Evidence-based business

Evidence-based business is about guiding decisions with high-quality evidence, starting with leaders who transform their organizations into being evidence-based. The hierarchy of evidence includes randomized controlled trials, natural experiments, observational evidence, and mechanistic reasoning. Mechanistic reasoning is often used in business to generate hypotheses, while observational evidence is common but weak. Controlling for confounders and using natural experiments can help improve the quality of observational data. Randomized controlled trials are the strongest form of evidence, but they can also produce false negatives or false positives. Leaders need to overcome organizational resistance when implementing high-quality evidence, and it's okay to reverse decisions based on new evidence. Successful businesses will see team members presenting data about evidence quality, decision-makers acknowledging uncertainty, and regular changes in mind based on high-quality evidence.