best data possible and that all projects need to be designed to collect useful data to evaluate their success and failure.

The middle section, and the bulk of the book, is dedicated to debunking some common half-truths in the business world. They then offer some sound, evidence-based advice on each topic.

Specifically, they cover whether work and the rest of life should be treated as fundamentally different; they ask whether the best organizations have the best people; they analyse the effectiveness of financial incentives; they look at whether a focus on strategy will help or hinder an organization; they ask whether organizations need to constantly change; and finally they question the role of great leaders in the success of organizations. These are all called dangerous half-truths because while there is some evidence to support each assertion, there is also much that gets overlooked by reducing complex management decisions to catchphrases like “change or die.”

For example, in the Strategy is Destiny? chapter, they note that organizations do need to know where they’re going, but spending too much time on developing a strategy has caused many companies to ignore the implementation of that strategy. Similarly, in Change or Die? they point out that all change is risky, and those risks are often underestimated by those championing change, while on the other hand to stagnate in any industry is potentially even more risky.

The entire book will be familiar ground for those in the skeptics movement, but what’s nice is that this pushes into an area often ignored by skeptics – even within our own organizations. We like to talk about the need to base medical decisions on hard facts and reason, but that advice is no less true when it comes to making business decisions. So while most of the book may come off as common sense, following the evidence is notoriously difficult for our species.

Finally, I will note that many skeptics argue for science-based rather than evidence-based medicine. This distinction is meant to identify the need to include logic and reasoning in the decision making process. Pfeffer and Sutton acknowledge the need for more than just raw data, especially when no data is available. In such cases, they argue that an idea should be questioned skeptically before adopting, especially the hidden assumptions of an idea. They also seem hesitant to use the phrase science-based to avoid confusion with the subject of scientific management.

For more on evidence-based management, check out their website.