While facts don’t seem to be important to political candidates, basing business decisions as much as possible on facts rather than speculation is a critical business leadership characteristic.

In my post last August entitled “Do You Think Like a Leader”, I listed 6 guiding principles of what I called a “leadership mindset.” But in retrospect, I failed to include one of the most important leadership principles—reliance on facts.

All of us humans have a tendency to want to jump right to conclusions. At every meeting you will ever attend in your lifetime, there’ll probably be people making statements as if they were facts even though they are merely unfounded opinions. We seem to inherently need to have quick explanations for things and will often latch onto the first thought that comes into our minds or the first plausible explanation we hear. What’s worse is these falsehoods can spread like wildfire and gain credibility—especially if they come from a source whose opinions are respected. The results can be disastrous. We’re all familiar with Chicken Little telling everyone the sky is falling. But we believe or conjure up similar untruths in our business lives that can lead to hiring the wrong person, missing a sales growth opportunity, launching a product doomed to failure, or overlooking a serious internal or external problem.  

Effective leaders counter these tendencies by being obsessive seekers of the truth. They know that making sound decisions is essential to the success of the enterprise and that if you want to be right you better have the facts. Granted, sometimes getting all the data you’d like is impossible. But having the discipline to get as much as you can is a valuable trait. Here’s some suggestions for how to build the search for the truth into the fabric of your organization.

1. Make 2-way honesty and transparency part of your culture and enforce it.
Put a high priority on truthfulness from the get go. To a great extent you will reap what you sow. If you’re honest and open with your employees, they’ll be more likely to be honest with you. But be prepared to enforce this core value even if it means letting offenders go. Also, you can’t have honesty without transparency. Hiding the truth is just as problematic as telling a lie. 

2. Pursue measurable continuous improvement.
Determine what your “success metrics” are—the key measurements that indicate the health of your company. At The First Years we used to call them “vital signs” which is an appropriate description. You then use these metrics both for setting improvement goals and for monitoring how things are going. It helps to create charts for each so that you can instantly pick up on trends. I used to review our charts with my senior team at every weekly staff meeting.

3. Get everyone in the habit of verifying assumptions.
You’ve heard the expression that “to assume makes an ass out of u and me.” Yet we assume things all the time. We can’t help it. We assume what consumers want, what our competitors strengths are, what our strategy should be, why a product isn’t selling, what our employees know or don’t know, etc. etc. Unfortunately our assumptions are dead wrong a high percentage of the time. For the important stuff, you can’t afford to just assume. It’s too costly and dangerous as well as totally unnecessary. Most beliefs can be tested with just a little cost and effort. You can interview and observe consumers, you can carry out competitive intelligence, you can prototype product, packaging, and pricing ideas and test them before investing in them. It’s a matter of always having a healthy amount of skepticism and curiosity.

4. Use behavioral interviewing for all hiring.
I’ve made my share of costly hiring mistakes in my business career and my guess is that you have as well. No way to completely avoid this but we all can do a lot better job by getting to the truth about a candidates capabilities. Some candidates are very good at marketing themselves. We’ve all been duped—both in hiring the wrong person and rejecting the right one. There are screening techniques like behavioral interviewing (e.g. Hiring 3.0 by Barry Shamis) or work simulations that can help you get to the facts about a candidate’s capabilities.

5. Insist on financial reporting accuracy and completeness.
A particularly dangerous place to play games with the truth is in the financial arena. Sometimes this is not so much faking the numbers as it is blinding yourself from reality. First and foremost you need a CFO or accountant that’s not afraid to tell you things you don’t want to hear. But then you need to make sure that you have your eyes wide open with respect to things like building in adequate profit margins, monitoring expenses, projecting cash flow, budgeting for unexpected expenses, anticipating capital replacement needs, and practicing proper internal controls.

6. Design your feedback system.
It’s up to you as CEO to put in place your own information feedback system that keeps you informed about what’s happening inside and outside the company on an ongoing basis. You need to ask yourself what you need to know, qualitatively and quantitatively, to do your job. The charts I mention in #2 above is one element. But they won’t tell you about things like new competitive threats, internal problems that haven’t surfaced yet, untapped growth opportunities, or technological innovations that might impact you positively or negatively. You’ll need other methods to keep you up to date including getting out of your office and seeing for yourself what’s really going on.

 
Next Steps    

Do your own audit of the extent to which your company operates with a fact-based mentality in day to day activities and interactions. And, see if there are assumptions built in to your mission and strategy that have yet to be confirmed? Consider how becoming more fact-based would improve company results. As always, if you need some assistance, take advantage of JPMA’s CEO Mentor program by contacting Kyle Schaller at kschaller@jpma.org or signing up on the web site.