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 / Winter 2006 / Issue 45(originally published by Booz & Company)


Best Business Books: Management

The authors organize their case for this claim into three parts, first making the argument for evidence-based management, then examining half a dozen “dangerous half-truths” before concluding with a section on how to profit from the use of evidence in management. They suggest that there are three primary reasons that managers so frequently choose the wrong approaches: casual benchmarking, which leads to adopting the most visible practices of apparently successful organizations without understanding the often unique circumstances that make them successful; repeating what worked in the past, once again without examining whether the context is the same as in the past; and following deeply held yet unexamined ideologies. The authors cite the furor over the role and efficacy of stock options as an example of how conviction rather than evidence can dominate the debate.

The dangerous “half-truths” examined are articles of faith held by many managers in North America:

  1. Work is fundamentally different from life and should be.
  2. The best organizations have the best people.
  3. Financial incentives drive company performance.
  4. Strategy is destiny.
  5. Organizations must change or die.
  6. Great leaders are in control of their companies.

Professors Pfeffer and Sutton weigh the evidence for and against each of these propositions. They conclude that, although there may be theoretical arguments to support these precepts, in practice their costs often outweigh their benefits. Thus half-truth number 2, which is often expressed as the “war for talent,” assumes that individual ability is largely fixed, that people can be reliably sorted based on their abilities and competence, and that organizational performance is often the simple aggregate of individual performances. The authors can find little evidence to support these assumptions and argue that the contexts and systems within which people work consistently trump individual abilities. Similarly, in the case of number 3, although financial incentives can motivate behavior, supply information about the organization’s values, and select for particular kinds of people, they can also encourage misbehavior, send mixed messages, and attract the wrong kind of talent.

Although the authors may have intended to show how the practice of evidence-based management is possible, by the end of the book the reader is more likely to suspect that the evidence for even the simplest of management propositions is equivocal and often outright contradictory, and that the best thing managers can do is fall back on their own beliefs and experiences. Without a theory of context to help them sort the evidence, the authors default to recommending a Socratic “attitude of wisdom,” which “enables people to act on their present knowledge while doubting what they know.” This attitude is obviously desirable but, because such wisdom can’t be bought or taught, we end up going in a giant circle: One acquires good judgment through bad judgment, and it’s bad judgment to practice casual benchmarking, repeat what worked in the past, and follow unexamined ideologies.

It is instructive to apply Professors Pfeffer and Sutton’s lens to one evidence-based thesis that appeared in the past year: teacher and consultant Kirk Snyder’s The G Quotient: Why Gay Executives Are Excelling as Leaders...and What Every Manager Needs to Know. His data suggests that gay executives who have publicly acknowledged their own sexual orientation create workplaces with significantly higher morale and greater employee commitment than firms run by their straight counterparts. He concludes that every manager needs to learn the importance of adaptability and creativity in the workforce, particularly with members of Generation Y, who are looking for meaningful work that will make a difference in the world.

The importance of this book — and the reason I’ve included it here — is that it examines a previously overlooked set of experiences that produces effective managers. Thus it throws new light on the managerial development process. We know, for example, that in England during the first Industrial Revolution, entrepreneurs were drawn in disproportionate numbers from small groups of religious nonconformists, like the Quakers. In the contemporary U.S., the Mormon community seems to play a similar role, and in other parts of the world one can point to highly entrepreneurial cultural groups like the overseas Chinese, the East African Indians, and Spain’s Basques. For developing managers, we usually think of the great corporate academies like McKinsey and GE. The gay community seems to develop both entrepreneurs and managers. Mr. Snyder’s focus is on the latter.

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