» Lire en français: French
When chemists do drug development they tend not to rely on hunches. Fortunately for the unwell, they prefer the more scientific approach of clinical trials. Yet, when managers tackle business related dilemmas they seem happy to trust to gut feelings and intuition.
4 min read
Jörg Dietz intends to change this mindset. At HEC Lausanne he’s teaching business leaders to apply evidence-based problem solving methods.
A popular criticism of management scholarship is that it struggles to translate into effective application in the real world. For example, academic research is often viewed as non-relevant for practice, and teaching at business schools often focuses on so-called “best practices” that are already used by managers.
Management scholars have responded to this criticism with evidence-based management (EBMgt). The premise is that managers who use hard evidence, including scientific facts, make better decisions than managers who rely on their gut feelings and past experience.
Students learn to approach decisions in the same way crime scene investigators would.
Two types of EBMgt courses have been popular. In one version professors integrate scientific evidence into existing courses on, for example, marketing or organizational behavior. With another approach students learn to become sophisticated consumers of business research. At HEC Lausanne, however, the faculty employs a third approach, says Jörg Dietz, vice-dean for faculty and research. Rather than just consuming business research, students learn to approach decisions in the same way crime scene investigators would. Students become management detectives. They use a scientific problem-solving cycle, including the collection and analysis of existing evidence, as well as the development, testing, and adoption of a problem solution.
Producing local evidence – information collected at the location of the problem – is central to the way EBMgt is studied at HEC Lausanne. There are a number of reasons for this emphasis, says Dietz. Business problems are often poorly defined and loosely structured, and the application of evidence collected elsewhere can be arduous at best and impossible at worst. If you produce your own local evidence, however, then it is immediately relevant to the business problem at hand.
Learning to produce local evidence means students are well prepared for problem solving as managers; they get to grips with important research methods early on, develop casual reasoning skills, and learn to evaluate other research and evidence.
Take the evaluation of evidence, for example. When managers devise solutions to management dilemmas, they should evaluate all useful – causally interpretable and applicable in the local context – evidence. But EBMgt students know that assessing causality (where one thing is directly responsible for another) and applicability can get messy with management issues.
Appearances and intuition are not enough in evidence based management.
Often one event appears to cause another. A management tool is introduced and productivity increases. But is the new tool responsible for the productivity gains? Intuitively it may seem so, but appearances and intuition are not enough in evidence based management. And many aspects of management – performance-related pay schemes, for example – appear highly context specific. Consequently, being able to obtain local evidence, by testing a possible intervention in the right context, is a very useful skill.
Producing local evidence also provides managers with information to counter the intuitive prejudices other stakeholders may have about what solutions are effective. Hard data trumps intuition and gut feelings.
A scientific approach
At HEC Lausanne evidence based management is taught and assessed through a mix of case analyses and consulting projects.
At HEC Lausanne evidence based management is taught and assessed through a mix of case analyses and consulting projects delivered in a combination of individual, small-group, and classroom learning, with the instructors acting as facilitators.
The idea is to allow students to become familiar with and master the complete evidence-based problem-solving cycle. The systematic four step approach covers: (1) defining the problem; (2) analyzing the problem, identifying variables that may be linked to outcomes, and assessing the merits of existing evidence; (3) designing tests and testing suggested solutions, using a scientific evidence based approach; and (4) evaluating the tested solution to see if any have the expected effect.
This differs from management’s usual approach to problem solving. Research suggests managers tend to intuitively choose a course of action without considering other options or systematically examining the evidence or collecting their own data.
Teaching EBMgt is not without challenges. To date, case studies of EBMgt are rare; HEC Lausanne has transformed consulting experiences and academic articles into suitable case studies. With the project element, students may have to explain evidence-based management to the managers at the client organization. It may be difficult to identify the problem that needs solving – managers tend to point to a set of figures that need improving, rather than to well demarcated and testable problems. Site access can be problematic. Students may initially need to devise relevant tests that can be conducted at the university – although clients often allow access once they see the results.
Despite the challenges associated with learning to produce local evidence, the benefits far outweigh the costs, says Dietz. In one case, for example, managers of a bike messenger business assumed that increasing the performance based commission paid to bike messengers by 25%, would incentivize the bike messengers to work more shifts and work harder per shift.
Rather than implement the increased commission… they decided to test its effect with an experiment.
Rather than implement the increased commission straight away, though, first they decided to test its effect with an experiment, paying a proportion of the bike messengers the higher commission for a limited period. The results were revealing. Performance per shift dropped when messengers received the increased commission, while the number of shifts worked increased. It transpired that the bike messengers had daily income targets. Increased commission levels meant that they could hit their targets more easily, so there was no need to work harder. The managers decided not to increase commission on permanent basis. A practical example of the benefits of EBMgt.
Read the original research paper: Dietz, J., Antonakis, J., Hoffrage, U., Krings, F., Marewski, J., & Zehnder, C. (in press). Teaching evidence-based management with a focus on producing local evidence. Academy of Management Learning & Education.