Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-Based Management

by Robert I. Sutton and Jeffrey Pfeffer

Book Overview

The best organizations have the best talent. . . Financial incentives drive company performance. . . Firms must change or die. Popular axioms like these drive business decisions every day. Yet too much common management "wisdom" isn't wise at all--but, instead, flawed knowledge based on "best practices" that are actually poor, incomplete, or outright obsolete. Worse, legions of managers use this dubious knowledge to make decisions that are hazardous...

• Format: Hardcover
• Language: English
• ISBN: 1591398622
• ISBN13: 9781591398622
• Release Date: March 2006
• Publisher: Harvard Business Review Press
• Length: 288 Pages
• Weight: 1.37 lbs.
• Dimensions: 1.1" x 6.9" x 9.4"

Customer Reviews

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 mix

How to avoid the "doing-knowing gap"

In my opinion, the most valuable business books are those which pose and then respond to an especially important question. For example, before Pfeffer and Sutton wrote their previously published book, The Knowing Doing-Gap, they asked: Why is it that managers who know so much about organizational performance, say so many smart things about how to achieve performance, and work so hard are nonetheless trapped in firms that do so many things they know will undermine performance? Their research indicated that a substantial majority of the executives they studied demonstrated a significant gap: They knew what to do and how to do it but seldom took effective action based on that knowledge. In this book, Pfeffer and Sutton examine what they call "the doing-knowing gap": doing without knowing, or at least without knowing enough. "People kept telling us about the wonderful things they were doing to implement knowledge - but those things clashed with, and at times were the opposite of, what we knew about organizations and people. Upon probing, we soon discovered that many managers had been prompted by a seminar, book, or consultants to do things that were at odds with the best evidence about what works." Pfeffer and Sutton identify some of the barriers to what they call "evidence-based management" and recommend specific steps that leaders can take to overcome those barriers. Of special interest to me is what they have to say about "half-truths that bedevil organizations." These are among the specific questions to which Pfeffer and Sutton respond and they do so brilliantly: 1. What exactly is "evidence-based management"? 2. Evidence of what? And how to verify it? 3. Why do all organizations need evidence-based management? 4. What are the most damaging half-truths about managing people and organizations? 5. When attempting to implement evidence-based management, what are the most formidable barriers to overcome? 6. How best to overcome each? 7. Which incentives are most important to individual performance? 8. To organizational performance? 9. What are the most valuable potential benefits of evidence-based management? 10. Which specific principles can guide and inform the collaborative efforts of those who are committed to doing whatever it takes to achieve such benefits? As I read this book, I thought about what Pfeffer and Sutton had said about "the knowing-doing gap" in their previous book bearing that title. Whereas that gap indicated that people could possess sufficient skills and knowledge but are unable to take effective action, "the doing-knowing gap" suggests problems of a quite different nature. Perhaps Pfeffer and Sutton share my own concern that many of those who read their book will then exclaim "Aha! That's it! Now I understand!" In fact, some of them will "get it" but most won't...at least not immediately. I agree with Pfeffer and Sutton's suggestion that each organization be viewed as an "unfinished prototype." Readers would be well-ad

An excellent book for reality-based business management

This was one of the best business books to pass my desk in a long time. Then, I'm biased. Doing research bores me, but _applying_ research is my great love. It's a love unrequited after decades in the business world. Not for lack of trying; more for lack of good research. Most business books, buzzwords, and brilliance are pretty much bull-pucky. Not "Hard Facts." Pfeffer and Sutton have a simple premise: Companies run better by using business principles based or high-quality research, instead of by jumping on the pithily-promoted trend-of-the-day. They support their premis with *gasp* facts and research. The book follows its own advice. It is heavily footnoted with sources and studies, enough to make the most obsessive librarian happy for months. Other reviews have mentioned the Big Half-Truths the authors explore: should we leave our lives at the door when we go to work? do the best organizations have the best people? does pay drive performance? is strategy destiny? They explore all these questions and often conclude the conventional wisdom is wrong. But their evidence isn't a cute little mouse looking for his cheese; it's decades of research, data, and examples. Their swiss cheese has far fewer holes in the logic. The Big Half-Truths weren't the big takeaways for me. The offhand examples are what changed my world: Oh, by the way, holding back students who fail causes them to do worse than letting them advance anyway. Oh, by the way, do you like to ask winners why they succeeded? Research shows self-reports of losers who _think_ they're winners are the same as self-reports of winners. Hmm... Oh, by the way, talent isn't innate. Believing you can (or can't) develop talent becomes a self-fulling prophecy. Oh, by the way, even a super-competent CEO will get better results by yielding control. Oh, by the way, merit-based pay for teachers doesn't produce better learning in schools. All were, of course, properly footnoted. Without actually converting to Librarianism, I'll likely spend the next few months happily chasing down the supporting research to find out what else I think I know that just isn't so. The Big Half-Truths were the main point of each chapter, of course, with the Little Half Truths as the supporting evidence. The authors don't just debunk; they go one step further and tell you what to do differently, if you've bought in to the Halfs. Along the way, Sutton and Pfeffer also utter a word rarely heard in business: Wisdom. They believe Wisdom is more important than knowledge or IQ. They define it precisely, and the definition will surprise you. You may or may not agree with it, but if you don't meet the definition yourself, you'll likely dismiss it as absurdity. And of such self-fulfilling prophecy will your fate be wrought. Sadly, the consulting market thrives on new fads, delivered in pithy books, easily extensible(*) to keep the consultant in Beamers for years. So we aren't likely to see any sudden groundswell desire for competent

Jam-packed with intruiging thoughts and evidence

Ever since I read his book "Competitive Advantage through People" I have bought every book Jeffrey Pfeffer has (co-)written. And I have never been disappointed. All his books both are consistent with and build on his previous work and add new and interesting angles. When this new book by Jeffrey Pfeffer and Robert Sutton was advertized I had a slight worry about its title. It sounds so decisive and self-assured .... I worried whether it wouldn't be too pretentious. Management surely is not only a matter of applying knowledge! It is also dealing with uncertainty, improvisation, choices etc.... But after reading the book, I can (again) say that it is fantastic. It fully acknowledges 'the other half of management' (the parts where you can not yet rely on proven knowledge). The authors pose some brilliant questions like: is work fundamentally different from the rest of life and should it be? Do the best organizations have the best people? Do financial incentives drive company performance? Is strategy destiny? Is the reality of organizations nowadays "change or die"? Are great leaders in control of their companies? Do you think you know the answers to these questions? And if you do, do you know what these answers imply for you actions as a manager? I bet you will learn a lot by reading what Jeffrey Pfeffer and Robert Sutton have to say about these things (like I did). This book is jammed with intruiging thoughts, packed with practical wisdom and a true inspirational read! Coert Visser, http://www.m-cc.nl/solutionfocusedchange.htm

Excellent studied revisionism of modern managerial practices.

This is an outstanding book written by two business and engineering Stanford professors. Analyzing modern management practices using surveys and studies, they debunk many of modern management practices. According to their studies, pay-for-performance does not work. Companies that had the widest range of pay scale between top and bottom performers also suffered the poorest financial results. So, pay-for-performance does not translate into superior stock performance. Similarly, forced ranking where employees performances are clustered in three different buckets (top 20%, middle 70%, and bottom 10%) where the weakest bucket is expectedly weeded out does not work either. Companies using this system have been plagued with an employee force with low morale, high turnover, and low productivity. The authors debunk tens of other well established managerial practices. These practices are often so well established that no one seemed to question them until these two academic types came along. By doing so, they have done a great service to the business community by opening our eyes using the scientific method. So, why have such practices that seemed to be part of corporate capitalism not work so well? According to the authors' analysis it is because they all foster a winner take all mentality. They reinforce an individual star system. That works well in individual sports like alpine skiing where it is one individual against the clock. The corporate business world is more like a team sport. Soccer comes to mind. One star within an otherwise demoralized team does not stand a chance against a motivated high performance team. In the corporate world it gets even more complicated than that because the team concept extends way beyond the walls of the corporation. Effective teamwork entails including suppliers and customers in product design and management decision. In such an environment, pushing internally a star system that is demoralizing to the 99% who come in distant seconds does not foster optimal team performance either internally or externally. This book has a wealth of information relevant to any corporate employee. The authors do an excellent job at analyzing existing managerial practices. Besides suggesting a stronger focus on teams, they don't offer any easy solutions. That's refreshing. You know these guys are not trying to market themselves as the new managerial gurus. This gives them much credibility in criticizing the existing ones.