In today’s increasingly competitive and agile marketplace, companies that want to keep pace need to explore and implement new strategies that enable them to withstand change and competition. As such, there are those who focus on technological innovation, those who focus on the development of a niche product, unique in its kind, and those who, on the contrary, focus on a product in common use, but offered at much lower prices.
Recently, however, the emphasis has been placed on how a winning strategy should be based on the careful evaluation of the best available data and evidence, paying particular attention to the quality and veracity of this empirical evidence. In this way, management decisions can be based on evidence that will reduce risk and lead to better outcomes. This approach is known as Evidence-Based Management.
But what exactly is Evidence-Based Management (EBM)? EBM is a practice that was born and developed in the medical field, from an idea that is as “simple” as it is effective and little exploited, namely that decisions regarding patient care should be made based on scientific evidence, on data provided by the best and most current research.
Although the number of studies conducted in the medical field each year is very high, and the data are readily available and usable by any specialist who wishes to investigate, only 15% of these really base their decisions on the latest empirical evidence. The rest prefer to rely on their own personal experience, outdated methods and models, and outdated traditions. Similarly, in management, decisions are often made based on personal experience or preconceived notions that cannot be applied on all occasions.
EBM proposes to base every decision on a scientific basis, using “evidence” to maximize the chances of success. By “evidence” we mean objective data or facts that support and confirm a specific hypothesis. This “evidence” can come from:
– Results obtained through scientific research and disclosed through an indexed, peer-reviewed journal
– Documented demonstration of the possible benefits of putting these findings into practice in previous contexts (such as, for example, observations of practical conditions in local businesses)
– Results obtained and documented by highly competent professionals in a specific field (such as, for example, a proven successful entrepreneur who is a leader and pioneer in his or her field).
Many managers tend to “import” certain decision-making and management practices from their past experience and apply them indifferently in new environments and situations. Pfeffer and Sutton (2006) cite as an example their observation of a small software company in which one of the executives, though admittedly smart and successful, had recommended the same compensation policies as the previous company he had worked for, not at all considering that the two companies were different sizes, sold different types of software, and catered to different markets and customers. In this case, EBM can help make a critical and logical assessment based on the specific characteristics of each company. Extending the metaphors taken from the world of medicine, one could say that EBM prevents the assumption that a “cure,” while proven, but developed in one place, can be equally effective elsewhere.
Another similar motivation that justifies the need for EBM is the so-called benchmarking, i.e. the tendency to uncritically “copy” what other organizations do, without assessing whether those practices will be as effective and whether they might actually work in a different context. In this specific case, in addition to critically evaluating the information you find, you should also realize that this important organizational information gleaned from other firms is likely to be partial and incomplete, and, therefore, of poor quality.
Finally, most practitioners do not appear to be aware of the current scientific research available on key issues in their field. A study conducted by Rynes et al. (2002) of 950 human resource professionals shows that most of them had little or no knowledge of scientific research relevant to their field. The study also shows a significant discrepancy between what the objective evidence showed to be effective and what these professionals went on to apply during their day-to-day management practices. Again, too much reliance was being placed on low-quality evidence, personal judgment, and prior experience.
