The Anecdote Trap

• By: Cliff Knowles
• On: 10/14/2008 11:42:36
• In: Uncategorised
• Comments: 0

An anecdote is a short account of an event or an incident. Anecdotes are usually told as stories. In businesses they are often told about service failures or product problems. Very often they represent the musings of the last loud customer an officer of the company spoke with. If anecdotes were understood only as stories – but not necessarily representative of reality -- there would be no problem. However, the more they are repeated or the higher up in the organization they emanate from the more they are confused with facts. In some firms, anecdotes are called ‘escalations’ to give them even more credibility.

Facts are a different breed of thing altogether. They are things that are known to have happened and are true. Companies run by facts usually have a source of facts that makes them reliable, current, verifiable and actionable.  These sources might be run charts from production lines or surveys of customers’ opinions about their services and products.

Companies managed by anecdote have no consistent strategy. They are whipsawed by the randomness of the customer input. Anecdotes are just as likely to be true or false and there is no way to distinguish the true ones from the others. As a result, a great deal of time and effort is spent chasing claims of failures that are wrong or rare – which would show up outliers in a legitimate analysis.

If a manager hears about financial troubles, the reaction is to “look at financial facts”.   Financial facts are in places like a balance sheet and profit & loss statement. These facts are habitually collected and analyzed. Anecdotes for some strange reason are exempt from the need for supporting data or scrutiny. They are just accepted as valid independent of observation or examination. This is simply dangerous.

There needs to be a rational system of customer feedback or shop floor feedback. In fact, no business process is complete without an assessment of the utility of the process in customers’ terms. These facts are as important as the financial facts. You can’t just keep making things or doing things and not know whether they are meeting the expectations of your customers. You can’t rely on customers to call to tell you how you are doing.  And you can’t afford to react to every anecdote that reaches an executive’s ear.

Surveys provide the evaluative information needed to complete almost any business process. Surveys can be short or long, on-going or one time, yes or no questions or rating scale. It does not matter, so long as they are statistically representative of the users/customers being studied. Survey results allow a firm to understand the efforts that need to be worked on first, second or not at all. They produce facts which direct the effort and prioritize the allocation of manpower and budget resources. Anecdotes produce noise and may foster efforts with less than 50% chance of any payoff.

How is your company run?