Course: Managing Growth Book report Book: Hard Facts, Dangerous Half-truths & Total Nonsense

Book report

Hard Facts, Dangerous Halftruths & Total Nonsense

Authors: Jeffrey Pfeffer & Robert I. Sutton 2006, Harvard Business School Press

Book report by: Otto Nyberg (55358N)

Book report by Otto Nyberg

Course: Managing Growth Book report Book: Hard Facts, Dangerous Half-truths & Total Nonsense

Introduction
I work as a consultant at an IT-company and on daily basis I interact with people that present me with their ideas. These people usually have some arguments for why their ideas are great and why this will be the killer-application that everyone has been waiting for. What I have noticed is that if I start pushing their arguments one step further and asking for the reasoning behind the idea, I usually get one of the four following reactions: 1. An explanation about that no one else seems to bother either, so why should he/she. 2. An incomplete reference to someone elses statement. 3. A story about how the same solution has worked great in a different environment. 4. A refusal to answer my question and an angry query about what my intentions are with that question. In the case of answer #1, the fact that no one tries to prove him/her wrong does not lead to the conclusion that the suggestion is correct. Perhaps it suggests that people do not see any obvious obstacles for why the idea would not work, but certainly no more. In the case of answer #2, what happens is that if I follow up on the reference, it usually turns out that the reasoning is only partly true, and often it has limitations that will limit out the suggested idea. In the case of #3, there is no analysis on what made the idea work in that other environment, and on how it could be transferred to this new environment. People rarely admit that they have not yet figured out the whole thing and say that they need more time to work on it (even if they have had the idea for only a few minutes!). What usually happens if I push on any of these three is that I will eventually get the answer #4 and end up in a dead-end. What strikes me the most is that this does not just happen in the organization I work for; it has happened in organizations I have worked for earlier and it happens with customers as well. I understand that all questions cannot be given objective answers, especially when time is short, but in my opinion at least the limitations of the reasoning could be acknowledged instead of just blatantly ignored. I have been asking myself the question that does it have to be this way that people make decisions based on feelings and beliefs rather than on information, and do I just have to accept it. This is why I chose to read this book; to get other peoples view on the same topic.

What the book is about

The book is split into three parts: the first part presents scientific research methods and why these are needed in a company, the second part focuses on proving wrong or presenting the limitations of half-truths and the third part explains how this evidence-based management practice could be implemented.

Double-blind placebo-controlled study

The authors present the double-blind placebo-controlled study as the best alternative available for validating hypotheses. This research method is seldom suitable in a managerial perspective, as it is

Book report by Otto Nyberg

Course: Managing Growth Book report Book: Hard Facts, Dangerous Half-truths & Total Nonsense a very costly and time consuming method. Decisions have a place and a time, and by doing too much research, there is a risk that the time for the decision has gone when the research is done.

Case studies
The authors present that case studies should be referred to with caution, as many people confuse case studies with proof. What can be proven with case studies is that a theory stating the opposite is wrong; a case study does not prove that the actions taken in one situation were right. Case studies are good sources for hypotheses how things might work; case studies are qualitative material.

Test your hypotheses

If you have a hypothesis you should test it. Sometimes things work just the way you expected them to, sometimes your hypothesis needs a small adjustment, and sometimes your hypothesis turns out to be wrong. These were the three methods provided by the authors in part one of the book. With these methods, the authors described scientific praxis which evidence-based management is based on.

Evidence-based management
The authors argued that this scientific approach is usually not followed in businesses for many reasons, which of the most important are cost and time. The authors presented a compromise for managers that they call evidence-based management. This management discipline takes into account the restrictions posed by business and combines them with scientific methods in such a way that the cost of validating a decision and that the quality of the decision are both acceptable.

Previous research
The authors pointed out that few ideas are completely new; there is often research on topics closely related to specific problems, and evidence to support own decisions can often be found from these. Important in evaluating previous research is understanding the limitations of the study, and understanding the differences and similarities in the current situation and the research situation. The authors present us with a comprehensive list of things that can be done in reasonable time within reasonable budget (excerpt, Table 1-1, page 22):

Questions to ask before trying a business idea or practice

What assumptions does the idea of practice make about people and organizations? What would have to be true about people and organizations for the idea or practice to be effective? Which of these assumptions seem reasonable and correct to you and your colleagues? Which seem wrong or suspect? Could this idea or practice still succeed if the assumptions turned out to be wrong? How might you and your colleagues quickly and inexpensively gather some data to test the reasonableness of the underlying assumptions?

Book report by Otto Nyberg

Course: Managing Growth Book report Book: Hard Facts, Dangerous Half-truths & Total Nonsense What other ideas or management practices can you think of that would address the same problem or issue and be more consistent with what you believe to be true about people and organizations?

Half-truths and their limitations

The authors presented many half-truths and discussed their limitations.

Incentives
The authors presented that incentives are mostly in the form of monetary incentives. Often these incentives are instated because managers want employees to produce more by working harder. This is called the motivational effect. Incentives have three main effects: motivational effect informational effect selection effect The informational effect is a way of communicating to the employees what the management values most. I.e. leaving some function uncovered by the incentives will be interpreted by some employees as if that specific function is not important, and the function will thus receive less attention than functions tied to incentives. The selection effect is a long-term effect of the use of incentives. People searching for work might look at the incentives in a company in order to understand what the company values are and what the company culture is like. People might choose to apply or not to apply based on these incentives. Incentives also work differently for people working in groups and people working alone. The motivational effect of incentives is well known, whereas the two other effects are less well -known. The authors pointed out that incentives should be used with care; there is a risk that the incentives will actually work!

Organizational change and resistance to change

This is the part of the book closest related to managing growth. Organizations grow over time and the state of an organization today is a result of its history. Change in a form or another during growth is inevitable. Change happens when (excerpt from page 178): 1. People are dissatisfied with the status quo. 2. The direction they need to go is clear (at least much of the time) and they stay focused on that direction. 3. There is confidence conveyed to others more accurately overconfidence that it will succeed (so long as it is punctuated by reflective self-doubt and updating as new information rolls in). 4. They accept that change is a messy process marked by episodes of confusion and anxiety that people must endure. When leaders talk about resistance to change, they usually mean that their subordinates are not doing what the leaders want. The authors showed that this resistance is not always bad. This

Book report by Otto Nyberg

Course: Managing Growth Book report Book: Hard Facts, Dangerous Half-truths & Total Nonsense resistance might be well-intentioned and sometimes these resisting subordinates know more about the subject than the leaders.

Implementation
In the third part of the book, the challenges with implementing evidence-based management was discussed. The lesson is that evidence-based management is not just a list of techniques that you can memorize, mimic and install. It is a perspective for travelling through organizational life, thinking about what you and your company know and what you dont know, what is working and what is not, and what to try next. (Excerpt from page 219)

Criticism
The authors fall in their own trap in the third chapter. The third chapter 3. Is Work Fundamentally Different from the Rest of Life and Should It Be? focuses mainly on anecdotal evidence supporting the authors argumentation about why some people should play a role in the company whereas others are better off being themselves. These arguments are not supported by evidence, but with what they here like to call common sense. In the previous chapters they have successfully argued why common sense is not so smart after all, and why it should not be used as proof. A concrete example of this can be found on page 57: As her experience shows, most organizations expect people to take themselves more seriously at work than in other parts of life. The following sentence is marked with a reference, but when checking out the reference on page 243 we find a sentence saying Robert Sutton learned this when a senior faculty member first tried to tease him, and when that didnt work, seriously explained that Sutton and Pfeffer were too loud and laughed too much for a place like the Stanford Business School, where serious thinking goes on. After this, the authors continue their story-telling by assuming that this fact was now proven. I do not disagree with the point they made that people are expected to behave differently at work than in other parts of life, but this proof was now backed up by two examples!

Despite the third chapter, I would highly recommend this book to anyone that is interested in management practices. The book provided me with a framework for calling peoples bluffs in the game of business, but most important of all, it provided me with a framework for evaluating when an analysis is good enough for implementation.

Book report by Otto Nyberg