When I think about evidence-based management, I can’t help but reflect on how crucial it is to bring a scientific approach to leadership. In my experience, many organisations still rely heavily on gut feelings or vanity metrics—those numbers that make us look good but don’t actually drive meaningful change. This is where evidence-based management steps in, helping us focus on delivering real business value.
Understanding Evidence-Based Management
At its core, evidence-based management is about making informed decisions based on data. It’s not just about collecting metrics; it’s about understanding their relevance to our stakeholders and customers. Here are the key components I believe are essential:
Market Value: This is the lifeblood of any sustainable business. We need to assess both our current value—what we’re doing well right now—and our unrealised value—those opportunities we haven’t yet explored.
Organisational Capability: This encompasses our ability to execute effectively. It’s about ensuring we’re not just doing things right but also doing the right things.
The Four Key Value Areas
To get a holistic view of our ability to deliver business value, I recommend focusing on four key areas:
- Current Value: What value are we currently providing through our products and services?
- Unrealised Value: What potential value is still on the table? Are there markets or customer segments we haven’t tapped into?
- Time to Market: How quickly can we move from idea to market? This is crucial for testing our assumptions and getting feedback from customers.
- Ability to Innovate: How much time are we dedicating to delivering new products or features? What barriers are hindering our innovation efforts?
The Importance of Metrics
While evidence-based management comes with a set of example metrics, it’s vital to tailor these to fit your organisation’s unique context. I’ve seen too many teams collect data for the sake of it, without understanding what those numbers mean for their business.
Regular Monitoring: Establish a cadence for reviewing these metrics—quarterly, for instance. This allows you to see how your decisions impact your organisation over time.
Data-Driven Decisions: Use the insights gained from your metrics to inform your strategic direction. This is where the real power of evidence-based management lies.
A Competitive Advantage
In my travels through various organisations, I’ve often encountered teams without clear goals, strategies, or measurement frameworks. This lack of direction can be detrimental. However, those who leverage empirical, hypothesis-driven, data-based decisions can carve out a significant competitive advantage.
Conclusion
Evidence-based management is not just a buzzword; it’s a transformative approach that can shape the future of your organisation. By focusing on the right metrics and making informed decisions, we can ensure that we’re not just surviving but thriving in today’s competitive landscape.
If you’re interested in discussing how evidence-based management can be tailored to your unique needs, I invite you to book a call with us at Naked Agility. We also offer immersive and traditional public classes that can help you and your team embrace this powerful approach. Let’s work together to unlock your organisation’s potential!
What is evidence-based management? I think the easiest way to describe it is just bringing science and empiricism to leadership. All right, how do we make decisions as leaders? What’s the data that we’re using to inform our decisions? And when we make decisions, what is the impact that those decisions have on the organization, and how are we measuring that?
In most organizations that I see, a lot of that is done by either gut feeling, right? So there’s not really any data, or there’s a lot of vanity metrics in the organization. The metrics represent us looking good but don’t necessarily change the way we do business. So evidence-based management is an attempt to address that and help organizations understand their business value. Right, that’s the key thing there: the business value. Are we focused on delivering value to our stakeholders, our customers, and how are we measuring that value?
It really talks about two categories with four key value areas that we feel like is a good idea to measure. At the top, we’ve kind of got market value. Obviously, that’s key, right? If we don’t have any market value, we’re not going to be a sustainable business. The two sides to that are value we already have, our current value, so that’s in our products and our services and things that our business does right now. The other side of that is unrealised value, right? What’s the value we’ve got left sitting on the table? Markets we haven’t explored, new opportunities, new things that we haven’t pursued, new customers we haven’t got yet.
So trying to understand those two, and although evidence-based management comes with a set of, I guess you could call them example metrics in each of these key value areas, the reality is that you need to find the metrics that make the most sense for your organization within those contexts. I just like to see us having metrics in each of the key value areas.
So we were talking about market value, so current value and unrealised value, but there’s also our capability as an organization, our ability to actually do stuff, right? The top two are about doing the right thing. Are we moving in the right direction? Are we focused on filling those gaps, perhaps in our market capability? The bottom half is our organisational capability, so that kind of sits in two key value areas.
So it’s four total, and that’s time to market, which is how fast we can go from idea to market, getting stuff in front of the customers to test our assumptions, right? Because we assume that something is going to provide value, but until we actually get it in front of customers, we’re not really sure. We just have an assumption, and we want to test it. The other side is the ability to innovate, right? How much time do we spend delivering new stuff, and what are the things that impact our ability to spend time delivering new stuff?
I think those four together, if we as a business have a core understanding of our current value, our unrealised value, our ability to innovate, and our time to market, that gives us a holistic view of our ability to deliver business value. Then once we’ve decided on what those metrics are and we’re able to monitor our organization, maybe you only do that quarterly, right? Collecting this large set of metrics, we’re then able to see how the decisions that we make, the changes that we make to our organization, actually impact on those metrics that we’ve decided to look at.
So that is what evidence-based management is. We’re going to use evidence to manage our organization, right? This is something that a manager would use, depending on whatever you’re at the top of, the pyramid for, right? It could be a product, it could be a service, it could be a whole organization, a whole company. How are you measuring these things, and how do you use that data to inform the decisions that you make?
Evidence-based management is just bringing that story together and saying, yes, we have metrics, yes, we’re looking at them, we’re monitoring them in a regular cadence, and we’re making different decisions based on those metrics and seeing how that shapes the direction that we end up going.
And that’s because this is something that so many organizations don’t do. You would believe the number of organizations that I go into, and they have no goals, they have no strategy, and they have no way to measure it. This can be a competitive advantage, right? If you’re able to leverage empirical, hypothesis-driven, data-based decisions to shape the direction of your organization to the market and the market niches that you are able to find, that can be the competitive advantage that you need to be successful.
If you want to have a discussion about your unique needs or situation, then please book a call or visit us at Naked Agility. We also have our immersive and traditional public classes on our website, and we’d love to hear from you.
