Quite often people ask me why on earth I decided to move from my (allegedly) lucrative consulting practice to become a tech start-up co-founder and CEO, with all the hard work, heartache and risk that it entails. Well, because I experienced for myself and saw the pain my clients went through without the time, data and directions to actually do the right strategic work that would make a difference. Not to mention the constant struggle to properly implement it and sustain success (always a challenge), but also to prove it generated the right results.
Nowhere was this more evident than in the annual planning process, currently underway at many organizations. My last post walked through my flawed past approach to annual planning, and in this post I’ll share my learnings and abject failures, all leading to Klever Insight’s birth.
- I was a HiPPO (and not because I overindulged). HiPPO stands for the ‘Highest Paid Person’s Opinion,’ coined by Avinash Kaushik and Ronny Kohavi. I often made big planning decisions on ‘gut feel’ — I simply didn’t have a clue what the best possible path forward was – so I guessed. Sometimes right, sometimes spectacularly wrong. Unfortunately, the reality is that my leadership team most likely deferred to my opinion, particularly in the absence of an obvious ‘smartest strategic next step.’
- I learned that human judgement augmented by algorithms is better than human judgement alone. In their terrific book,Machine, Platform, Crowd, Andrew McAfee and Erik Brynjolfsson write, “Getting rid of human judgments altogether—even those from highly experienced and credentialed people—and relying solely on numbers plugged into formulas, often yields better results.”
The following text is from the book, slightly modified and formatted to fit this blog post.
A team lead by psychologist William Grove looked at 50 years of literature looking for published, peer-reviewed examples of head-to-head comparisons of clinical and statistical prediction (that is, between the judgment of experienced, “expert” humans and a 100% data-driven approach) in the areas of psychology and medicine.
They found 136 such studies, covering everything from prediction of IQ to diagnosis of heart disease. In 48% of them, there was no significant difference between the two; the experts, in other words, were on average no better than the formulas.
A much bigger blow to the notion of human superiority in judgment came from the finding that in 46% of the studies considered, the human experts actually performed significantly worse than the numbers and formulas alone. This means that people were clearly superior in only 6% of cases.
And the authors concluded that in almost all of the studies where humans did better, “the clinicians received more data than the mechanical prediction.”
Ouch. I never used a data-driven way to make decisions, because I never had the data. I lacked the people, process, technology, culture, leadership and metrics data points. (Not just a benchmark.)
- Together, all of us know almost everything. HiPPOs have little tiny ears relative to their size, so they can’t listen very well. What’s needed are elephant-sized ears to listen to the people who know: the people who actually do the work.
Want better ideas? Fresh ideas? Buy-in? Engage your teams as early as you can in the process. Not after you have decided on what the plan for the year is. Before. Get suggestions on what needs to be done. Get suggestions on how things should be done. Find out what they think is broken. Keep them informed on what you discovered, and what you are going to do about it. Keep them informed of the progress and next steps along the way.
No, comments from yearly HR surveys don’t count.
So that’s one of the big misses, year after year, that inspired us to launch Klever Insight.
Want to learn more? Schedule a no-pressure time to learn about our new digital advisor- built from the ground up to address each of these issues.
Klever Insight is the world’s first digital advisor for managers in Customer Success and Support that recommends the smartest strategic next step. It coaches managers on how exactly to execute them and measures progress against an open, modern metrics standard.
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