Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-based Management [Kindle Edition]

I was introduced to Jeffrey Pfeffer's work at a management course in 2008. Thereafter, I read and reviewed his book, Managing with Power, and was impressed by his analysis of power in organisations. It was with this in mind that I bought Hard Facts, Dangerous Half-Truths and Total Nonsense. My my! I was not disappointed.

We have all heard the phrases, "war for talent", "keep work separate from life", "getting financial incentives right", "strategy is destiny", and "we need more leadership". We often latch on to these snippets of conventional wisdom, translating them into organisational policy, yet seldom stop to question the assumptions behind conventional wisdom.

In this brilliant book, authors, Jeffrey Pfeffer and Robert Sutton, remind us to practice evidence-based management. They show how surprisingly many management decisions are driven by the ideology and charisma of managers, and not necessarily by the evidence. They tackle some `conventional wisdoms' of the management literature. I'll rehash some of the more important of these `wisdoms' here:

1. GREAT LEADERS ARE IN CONTROL OF THEIR COMPANIES

The business press and our contemporary culture are obsessed with leadership; therefore, we lionise corporate leaders like Jack Welch and Lee Iacocca. Pfeffer and Sutton emphasise that leaders do make a difference. Indeed, some of the defining social changes of the last century may not have occurred without the leadership of people like Gandhi, Martin Luther-King and Mother Theresa.

While leadership matters (as a Nigerian, I have seen my fair share of questionable political leaders), Pfeffer and Sutton suggest that the myth of leadership is a half-truth, especially in large organisations. Citing research on human psychology, they (Pfeffer and Sutton) put it down to human nature: "when we look at organisations, we see people who are in charge; we don't see the constraints that affect their behaviour and company performance". We tend to attribute to much blame for mistake--and credit for success--to leader. One GE executive interviewed in the book joked, "Jack [Welch] did a good job, but everyone seems to forget that the company has been around for over 100 years...and he had 70,000 other people to help him".

2. FINANCIAL INCENTIVES DRIVE COMPANY PERFORMANCE

Citing recent research, the authors show that financial incentives are used to drive performance because individuals believe that other are motivated by money, even as they (the individuals) know that they are much less so. Often, financial incentives are overused and tend to attract the wrong kind of talent: people only interested in making a buck. Pfeffer and Sutton show that there are cases in which financial incentives work well: where work is mostly done by single individuals, who do not work in interdependent settings. Once people work in large interdependent settings, then financial incentives alone are not the key drivers of company performance (see for example, Amazon, SouthWest Airlines and CostCo).

3. STRATEGY IS DESTINY

Business schools, governments, the military and corporations are fixated on strategy (defined as what the organisation does based on its competences and where it can add value). The authors question the logic and evidence for why conventional wisdom states that strategy is destiny.

Using examples of successful companies like Dell, Intel and Amazon, the authors show that these companies did not succeed by having proprietary (secret) strategies; if anything, their strategies were public knowledge. Dell's strategy, for example, was to bypass the wholesalers and sell directly to the consumer using just-in-time inventories. Even though Dell's competitors knew this strategy, they could not replicate Dell's success. What made the difference then? The authors stress that implementation of Dell's strategy was the key to delivering the goods. No, strategy is not destiny. While a company will benefit from good strategic planning (what business to be in and how to compete with other firms), it will almost certainly benefit from the less glamorous details of implementation (keeping it simple, learning as you do etc).

In the words of John Maxwell, conventional wisdom is borne of "lazy thinking". Pfeffer and Sutton's Hard Facts is a reminder to challenge this lazy thinking and to practice evidence-based management, a commitment to using the facts--and only the facts--to inform the management of organisations. This means that management should be based on the best available evidence of what works in a given organisational setting. Pfeffer and Sutton make their case with clarity, wit, healthy skepticism and conviction. It is a message that every senior executive should hear. Pfeffer and Sutton's Hard Facts deserve five glittering stars.

Jeffrey Pfeffer is Professor of Organizational Behavior and Robert I. Sutton is Professor of Management Science and Engineering at Stanford's Graduate School of Business. They are the author of business bestseller `The Knowing-Doing Gap' (2000). This book was published in 2006 and consists of 9 chapters.

In the preface the authors explain the result of their exercise: "[This book] is a call for evidence-based management, a case for its potential impact, and a guide on how to use it." They also immediately warn readers: "There are no simple, easy answers, but there are answers." Part I - Setting the Stage - consists of two chapters, whereby the first chapter serves as an introduction into evidence-based management. "Evidence-based management proceeds from the premise that using better, deeper logic and employing facts to the extent possible permits leaders to do their jobs better." And although most managers try to act on the best evidence there is little rigorous use or serious appreciation of evidence-based management. In the second chapter the authors consider key impediments to implementing evidence-based management and how to overcome them. They also offer guidelines and ways of thinking to help organizations turn these ideas into action.

The main body of the book is contained within Part II - Dangerous Half-Truths About Managing People and Organizations - and consists of six chapters. Chapter 2 shows simple but powerful standards for judging which advice and practices advocated in the vast marketplace for business ideas are sound, which are suspect, and which are total nonsense. This is followed by an examination of perhaps the most basic half-truth - "work is fundamentally different from the rest of life and should be." This half-truth is fundamental because so much else follows from it. The organizational practices are quite different than we observe - or at least aspire to - in our personal life. Chapter 4 discusses the half-truth that "the best organizations have the best people", which was embraced during the dot-com boom and still lives on in the "war for talent" imagery. The next chapter examines one of the most deeply held half-truths in the business world, that "financial incentives drive company performance." However the authors' best evidence shows that using them to solve many problems leads organizations to stray from their goals and undermines performance.

The remaining three half-truths move up to the organizational level of analysis, focusing on the challenges of managing the enterprise. For instance, chapter 6 questions whether and when "strategy is destiny". Peffer and Sutton make an evidence-based case that excessive faith in strategic decision making is hazardous to an organization's health. This is followed by an examination of the faulty evidence and logic behind the mantra "change or die". The final chapter of this part considers what leaders are expected to do versus what they actually can and should do. The authors focus on these half-truths because they believe that "leaders who understand why each belief is flawed, and who think hard about the evidence for and against each, can develop more effective and sophisticated approaches to running their organizations."

In the final chapter the authors explain that managers can find and use evidence so their companies can avoid such dreadful journeys. They identify and discuss 9 implementation principles to help people and organizations to commit themselves to profit from evidence-based management. None of these principles will surprise anyone and most are in fact predictable. However, most of us do not always stick to them for a variety of reasons. "The question remains: Who will have the courage and wisdom to do it?"

Yes, I do like this book. Although it does not fundamentally bring any new principles to table, it will help most of us re-focus onto the extremely important task of managing based on evidence, data and facts. Pfeffer and Sutton effectively break down dangerous half-truths and make a compelling case for finding and using evidence to succeed not just in management/business but also in the rest of life. Just one criticism, there could be some more details on methods for gathering data and translating this into evidence.

I recently had the opportunity to read
The Halo Effect: .and the Eight Other Business Delusions That Deceive Managers

I thoroughly enjoyed reading the Halo Effect and was hoping for something similar from this book. Overall, I was not dissapointed, and I think both books succeeds at exploring a very important topic.

The best part of the book is section II, in which different half-truths are addressed, such as whether financial incentives drive performance, whether companies change or die, whether strategy is destiny etc. This is in my opinion, the real meat of the book, and the answers are often rather subtle.

I did however find some parts of the book a bit flawed. Throughout the book, the authors encourage us to think critically about management, and to be wary of using anecdotes and casestories as sources of management "truths". But in it's more prescriptive parts, the books gives some bland and generic advice, which did not seem like hard facts to me.

So I end up giving the book four stars for the middle section, and for it's treatment of a vitally important topic. But I was very close to only giving it three stars.