Review of "Hard Facts"

The full title from Jeffrey Pfeffer and Robert Sutton is "Hard Facts, Dangerous Half-Truths, & Total Nonsense, Profiting from Evidence-Based Management." It's a follow up to their "Knowing-Doing Gap," and in some ways, it argues the opposite point. In "Knowing-Doing," the authors contended that most managers know what to do, they just have problems implementing. In this book, they argue that most managers really haven't thought about what they're doing in terms of "real" evidence and instead tend to follow the latest trend, what their "gut" says, what is politically supported, etc.

The answer is "evidence-based management," part of a larger "evidence-based" movement that has had its greatest impact in "evidence-based medicine." "Evidence-based education" has its biggest following in England, but the basic ideas are certainly being applied in the U.S. as well. If you've read Freakonomics, Blink, or other "social science explained for the masses" books, you'll get the basic gist, though this monograph is much more academic in nature and contains far fewer riveting stories.

Nonetheless, the basic arguments are compelling. After laying out the basic rationale, the authors highlight six basic management questions and reveal that the typical conclusions most businesses have reached about these topics are "wrong" and then go on to explain what the current best evidence indicates is a better choice.

1) "Is work fundementally different from the rest of life?" Most businesses say "yes." There should be sharp lines between work and private life, and work life is ultimately more important. This attitude, the authors contend, developed out of a factory model in which employees are essentially "machines." Ford famously said that he hired "hands," but unfortunately, whole persons came along with those hands. But treating people as "machines" invariably makes them feel less valued, resulting in lower performance, higher turnover, etc. Those institutions that blur the work/personal life boundaries and treat their employees as part of the "community" as much as possible are the ones that typically see the highest levels of performance.

2) "Do the best organizations have the best people?" I've posted separately on this topic, but the current "war for talent" craze, the authors argue, is fundamentally misguided. Good systems and good teams matter much more than good people in a world in which we're all hiring from essentially the same talent pool.

3) "Do financial incentives drive company performance?" Similar to their arguments in their previous book, the authors contend here that individualized merit pay tends to reduce organization-wide performance, not enhance it. I've posted elsewhere on "how to do merit pay right" according to this argument, but the basic concern again is with creating good systems and good teams. Think of the situation in your personal life. Do you pit your family members against each other for a set amount of resources based on their performance according to some set indicators? We know instinctively what that would do to our "community" at home, so why do we think things would be any different at work?

4) "Is strategy destiny?" Strategy is sexier, more intellectually intriguing, and appeals more to our desire for a magic bullet. But, the authors argue, spending the same amount of time on better implementation matters much more than lots of time spent on strategy. I think of a Sci Fi story, and the WWII Germany-Russia analogy as well, in which the group with the superior military and technological sophistication eventually lost the struggle because they were so focused on the "perfect" solution that the opponent that focused on implementation of some basic ideas and basic weapons slowly surpassed them. At a personal level, this one's difficult for me, because I love strategy, but the point is a valid one. We spend way too much time figuring out our "mission," putting together strategic plans, and doing budgets instead of focusing on how to do our current jobs even better.

5) "Is it true that organizations change or die?" Well, yes and no. Most change efforts lead to worse performance, not better performance. But the only thing worse than lots of change is no change. The real argument here is that any attempt to change needs to have lots of evidence in support of the idea. Pilot projects, benchmarking peers, and just plain thinking things through matter a lot. Don't just go with whatever the leader's latest enthusiasm is.

6) "Are great leaders in control of their companies?" Again, yes and no. Since we tend to hire from the same pool of people, the person at the top only appears to make about 10% of the difference in performance. But then the authors give example after example of how this or that leader made a crucial difference in the long-term direction of a company. A 10% performance differential a year compounded over six years equals double the performance of the competitor, a point the authors fail to make.

In conclusion, the authors give a quick way to tell if companies are "evidence-based." How do they respond to failure? The best companies allow their people to fail and provide lots of mechanisms by which those failures can come to light and be used as ways to improve the organization over the long haul. It's this last point, let's call them "the tactics of mistake," to quote from a favorite SciFi book from my childhood, that I need to give more thought to. How do we create systems and cultures that allow people to be so fully involved in the team effort that they're willing to try new things that may or may not succeed and to then learn from these innovative efforts?