Benchmarks can differ, and it pays to use them wisely. For example, support for the academic scientist is based on recent scientific productivity. This is judged by a rigorous peer-review process in which data are carefully collected, documented, and objectively assessed. Research plans are evaluated based on logically presented arguments and by supporting data. There is no room for specious arguments in scientific decision-making; from interpreting the results of the last experiment to planning the next one. Pursuing anything but the truth, failing to completely analyze data, and/or choosing to ignore inexplicable results, will invariably lead to the researcher’s worst nightmare; proof of his or her poor science. The laws of nature provide the most robust checks and balances on decision-making. (Yes, occasionally, proof of bad science takes a long time; e.g., the fraudulent link between vaccination and autism.)
In contrast, relatively short-term political, social, and economic forces often have major influences on corporate decision-making. Indeed, there can be a great disparity between the rigorous benchmarks for checks and balances set by natural laws and those determined by human behaviors. In corporate decision-making, there is no equivalent of the ’scientist’s worst nightmare’. The focus is forward, hindsight is 20/20, and there is a badge for recovery from spectacular failure.
Often, clients, their stakeholders, and their competitors are interested in overarching outcomes under various scenarios. Sometimes, this high-level focus can foster the seepage of half-truths, falsehoods, and ignored data into business analysis. Decision-making can deteriorate rapidly in the absence of a disciplined commitment to using the correct benchmark for each component being considered (e.g., facts vs. opinions).
Here are a few recurring situations to be on guard for on the slippery slide to dressed-up guesswork:
- There is a short time horizon and ramping up valuation or earnings is critical.
- The scope is signficantly constrained by politically viable options.
- Change in the status quo warrants much cultural and behavioral adaptation.
- The field includes sacrosanct intangibles, like entitlements and individual egos.