I love stories. They help us learn and can be powerful, wonderful things.
As a kid, stories were entertainment. Yet as an adult, stories can also be a form of currency. In business, managers with the best arsenal of stories tend to have the nicest offices. Stories are the troops in the war of ideas. Yet despite how helpful stories can be, they can also infect management thinking in toxic, insidious ways. Stories are mistaken for evidence on a daily basis, making our decisions actually dumber while seeming smarter. For example, have you ever witnessed something like this?
- Manager A: “We need a low cost strategy.”
- Manager B: “No, low cost won’t work. Remember the failed Apple Newton? That’s what can happen with a low cost strategy. Instead we need to focus on the best design at a premium price, like the early iPhone or Tesla.”
- Manager A: “No, the Newton didn’t fail because of cost; it was a battery life and screen resolution issue. We can win with lower cost if we do either a razor-razor blade strategy like Gillette or HP, or a fast-follower strategy like Zara.”
Stories are how strategy happens every day in the highest echelons of management. It’s how MBAs are trained (the case method). The cookie-cutter practice of 1 idea with 3 supporting stories can get you far in life.
Here’s the problem: anecdote is not evidence.
There’s a big difference between anecdote and evidence. Stories can contain evidence, but they can’t replace evidence. As a data scientist, I spend most days with dry evidence. We did A, the results were B, the statistical confidence was C, the margin of error was D. I’m also abnormally literal (so I’ve been told, and not usually as a complement) so part of me expects evidence to speak for itself. It rarely does.
Hearing hard evidence takes a trained ear. Evidentiary proof – even boatloads of it – doesn’t sway people who don’t know how to listen for it. Not long ago I was in a room where conclusive hard evidence was presented for over an hour on a management issue. When it was time for Q&A, the first question was “where’s the supporting evidence for your claims?” I nearly fell out of my chair. What did the guy think the last hour had been all about?
Then the speaker did something unexpected. Rather than answering the absurd question head-on, he spent around 2 minutes telling an anecdote about a management team that faced a similar issue to what his data indicated. When he was done, everyone nodded in satisfaction.
While his hard evidence outweighed the soft little 2 minute story, it was the story – not the evidence – that made people feel the burden of proof had been met. They needed to feel it, because that’s how they were taught to consume information. For them, evidence without a story was equivalent to zero evidence. Conversely, a coherent story without any evidence can feel like proof.
The Oxford Center for Evidence-based Medicine has a nifty chart on the hierarchy of evidence. The point is, stories are at the bottom of the pyramid – a good place to start, but the most crude, unreliable state of knowledge. As rigor is applied, such as statistical analysis and controlled trials, information becomes more reliable.
Mistaking anecdote for evidence has more than one bad consequence. An obvious problem arises if stories seduce you into decisions that, under the circumstances, will actually hurt your business. Less obvious, but equally damaging, is how a taste for stories can make managers even less likely to understand and appreciate hard evidence. When you’ve grown up eating ice cream and cake it can be weird if someone asks you to try a vegetable.
A colleague named Ron had a great label for this dilemma: “strategy by storytelling.” While we can all appreciate a good story, does your businesses over-rely on anecdote at the expense of evidence? Does hard proof fall on deaf ears while sloppy narrative gets passed off as deeper wisdom?
Strategy by storytelling is a lazy way to chart a business’s future. It’s time we all do better, but improving how we understand evidence and rigor will take some getting used to. For some of us, it will feel like learning a new language. Yet once we develop a better ear for data, we may be surprised by what new stories we start to hear.