Do Something: Taking Action Even If It Hurts, by Mark Chussil
Kudos to Sharon Begley, Newsweek’s excellent science columnist, for her article “Don’t Just ‘Do Something’” in the June 21, 2010, issue of the magazine.
Tongue in cheek, Ms. Begley begins “Scientists are such spoilsports, always insisting on gathering data on the likely effects of a strategy before implementing it.” She then focuses on the oil spill and the pressure politicians feel (I add: pressure that perhaps they bring on themselves?) to do something even if there’s no evidence that the something-to-be-done will help. The pressure they feel to do something can prevail even if there is evidence that the something will make things worse. Apparently we the people believe that bad action is better than no action at all. If we didn’t believe that, we wouldn’t demand that politicians act. Not unlike, perhaps, demanding that doctors prescribe antibiotics to treat a virus.
Businesspeople feel the same pressure, of course. We feel the pressure to beat targets. We feel the pressure to turn things around. We feel the pressure to make our mark and show we’re in charge. We fall into a do-something trap.
I’ve seen it often in business war games. When given an opportunity to change their strategies, managers usually do so (and almost always do so if they’re taking over from another group of managers). They usually don’t stick with a previous strategy decision, whether or not it seems to be working. And those changed strategies often subtract value. How do I know? By simulating their businesses’ performance with and without the strategy changes.
I’ve seen it also in the tens of millions of strategy simulations I’ve run (using ACS’ patent-pending strategy decision tests) in a pricing tournament on which I’ve previously reported. Nearly 300 strategists have contributed pricing strategies to the tournament. Each person’s overall pricing strategy could include 0, 1, or 2 changes in strategy over time. About 28% of the strategists made 0 changes, 25% made 1 change, and 47% made 2 changes. The 47% making 2 changes performed slightly worse than the other groups. I am not saying that changing strategies necessarily hurts performance. I am saying that merely changing strategies — doing something when we have the chance — doesn’t necessarily help performance.
The question, of course, then becomes how can we know if changing course will help or hurt. That, Ms. Begley says, is what science is for. Where we don’t have established science, I’d add that it’s worth testing a strategy change in a safe environment before you act. And the first do something you should do is to not assume that doing something will make things better.
Further reading: A Dark and Stormy Night, Gross Galactic Product, It’s Working!, The Model Whisperer, What You Pay For.