Evidence based management is the notion that real knowledge in the form of empirical analysis of results is the shortest path to good business decisions. It may seem obvious to follow this concept, but many organisations do not.
Executives make pivotal strategic decisions based on nothing more than business fads, or recommendations from advisors who are afraid of challenging their superiors. Data that measures how well the company is doing is not considered, and as a result, critical company decision making takes place in the dark.
Facts can be more or less accurate, but are usually grounded in evidence one way or another. These facts should be sorted in a hierarchy, so that the most valid and applicable facts are valued most.
Companies should base their decision making on evidence. Even when little data is available, decisions made by the executives can be guided by the evidence and logic instead of relying entirely on guesswork. This allows companies to enjoy a more competitive advantage.
Acting on the facts is something all companies should do. Many managers do not want to hear bad news, admit that they are unaware of something, or learn from others. Without the critical knowledge and the facts, they are forced to operate at a competitive loss.
Executives who use fact-based management encourage their employees to learn even as they act on what they already know. They regard their companies as a work in progress, to be sure that it is constantly moving in the right direction. Even when knowledge is vague and incomplete, they are confident enough to act on it, and humble enough to change it if need be.
Fact-based decision making in a company forces executives to be curious and receptive to new information instead of being passive and closed. All managers should be encouraged to embrace the concept for the full benefit of the company. However, not everybody must be proficient in this, but the aspiration should be the same for all levels.
It can be a hard process to change workplace culture to accept fact-based decision making, as it requires hard work and focus to find and apply the relevant facts to decision making. However, all companies have a responsibility to maximise value for shareholders and that is only achieved when the company performs well.
