Cod-science masquerading as the real thing?

If there is one constant in the business world it is the regularity with which management fads appear.  These have arrived at the rate of roughly one a year for the half century.

A couple of years ago someone kindly sent me a slide showing fads by year since 1960 – x-axis providing the timeline and the y-axis the degree of hype.    Sadly in a fit of tidying I deleted the email without saving the attachment and attempts to find it again (Google searches, sick help requests on Linked-In forums, etc.) have yielded nothing, so I cannot share it with you.  But fortunately the key conclusion I came to from scrutinizing it closely has not been lost in the mists of memory.  This was that the fads in this slide could be split into three categories.

Firstly there were those that were now an integral part of business mindsets – the concept of competitive advantage being perhaps the most obvious, but also core competencies and even perhaps management by objectives.  Calling them fads was probably a little harsh.

Secondly there were those that were based on sound principles but whose image had been tarnished by the failure of later adopters to replicate the successes of the method exemplars; in part due to the cycle of adoption, adaption and corruption with mass interest resulting in more and more of the implementation being undertaken less and less knowledgeable and zealous people.  Into this category you might put business process re-engineering and six-sigma (both of which make it into the 8 Stupidest Management Fads of all Time).

Into the final category come those that really were not very good ideas at all but managed to capture the imagination of the management world.    Typically their originators sought to cloak their ideas with the taxonomy of science to confer respectability and increase confidence in their veracity without adopting the requisite rigour.  This would include the fascination with relative market share because of its purported relationship with profitability, also the search for ‘excellence’ as described in the eponymous book by Tom Peters and Richard Waterman.

Now the concept of excellence has fallen into disrepute for two reasons.  Firstly Peters was once quoted admitting that he had falsified the underlying data, though that statement was later retracted.  Secondly, within a relatively short time a number of the exemplars of excellence found themselves in trouble.  But the point I am making is that the research process undertaken to support this third category of fad is usually flawed, indeed that the research undertaken in the name of management science is subject to a whole range of biases that are barely recognized and therefore never adjusted for.

The reason why management research frequently tends towards being cod-science while masquerading as the genuine article will be explored in detail over the coming weeks.  But as a summary (or taster), the key reasons are described below, sub-divided into demand, supply and dissemination factors.  These factors obviously all feed on each other – lack of demand for scientific rigour means management journals do not prize it and so researchers do not adhere to it.

Demand for scientific rigour in management research is low…

1. Quality acceptance threshold is low

If the threshold of scientific validity demanded by consumers of management ideas is high, then it is fairly safe to assume that the quality of research output will be high.  But the majority of people are simply not that bothered.  Following my previous post, I tried to get a discussion going on the Strategic Planning Society Linked-In forum as to whether greater disclosure should be demanded by management publications on the commercial relationship between article authors and the case studies they laud.  This garnered just one comment (and even that was slightly off topic).

Similarly consumers are very accepting of authors stating “my research shows…” without wanting to see the underlying research so they can judge for themselves whether the research does indeed show that and only that, or whether the author is pushing a pet theory when the research does not exclude other potential causes of the results.  Most people are trusting and lack the innate scepticism required for pushing for higher standards.

2. Desire for certainty is high

As Dan Ariely has highlighted, we are attracted to conclusions that enable us to take action, not conclusions that require us to ask more questions.  Clear, confident assertions appeal more than nuanced judgments (especially when they support the desired course of action) – no one really wants to hear about potential ambiguities.

But due to the complexity of the business system – not least arising from the existence of confounding variables, the number of factors outside a business’ control and the presence of luck – defining the exact impact of different decisions and actions on outcomes is practically impossible.   Research findings that acknowledge such ambiguity are likely to be a truer reflection of the actual situation, but their influence is correspondingly reduced because they don’t chime with what we want to hear.

…As a consequence, adherence to scientific principles is also low…

3. Correlation is assumed to show causation

The certainty desired by consumers of management research is reflected in the attempts by suppliers to simplify results into causes and effects.  Compelling frameworks come with the promise “If you do this, then you will get that” whether that is significantly higher sales or increased profitability.  As a result, any correlation between variables (which can be measured statistically) is assumed to imply causation (which cannot).  The possibility that the correlated variables are both effects of some other cause is ignored, as is the idea that the causality is reversed to the one posited (the theory that the authors have developed to explain the relationship).

4. Historian’s fallacies are ignored

In the early 1970s David Hackett Fischer described over 100 errors of logic that historians had been prone to making in their interpretations of historical events.  Fischer arranged these fallacies into a number of groups including fallacies of sampling, question framing, factual verification, factual significance, generalization, causation, narration, composition and substantive distraction.

These fallacies exist due to the presence of uncertainty – aspects of the past are highly uncertain, but because they have already happened, we don’t expect this to be the case.   And while the outcomes of history are clear, the processes that created them are not.   Much management research – particularly that which seeks to codify the reasons for the success of top-performing companies – involves historical review.  But recognition of the risks to logic that can result (and the humility that such recognition brings) has yet to spread from the faculty of history to the faculty of business.

5. Bias is more prevalent than is recognized

Bias afflicts both researchers and their research subjects.  In the case of the former, the most prevalent is confirmation bias – only weighing evidence that supports a favoured theory.  Indeed this may involve constructing a research programme to support a pet theory rather than seeking to refute it, as the Popperian method suggests.  Finally it may involve stating the results prove it conclusively without giving other possible explanations due consideration.

Drawing lessons from successful companies and their less successful brethren typically involves interviewing managers from both.  But as behavioural science has highlighted, the recollections of these people are prone to a number of biases – the belief that they knew all along what they know now (hindsight bias) or that what they think now is what they thought then (self-consistency bias); remembering things as they expected them to be and not necessarily as they actually were (expectancy bias); and attributing success to what was in their control but failure to things outside their control (self-serving bias).  As a result, false conclusions are easily drawn (especially if they fit the favoured theory) and the role of luck in success is significantly underplayed.

…And they are not enforced by management publications

6. Opacity rather than transparency rules

Transparency of research is a critical principle of science, the idea being that others can replicate a study and ascertain whether they reach the same results.   But management research designed for consumption by managers is typically opaque.  In the more academic journals, the process of peer review may be as prevalent as elsewhere in academia.  Though in popular management journals there is no evidence of it.  Certainly research critiques are non-existent.

Compounding this is a lack of research transparency.  Actual research findings are not made readily available so that anyone interested can scrutinize the research approach taken, the actual data collected and decide whether they agree with the posited conclusions or whether alternative explanations may exist.  All that is available is the author’s conclusions – “My research shows…” – and readers have no option but to take his or her word for it.  And given the prevalence of the biases highlighted above, the confidence with which the research findings are asserted may be significantly greater than the actual results merit.

7. Lack of disclosure

The final point is lack of disclosure, which was the subject of last week’s post and so I won’t repeat what I stated then, except to say the response from Adi Ignatius was positive – hopefully there will be developments I can write about in the near future.

As highlighted above, I will also be expanding on points 3-6 in dedicated, more detailed posts in the upcoming weeks.

Elusive Growth: Why prevailing practices in strategy, marketing and management education are the problem, not the solution, by Jack Springman, will be published in Summer 2011

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About Jack Springman

I am a consultant with experience in business strategy and customer strategy development, customer management and customer service transformation.