I was listening to BBC radio on my way to the airport Sunday for my flight to San Diego and Catalyst. The story was about the invention of the clinical trial by James Lind. While serving as surgeon on the HMS Salisbury Lind conducted experiments with the crew that was suffering from scurry. He noticed that some crew members improved by eating citrus while others did not.
However, instead of assuming that citrus was the key, he devised an experiment where 12 sailors were split into 6 groups of 2. Each group was given different diet supplements; some with oranges, some with limes, and others non-citrus items. By devising this experiment, he was able to confirm his hypothesis that citrus was the key to eliminating scurvy and give birth to the clinical trial. He used the trial to test his assumptions, prove out his theory, and to expose anything he may have overlooked. His great contribution to science was being humble and embracing uncertainty.
It made me think how most businesses have not learned to apply this critical and important lesson discovered by Lind in the 1700s. Today businesses still prefer to assume certainty over uncertainty. For example, they gladly fund initiatives based on assumed market and economic conditions, benefits, and risks. But once decided, they rarely put in place tests to monitor their assumptions.
Why are businesses so unscientific while pretending to be scientific? Businesses apply operations research and other Tayloristic ideas to remove human effort in the name of management science. The assumption being that this will lead to greater long term value. But has it? Recent analysis would suggest otherwise. The Deloitte LLP Center for the Edge studied long term return on assets (ROA) trends showing that ROA has suffered a steady decline since 1965. All US public companies experienced sustained and significant erosion in ROA — dropping by 75%. Is it possible that while we have been minding the store of productivity we have been burying ROA and possibly our future? Possibly so.
This is an example of how businesses make assumptions about value and do not apply the lessons of the clinical trial. We assumed for decades that productivity was the goal and never thought about what else may be affected. We become over confident in a winning formula only to find that the assumptions behind the formula have changed. We fund initiatives and hardly ever monitor the outcome. We eliminate human involvement and starve organizations of human insight.
When will organizations become truly scientific, embrace uncertainty, and constantly examine assumptions? Are people more interested in psuedo-science and pretending to be certain?