Evidence Based Management

This is a guest post

Management is not a profession…

It isn’t like medicine, engineering or law; it is a state in which we live.

  • Sometimes it is formal — perhaps a promotion at work.
  • Sometimes it is  informal — circumstances force us to organise things.  Remember when you could no longer do everything yourself?

There are no legal, industry or educational requirements to become a manager.  And yet, in our relentlessly competitive world, we are expected  to:

  1. Make the best possible decisions
  2. As fast as possible
  3. At the lowest possible cost.

It is easy to appraise decisions in hindsight, when we can see their outcomes.  But how can we be confident in our decision-making process from the start?

Evidence based management (E.B.M.)

This is the practice of putting trustworthy data to use.  Using hard logic to test our management theories.  If the theory survives the test, put it into continuous practice.  Then keep testing.

Medical professionals around the world embrace the E.B.M. approach.  It has also found useful application in other social spheres (for example, policing).

E.B.M. for business is not a new idea, but organisations struggle to install it.  There are two key reasons why:

  1. Individuals resist E.B.M. for fear of changing power dynamics.  Data and logic supersede formal authority and reputation.  Bad news is not easy to hear, and often less than easy to deliver.
  2. Organisations lack a framework for applying E.B.M. well.  E.B.M. is not a closed list of mechanical activities. It is a mindset, an approach, a set of principles.

Yet, those organisations that embrace E.B.M. enjoy great value from it.

E.B.M. successes

In 1999 DaVita was struggling to meet payroll and facing bankruptcy.  Incoming CEO Kent Thiry instituted a No Brag, Just Facts policy.  Within five years quality ratings were the “best in the industry”.  Staff turnover was 50% lower and financial results were excellent.  In 2014 DaVita ranked 230 in the Fortune 500.

Be ready for E.B.M. to throw up facts that may seem counter-intuitive.  Gaming giant Harrah’s applied E.B.M. principles and learned that:

  • It could increase gambling revenue from paying guests
  • By halving the value of its promotional packages

E.B.M. also led Harrah’s to the same 50% reduction in staff turnover as DaVita.

How can your organisation install E.B.M.?

Systems thinking principles offer a useful guide:

  1. Understand that management is a response to a social problem, not a mechanical one
  2. Data should represent more than one perspective on the problem
  3. Confirm the quality of the data
  4. Verify the usefulness of your management targets
  5. Allow your people to respond to what the data shows

Oliver Cunningham helps people make better decisions faster at Active Ops

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