Most managers surely acknowledge the value of evidence-based (or fact-based) decision making. If asked, they would probably say decisions in their organization are primarily made in this way, with intuitive or instinctive judgments being reserved for situations where no evidence is available. Yet it’s not hard to agree with authors Tingling and Brydon that the relationship between evidence and the decision process that an organization actually uses is probably quite different. All to often, evidence is gathered not to drive a decision but to support a decision that has already been made. This is what they call “decision-based evidence making”.
The authors ask: Why does decision-based evidence making occur in organizations? Is decision-based evidence making necessarily bad? And, if decision-based evidence making is inevitable in organizations, what can be done to lessen its negative impacts? It’s not uncommon for managers to believe that they have committed themselves and their organizations to evidence-based decision making backed by major investments when, in fact, they have committed to decision-based evidence making. Decision making can be improved if managers come to a better understanding of the differing ways in which evidence is used in their organizations.
Evidence can play quite different roles in decision making, depending on whether it is used to make, inform, or support a decision. Evidence-based decision making exists when decisions follow directly from the evidence. This isn’t infallible, since the evidence may be mistaken, or the models used to convert the evidence into a decision may be faulty. Evidence can also be used to inform a decision when objective facts are combined with inputs such as intuition or bargaining with stakeholders. As the authors put it, the role of evidence in informing decisions is similar to due diligence.
More problematically, evidence can also be used to support a decision that has already been made. This closely relates to what psychologists refer to as motivated cognition and the confirmation bias. Even if leaders do not intend for evidence to be used this way, they may be unaware that the evidence is being filtered and shaped by subordinates to conform to the expectations of company leaders. This situation differs from those in which decisions are made without any formal evidence.
Decision-based evidence making may be common, but is it necessarily bad? Obviously it is dangerous to ignore disconfirming evidence—a phenomenon illustrated by the downfall of Enron. The authors also point out that companies waste major investments in information systems and analytical tools when those using them “are repeatedly demoralized and humiliated by having their efforts dismissed, overruled or altered”. However, decision-based evidence making can have its uses, at least when undertaken fully consciously—and when almost always restricted in its direction to external parties. It can be used to signal rationality to observers of company decisions, encouraging them to be more confident in the decision. The authors illustrate such a situation, but it remains clear that this is a highly risky approach.
The article concludes by considering several ways in which managers can reduce the negative effects of decision-based evidence making. In brief, leaders should: 1. Understand the nature of the decision problem and assess the potential contribution of formal evidence to the quality of the decision process. 2. Weigh the risks, costs and benefits of evidence when advocating an evidence-based approach to decision making. 3. Differentiate between internal and external audiences when engaging in decision-based evidence making. 4. Ensure that the objective evidence painstakingly gathered by your analysts is reflected more often than not in the decisions of the organization.