As a business evolves, it will encounter the need to build credibility with outside parties, such as investors and lenders, and to make well-informed strategic decisions. In short, financial...Read more »
Lesson #3: When Evidence Collides with Ideology
Lesson #3: When Evidence Collides with Ideology – July 30, 2013 Dave Garlock, Fahrenheit Finance
Are you comfortable considering non-conforming ideas and concepts? How do you respond to ideas that attack the core of your beliefs and understandings? What do you do to validate challenging ideas and transform your own beliefs and understandings?
This article is the third in the series of interpretations of the concept of Habits of Mind set forth in Good to Great to Gone, the 60 Year Rise and Fall of Circuit City by Alan Wurtzel, former CEO and Chairman of Circuit City. Habits of Mind are ways of thinking used by executives who develop successful strategies.
The third Habit of Mind is Evidence Trumps Ideology: “In business, as in politics, decisions are too often based on unproven assumptions about what works and what doesn’t. We all need operating assumptions about human nature, the economy, and the like, but when things do not work out as planned, we need to determine whether our assumptions are based on evidence or ideology. Evidence about the real world trumps ideological assumptions every time.”
“Ideology” is a system of beliefs, concepts and theories formed by individuals and groups for managing their relationship with their environment. This system is the tool by which we filter and process what we are seeing, hearing, or otherwise sensing. Ideology creates a sense of control and stability in the onslaught of conflicting and contradictory viewpoints and events.
“Evidence” is support or proof of a supposition or theory. Evidence is derived from information by a process of reasoning and testing to create a logical argument. The goal is to persuade an audience of the validity of certain points of view or the occurrence of certain events, usually in support of some component of the presenter’s Ideology.
What happens when one person’s Evidence collides with foundations of another person’s Ideology? How does the holder of an Ideology deal with information that challenges fundamentals of their Ideology? How do you handle presenting the Evidence to a potentially skeptical audience?
Responses can vary from an immediate rejection of the information without further consideration to careful examination of the information with potential modification of the holder’s Ideology. How we respond is determined by the rigidity of our Ideologies and the strength of the Evidence under scrutiny.
People who adopt an Ideology of others without a deep understanding of the intricacies of the Ideology are prone to be more resistant to challenge. In some ways, these folks might be considered “shallow”. This challenging attitude may arise from their inability to effectively defend the Ideology or from the threat to the individual’s credibility.
Someone who has adopted Ideologies from multiple sources using some cohesive logic may be more willing to consider and assimilate new information in their Ideologies. Whenever presenting Evidence, be aware of the degree of rigidity or flexibility of the Ideology of your audience.
As a receiver of Evidence, we should never be so emotionally, financially, and intellectually invested in a project, concept or a strategy that we are not prepared to consider modifying or abandoning our “sacred cow” project, concept or strategy when Evidence shows we are heading down the wrong trail.
While a flexible Ideology is important, the reliability and validity of the Evidence may be more important. As a presenter, our credibility is tied to the Evidence. Neither the recipient nor giver of Evidence wants their reputations to be betrayed or compromised by decision using invalid Evidence.
Be aware of the pitfalls of data when preparing and presenting Evidence and conclusions.
- Do not create a conclusion then create data to fit the conclusion. Every analysis starts with a hypothesis to be tested, but be ready to modify the hypothesis based on observation. Not every analysis has an actionable recommendation, other than to keep working on the hypothesis.
- Make sure the measurement data is relevant to the issue and can be correlated to a meaningful benchmark. Has there been a change in the environment affecting the usefulness of historical data? Are the correct timeframes being evaluated and tested?
- Prepare an evaluation of the strengths, weaknesses and potential fallacies of the analytical approach and be prepared to discuss. Make your audience aware of the complexities encountered in testing the hypothesis.
- When the Evidence appears credible, begin to ask the “what-if” questions. If this Evidence may be true, then what would happen if a certain change or action was made? How would we measure the effect of the change or action?
As the presenter of Evidence, be open to critique and questions. Recognize that data is indicative and rarely absolute in its nature. There can be more than a single cause affecting the situation being tested.
As the receiver of Evidence, when in doubt about whether the Evidence or Ideology is correct, engage an independent third party whom you trust to be an impartial arbiter. Provide them with the question or hypothesis being posed and the Evidence being presented, but refrain from inserting your own perspective. Ask them for their opinion. Judge the rationality of their response and re-examine your Ideology. Maybe a change in Ideology may be warranted. Change is not comfortable, but it is better than “intellectual” extinction.
The first two Habits of Mind covered in prior articles were:
R. David Garlock Director, Restructuring & Litigation Support
Contact Dave Garlock Dgarlock@fahrenheitfinance.com
David has more than 30 years of professional experience as a financial executive in corporate finance & accounting and as a restructuring and turnaround advisor. Since 1998, Dave has worked as an interim CFO and financial advisor to medium size businesses as well as distressed or bankrupt companies and liquidating trusts in the healthcare, manufacturing, and retail industries. He has performed litigation support services and has provided bankruptcy case management services involving Bankruptcy Courts in New York, Texas, Delaware and Virginia over the last 8 years
The content of this article expresses my understanding of the Habits of Mind and does not necessarily reflect Alan’s intent or meaning in the writing of the book. Form your own opinion by reading the book.
Wurtzel, A. L. (2012). Good to Great to Gone, the 60 Year Rise and Fall of Circuit City. New York, New York: Diversion Books.