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What is Evidence-Based Management?

Evidence-based management is a discipline that at its core requires us to bring the best evidence to bear on our management decisions.

By Edison AdePublished 2 years ago 4 min read
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Evidence-based management is a discipline that at its core requires us to bring the best evidence to bear on our management decisions.

Evidence-based management is the idea that you should always work with what is best known and most proven… You employ it by taking your decisions as far as you can using only the best ideas, then looking for the evidence to fill in any gaps. When there's no good evidence you do some experiments to get it. And you change your mind if the evidence shows your ideas were wrong.

Since the 1990s, there has been a shift in how business decisions are made. Some people call this shift 'evidence-based management. Evidence-based management is an approach to decision making that involves two steps:

finding the best available evidence about what factors influence specific aspects of organizational performance

using this evidence to make better decisions. As part of this shift in thinking, organizations began doing more research on how they could be more effective. For example, hospitals did studies on which medical procedures worked best for certain illnesses and businesses studied the most efficient ways to manage work teams. On its surface, evidence-based management sounds like a positive development - after all, who wouldn't want information they can use to make their organization better? However, many organizations are reluctant to embrace evidence-based management because they think it restricts their ability to make good decisions. Further complicating matters is the fact that in this approach there is no single right answer and managers must be able to explain and justify the rationale behind their decision-making process.

Despite these challenges, some companies have found success implementing evidence-based management practices. Companies such as McKinsey & Company and General Electric have made great strides by using outcome data to improve performance in various areas of operation such as increasing revenue or reducing waste. These companies then used outcome data from completed projects to inform future projects and business decisions - a process called 'performance analytics'. At GE, for example, managers were encouraged to use outcome data from past projects when making business decisions. This allowed managers to consider more than just their personal experience when making business decisions, giving greater consideration to the best available information about how they could improve performance.

"Examples of evidence-based management are still emerging"

This shift has led to greater collaboration between researchers and practitioners in an effort to develop strategies for using outcome data effectively. There are many ways that this collaboration can be beneficial - one is by making information on what works accessible to managers in different fields who may not have time or interest in doing research themselves (for example General Electric used outcome data from other projects in their industry when developing a new production facility) There are still some hurdles to overcome before it becomes the norm. Evidence-based management is not simply about making decisions based on outcome data but also involves justifying those decisions in terms of how they affect the organization's purpose and strategy. Management must also be able to decide how much weight should be given to different types of evidence when developing decision-making strategies (for example: do you give more weight to performance analytics showing that an operation did not go well than your personal experience?).

"Performance analytics can lead us down a slippery slope."

Research by scholars like Jaccard (2010) suggests that managers tend to put too much emphasis on their own experiences when making business decisions. They argue that evidence-based management shifts the focus away from individual managers' judgment and onto the objective performance of a process or project. Performance analytics can lead us down a slippery slope because while it is an excellent source of information, we mustn't forget that not all evidence is created equal - something organizations trying to implement evidence-based management are aware of. One solution for this problem could be labelling performance data in terms of both its strengths and weaknesses so managers can make better decisions about how to use this data when developing strategies.

"Our research has found three practices for organizations to pursue."

Further complicating matters, some evidence may be less useful than other types in specific contexts (for example an organization's culture might favour using analytical models over individual experience). Another challenge that organizations face when implementing evidence-based management is knowing what evidence should be tracked to maximize effectiveness. Our research has found three practices for organizations to pursue:

Management by exception: In this practice, managers pick a small number of performance metrics that they want to track and focus on those metrics when making business decisions

"Management by exception" helps managers focus on key areas of concern

Pattern matching: This approach involves using a variety of types of evidence (for example outcome data from past projects, industry reports etc.) and looking for patterns in their effects. For example, constructing a predictive model can help organizations determine the best way to use different types of evidence together

"Pattern matching" allows companies to explore different sources of information as it relates to their decision making

Management by exception: This approach focuses on tracking data that is most relevant to the company's business strategy. Companies use information about their business strategy to determine what evidence they should be tracking and how it should be used in decision-making processes

"Management by exception" helps companies stay focused on key areas of interest while exploring performance analytics

As organizations start using evidence more often, the practice of evidence-based management will become increasingly common. It has already begun to catch on in several industries, but until all managers are ready and able to take advantage of this knowledge, there is still work to be done.

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About the Creator

Edison Ade

I Write about Startup Growth. Helping visionary founders scale with proven systems & strategies. Author of books on hypergrowth, AI + the future.

I do a lot of Spoken Word/Poetry, Love Reviewing Movies.

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