The Relevance of Empirical Research in Strategic and Tactical Decision making
Many decision makers and knowledge centers put great emphasis on empirical research in the development of their methodology and in their attempts to capture the complexities of reality into models.
At Emrys we read these kinds of sources with interest, for they can certainly be a source of inspiration, but they are not our first focus point.
Empirical research in essence deals with probabilities and in leadership statistics is usually not conclusive for decision making. Logic, team consensus and consistent and scalable methodologies for achieving growth are far more important. The focus is on the current reality in relationship with the aspired vision and mission of the company. The sample size is 1 by definition. The company is unique and the situation at the current moment, the circumstances under which a decision has to be taken is unique as well. The fact that empirical research shows that in e.g. 80% of the cases people interviewed within a sample of 1.000 would prefer option A doesn't say anything about the specifics of the decision under consideration. Mathematicians would agree to that as much as leadership intuition does.
There are two fields where empirical research does have its value in the decision making process, but we should distinguish clearly between different levels of decision making and which technique to apply on which level:
- In the process of defining a vision for the future and a disirable position for the company in that future, trends are an important source of information. It is not easy to interprete the available information and judge the relevance for your decision making process, but it general trends are relevant. The fact that more and more consumers prefer to buy certain types of products online is relevant for the develoment of a retail strategy. General emperical research can be very valuable in finding trends in an early stage of development.
- In the process of tactical decision making more and more companies benefit from so-called A/B- testing. It is a robust method to test different approaches to bring your product or service to the market. It is executed in a very measurable manner using statistically relevant samples under carefully isolated conditions. It can be extremely effective and even decisive for the company’s future. The differences of effectiveness between various tactical approaches (e.g. different sales processes) are thoroughly compared. On a tactical level type of research is significantly more relevant to a specific business environment than general empirical research, because these test results are derived from the own specific conditions of the company in relationship with its own customers.
- Strategic decisions have the objective to build on uniqueness. Strategy is all about differentiation from competitors and developing and unmatched value proposition. Strategic decisions should be based on scrutinized logic. The assumptions underlying this logic and the tactical decisions in the implementation process of the strategy should be thoroughly tested in real life situations. In this testing process statistics must come in, but not in the creative process of developing the value proposition as such. Again, when it is possible to run many tests on different approaches to the target group under concrete and comparable circumstances it can certainly make the learning curve steeper. But this is completely different from empirical research that tries to test assumptions under theoretical circumstances.
Leadership has to form its own opinion and convictions on the road to travel on their way to achieve success. The entire leadership team should be focused on learning from reality all the time, striving for ongoing improvement. In the testing phase experiments should be scaled-down as small as possible and if proven successful scaled-up as fast as possible.
Our advisory processes, master classes and training programs focus on developing this quality within the leadership teams and high potential individuals we work with. With the constant drive for continuous improvement in combination with well-developed analytical and reasoning skills and unattached from any scenario as such, always prepared to reconsider the current reality, we help people to achieve more than they ever imagined. Empirical research does not mean a great deal when the ambition is to be off-chart anyway.
The combination of knowledge and experience provides insight. We always aim for learning from real life implementations, both in success and failure. Through a rigorous process of abstraction and simplification we externalize and generalize our experiences and learnings into concrete and directly applicable methods.
August 2014 | Version 1.0 by Yohyon van Zantwijk