Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management |...

Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management | Jeffrey Pfeffer, Robert I. Sutton | Excellent! Insightful, analytical, critical, but demanding

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Hard Facts, Danger...

	Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management Jeffrey Pfeffer, Robert I. Sutton Harvard Business School Press, 2006 - 276 pages average customer review:based on 37 reviews view larger image
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highly recommended

An End to Faddism!

The marketplace for business advice is crowded with conflicting advice, many of which are retreads of older versions claiming to offer breakthrough results. The "really bad news" is that breakthroughs rarely happen - the wise manager will not simply jump for what is in vogue.

Corporate leaders who want to practice evidence-based management might begin by recognizing that the odds are against them in undertaking a merger and therefore, resist the urge to merge. More thoughtful leaders might do what Cisco Systems did - determine the factors associated with successful and unsuccessful mergers and then use those insights. Cisco concluded that mergers between similar-sized companies rarely work, due to frequent power struggles. They also found that mergers work best when companies are geographically proximate, with organizational cultural compatibility. Finally, Cisco also works to ensure that people within the acquired company stay.

"Hard Facts" then takes a swipe against benchmarking, stating that the wrong item may be copied (eg. Southwest Airlines' fast turnaround, instead of how it treats employees).

As for stock options, a study that looked at companies restating their financials found that the higher the proportion of pay in stock options, the more likely it would restate. Stock-based compensation is an incentive to increase expectations, not performance, and the easiest way to do that is to hype the stock. Similarly, the authors claim that there is little evidence that equity of any kind enhances organizational performance. Many believe in a first-mover advantage; empirical evidence is mixed and unclear.

Experiments (eg. marketing promotions, web-page design) offer a way to generate facts for management; another is to visit customers - especially when less data is available.

An important barrier to fact-based management is that is changes the organization's power structure. Another is that management lore is filled with "half-truths" that work sometimes, but not others. Examples include "the best organizations have the best people (yet IQ - the best predictor of performance - only explains 16% of performance; systems are a bigger issue (bad at NASA; excellent at Toyota, evidenced by its reopening G.M.'s troublesome Fremont plant and then attaining outstanding results with essentially the same former G.M. staff). Another example is "financial rewards driver performance" - yet, Emery Freight succeeded in immediate and substantial improvement using praise, while financial rewards often bring cheating and/or adverse side effects (eg. reduced safety). (The authors also point out that most performance drivers are outside the CEO's control; to be fair, one also needs to recognize that one of G.E.'s strengths under Jack Welch was his insistence on rapid response to environmental changes.) A third is "strategy is king" - here the authors conclude that most research in the area has not been well done, and that which has produced mixed results. Sometimes it is just "luck" - eg. Southwest came to emphasize fast turnarounds during its beginnings because extensive legal wrangling had reduced its fleet to three planes, which it then tried to cover a schedule designed for four; IBM's outsourcing CPU manufacture led Intel into chips, not Intel's planning.

Most change efforts (new products, process re-engineering, major software implementation) fail. But then, those who don't change face even higher odds of failure.

Finally, "Hard Facts" ends with a less than convincing set of guidelines for helping leaders sort through the conflicting evidence brought by management consultants, etc. Regardless, their excellence in pointing out all evidence against and contradictions between various proponents is invaluable. The book is also a call for reorganizing how business courses and materials are presented, so that more useful evidence (eg. the Cisco approach to mergers) is utilized.

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Excellent! Insightful, analytical, critical, but demanding

When it comes to popularized management wisdom, there are a lot of balloons of ignorance out there, many of them reinforced by self interest and self confidence. Fortunately these two Stanford professors are also out there, popping those balloons with wisdom, style and wit. You can learn a great deal, about management and otherwise, by reading these delightful essays.

p.s. Below please find some of my favorite passages for your reference.

The secret to Toyota's success is not a set of techniques but is philosophy - the mindset of TQM and continuous improvement it has embraced - and the company's relationship with workers that has enabled it to tap their deep knowledge. As a wise executive in one of our classes said about imitating others, "We have been benchmarking the wrong things. Instead of copying what others do, we ought to copy how they think." pg 7

Instead of being interested in what is new, we ought to be interested in what is true. - Pfefffer's Law pg 29

Not everything that can be counted counts, and not eveything that counts can be counted. - Einstein pg 40

Wisdom means "knowing what you know and knowing what you dont know," especially striking a balance between arrogance (assuming you know more than you do) and insecurity (believing you know too little to act). This attitude enables people to act on their present knowledge while doubting what they know. It means they can do things now, as well as keep learning along the way. pg 52

Can you and your colleagues describe your company's strategy in a sentence or two? Do you and your colleagues even agree on what the strategy is? There is one powerful lesson from teh strategy literature and that is the importance of having people understand what they are supposed to be doing and develop some consensus about where, in their view, business success comes from. In simple terms, you arent likely to get anywhere if you dont know where you are going. pg 153

CEO Meg Whitman attributes much of eBay's success to the fact that the company spends less time on strategic analysis and more time trying and tweaking things that seem like they might work, and learning along the way...Andy Grove, former CEO of Intel, said, "None of us has a real understanding of where we are heading. I dont. I have sense about it...but decisions dont wait. pg 155

The nine implementation principles to help people and companies that are committed to doing what it takes to profit from evidence based management. Chapter 9
1. Treat your organisation as un unfinished prototype
2. No brags. Just facts
3. Master the obvious and mundane
4. See yourself and your organisation as outsiders do
5. Power, prestige and performance make you stubborn, stupid and resistant to valid evidence
6. Evidence based management is not just for senior executives
7. Like everything else, you still need to sell it
8. If all else fails, slow the spread of bad practices
9. The best diagnostic question: What happens when people fail?

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Do not pass GO, READ this book

I am a big fan of Pfeffer and Sutton. We refer to their "Smart Talk Trap" phrase and article in our book, "The Thin Book of Naming Elephants." So when I saw this title, I immediately ordered it.
They have done it again...the book is fresh, thought-provoking, well researched and an easy read. Every leader should read this book but be prepared to ask yourself, which half-truth are you relying on? Pfeffer and Sutton are the best combination of professor and consultant out there. Buy this book, actually read it and dog ear the pages that resonate with you. It will be worth your time and may save you from making a very big leadership mistake because you relied on total nonsense or a dangerous half truth instead of the reams of real Hard Facts out there because of people like Pfeffer and Sutton.

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A Must Read

Profoundly stimulating ... in fact it is wisdom enhancing. They present a compelling vision of the role of the leader: to be the architect of organizational systems and values to create an intelectual democracy where evidence-based decision making is what is worshiped ... not the rockstar CEO.

Myth busting

I am using it all the time to support arguments in the board room. The book will probably not tell you anything you didn't know - it just confirms what you suspected all along, and that's very powerful.

I only give it 4 instead of 5 because some chapters are too long and winding.

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reviews: 1, 2, 3, 4, page 5, 6, 7, 8

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