Evidence-based decisions

Melbourne-skylineIn the last month I have been exploring decision making in business. It’s a long story that spins around one core assumption that I needed to test. The assumption is this.

If evidence is available people will use it to help them make smart choices.

Now I always thought that before any serious decision was made the brain recalled and sifted its available knowledge relevant to the decision. This coffee is hot. It must be because I just saw the barista pour steaming milk into it so I will sip it to avoid burning my tongue.

Other decisions rely on less categorical evidence. My superannuation scheme allows me to choose between steady and more risky but high-yield investments that have something to do with the mixture of stocks and bonds in my portfolio. I choose the steady option because I remember seeing a graph showing share price crashes occur often enough for another big one to happen before I retire.

Sipping coffee or avoiding risky stocks are evidence-based decisions even if the amount and quality of the evidence used is vastly different.

As a professional scientist evidence is my currency. Training and experience have taught me the skills to sift data into facts and to understand how facts can become evidence. And I always hope that the evidence is articulated in forms that influence decisions. This is a powerful paradigm that still underpins my consulting practice alloporus environmental.

It always made perfect sense to believe that if the human brain makes decisions based on facts, then if evidence were available people would use it.

Oh the bliss of naivety. If only it were possible to be in such a state indefinitely. Life would be so much easier.

Then I began to ask business types this question.

If evidence were available to help decision-making, would you use it?

Mumbling ensued. In just a handful of meetings it was clear that the real answer was no. There were claims of course and even the occasional example of actuarial prediction or due diligence report, but in reality decisions are gut feel things.

At best evidence is gathered in support of a decision already made.

It has been quite a shock to find a core assumption that is a given for a scientist is at best bent and at worst ignored in other walks of life, even where evidence is needed.

Then I paused and realised where evidence comes from for the majority of people who do not have the time or inclination to peruse academic tomes. It comes from their experience; usually their immediate experience that is still in the front of the mind.

And a good deal of this ‘evidence’ is incomplete.

What we see in the workplace or told by the boss or browse on the web is not evidence in the scientific sense. Even if it involves data it has no context to determine inference. In short we decide on a whim. What our guts tells us.

If this is true it begs some very interesting questions.

Why doesn’t the system fall over if we are relying on the [mostly] corpulent guts of [mostly] male business managers?

Why do we have evidence at all if nobody uses it?

Would decisions be better if they were made analytically?

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