Mike Rollings

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Mike Rollings
Research VP
5 years at Gartner
28 years IT industry

Mike Rollings is VP of Gartner Research within the Professional Effectiveness team. His research discusses what IT professionals need to know about transformation, innovation, human behavior, contextual strategy, collaborative organizational change, communication and influence, and cross-discipline effectiveness . His research can be read by IT professionals with access to Gartner for Technical Professionals (GTP) research. Read Full Bio

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Business lacks Science

by Mike Rollings  |  July 26, 2010  |  5 Comments

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?

5 Comments »

Category: Management Transformation Uncategorized     Tags:

5 responses so far ↓

  • 1 Tweets that mention Business lacks Science -- Topsy.com   July 26, 2010 at 7:04 am

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  • 2 Mark Chussil   July 26, 2010 at 11:12 am

    Well said, Mike. I agree that thinking scientifically and rigorously can help tremendously; I’ve seen it done.

    For an example of more on this subject, please see “House, MBA” at http://whatifyourstrategy.com/2009/10/16/house-mba/.

    There are at least two major difficulties in applying science to business in the clinical-trials sense. One is that no one will enroll his or her business into a clinical trial. The other is that (as you say) overconfidence and other human foibles lead us to think that we already know the answers.

    But that doesn’t mean progress is impossible. Anyone can make progress by thinking scientifically, critically, and rigorously.

    And there has been progress. There has been work on it, notably The PIMS Program of the Strategic Planning Institute (primarily in the 70s and 80s). See http://en.wikipedia.org/wiki/Profit_impact_of_marketing_strategy for more on PIMS. I’m doing related work using massive simulations in “strategy decision tests” (patent pending). See http://whatifyourstrategy.com/services/tournaments/. Work in social psychology tells us how to avoid decision-making errors. See work by Max Bazerman, Scott Plous, Jay Russo and Paul Schoemaker, and others. I hope others respond to your essay with further examples.

    Thank you for your essay.

  • 3 TS Galpin   July 27, 2010 at 11:35 am

    Mike,

    Great point, I’m always frustrated by that very problem. If I had to guess at a root cause; it’s a lack of science education.

    MBA’s don’t know science or math (ask any MBA to solve a partial differential equation, an engineer can do that with eyes closed), and financial performance is not scientifically measured. Maybe if Management science actually taught scientific method and philosophy, we’d have a shot at removing political opinion from being the primary determinant of business decisions.

    But when hard science college students are doing math homework on a Friday nights and business students are partying – I guess you see the difference in culture. In general – Business students are not part of a culture of innovation. The are indoctrinated into culture of celebrating success and adequate effort.

    Thanks for making a great point,

    -Ted strategicscience.org

  • 4 Nick Gall   July 28, 2010 at 10:27 am

    Mike,

    I think Ted is on the right track. But its not lack of education, its a fundamental difference in temperament. Asking why a businessperson is not more scientific is like asking why a scientist is not more businesslike. Or like asking attorneys to be more like accountants, etc.

    Different professions generally attract people with dispositions that work best in that profession. Businesspeople don’t have a lot of science education because they didn’t like science classes.

    What’s also ironic about your example is that 200+ years later medical practice itself still “needs to be more scientific”. Note the recent popularity of concepts like http://en.wikipedia.org/wiki/Translational_medicine and http://en.wikipedia.org/wiki/Evidence-Based_Medicine. BTW, if you google ["evidence based business"] you’ll see that the trend/fad is spreading from medicine to business.

    If even the medical profession has a disposition that isn’t all that “scientific”, I don’t hold out much hope that businesses will EVER “become truly scientific”. Though I’m all in favor of business becoming a little less unscientific. :-)

  • 5 Jacques Ledoux   August 2, 2010 at 9:29 am

    We constantly make assumptions in our daily lives and it has become natural behavior to test them if we feel a situation we already observed may have changed: for example, when crossing the street, we look to the left then to the right: if there is no traffic on both sides, we walk, assuming that during that short period of time, there was no new traffic on the left. But what if there was no traffic on the left but some on the right: we wait and then, instinctively, we check back on the left as, unconsciously, we cannot assume anymore that there is no new traffic since a significant period of time has elapsed since we last tested our (left side) assumption…. and so on. Should we then say that we cross the street in a scientific manner?

    The scientific approach brought rigor, formal measurement and precision in a basic natural and instinctive reaction.

    All this being said, I totally agree with Mike when saying that business has assumed for too long that productivity is the only goal and that management is the only mean. Business is complex and success has always depended on the right balance of many ingredients: of course, formally acquired knowledge like management and sciences are important but too often they were promoted to the detriment of natural talent and instinctive skills like creativity, leadership and initiative.

    Saying that business should constantly monitor its assumptions is equivalent to say that business should become more scientific is, to my opinion, a bit far fetching. What is really important is the capacity to measure our initiatives and progress and to honestly evaluate the results in regards to our objectives. In that sense, scientific contribution is certainly nice but starting to use simple natural instincts would be a most welcomed improvement.