Managers make decisions day in and day out. From solving interpersonal conflicts among employees to strategizing on how to communicate more effectively with customers, leaders overwhelmingly rely on experience and intuition to inform their decision-making process. Why do we adopt such an arbitrary approach to solving business problems? After all, when we see a physician for a health-related concern, we expect a personalized diagnosis and treatment recommendations founded in evidence. Since we know that history and context play a role in determining how physicians treat their patients, it should not be a surprise that an management intervention that works for one organization might not work for another.
Over the past 15 years, management scholars and practitioners have been increasingly promoting the use of evidence in the decision-making process. The premise behind this approach is that when one makes decisions using a combination of critical thinking and the best available evidence, the likelihood of a favorable outcome increases. In their book entitled Evidence-Based Management: How to Use Evidence to Make Better Organizational Decisions, Eric Barends and Denise M. Rousseau describe four sources of evidence that one can gather data from when trying to solve a business problem. They define evidence as information, facts, data, assumptions, or hypotheses, which can be gathered from articles in scientific journals, the experiences of practitioners, the internal data of organizations, and the values and concerns of stakeholders. Many managers already draw on some of these evidence sources when making decisions; however, the quality of evidence acquired tends to vary quite significantly.
The evidence-based management model emphasizes using the best available evidence because each business problem comes with its own unique set of circumstances. For example, the recommendations of a consultant who has a decade of experience advising a wide variety of clients would be considered better quality evidence than the results of a survey of 12 companies published in a popular magazine. To figure out what evidence to gather and how to ascertain its value, it’s essential to begin by defining the problem in the form of a question. That brings us to the first step of the evidence-based management model, which is to formulate a focused question that encompasses the population affected by the decision, the intervention, the end objective, and the context. A good example of a focused question might be: What incentives would be most effective for motivating front desk agents to upsell reservations from standard rooms to suites during the check-in process in a luxury city hotel?
Once the question is clearly defined, the next step is to begin gathering evidence. In this example, the decision-maker could conduct a rapid evidence assessment by reviewing journal articles on factors that motivate workers in the service industry, interviewing experienced industry professionals, analyzing data from past upselling campaigns, and conducting focus group discussions with front desk agents. Acquiring evidence can be time-consuming, so managers should consider what is at stake when determining how much time and resources to devote to this step. A decision that could jeopardize the organization’s reputation would warrant more extensive data gathering and diligence than one with limited financial and stakeholder impact.
With the evidence in hand, we can proceed to critically appraise it to make sure that it is trustworthy. This involves looking for alternative explanations, validating a claim through multiple reliable sources, and looking for flaws in a study’s design and methodology. After making a decision using the best available evidence, the last step in the process involves continuously reviewing our decisions and questioning our assumptions to make adjustments when we realize that we may have been wrong. There’s no guarantee that a decision will be the right one. However, the chances of success increase significantly when we use the best available evidence.
Evidence-based management is not the responsibility any one individual in the organization, but rather a disciplined way of making decisions that all managers can partake in. The steps that I described above can also be applied to the decisions that we make in our personal lives, for example, choosing what investments to make based on our circumstances and our future goals. The ability to critically appraise information, whether it be the news, survey results, or claims made by people in positions of authority, is more critical now than ever because of the ease with which people can publish unverified and inaccurate information on the Internet.
De La Salle University, a trailblazer in graduate business education, has introduced an MBA course on Evidence-Based Management this term. Students enrolled in the course gain practical experience on how to critically appraise evidence and make better informed decisions, which will undoubtedly increase their performance as managers and benefit the organizations that they work for.
Dr. Anthony Decoste is a Senior Professional Lecturer in the Decision Sciences & Innovation Department of the Ramon V. del Rosario College of Business at De La Salle University, where he is teaching an MBA course on Evidence-Based Management. He is also the President & CEO of Global Virtuoso and CareJet and a Fellow of the Institute of Corporate Directors. You can reach Dr. Decoste at anthony.decoste@dlsu.edu.ph.
The views expressed above are those of the author’s. They do not necessarily reflect the position of De La Salle University, its faculty, and its administrators.
