Underlying the practice and study of business are the belief that management is a science and that business decisions must be driven by rigorous analysis of data. The explosion of big data has reinforced this idea. In a recent EY survey, 81% of executives said they believed that “data should be at the heart of all decision-making,” leading EY to enthusiastically proclaim that “big data can eliminate reliance on ‘gut feel’ decision-making.”
Managers find this notion appealing. Many have a background in applied sciences. Even if they don’t, chances are, they have an MBA—a degree that originated in the early 20th century when Frederick Winslow Taylor was introducing “scientific management.”
MBA programs now flood the business world with graduates—more than 150,000 a year in the United States alone. These programs have been trying to turn management into a hard science for most of the past six decades. In large measure, this effort began in response to scathing reports on the state of business education in America issued by the Ford and Carnegie Foundations in 1959. In the view of the report writers—all economists—business programs were filled with underqualified students whose professors resisted the methodological rigor of the hard sciences, which other social sciences had embraced. In short, business education wasn’t scientific enough. It was in part to remedy this shortcoming that the Ford Foundation supported the creation of academic journals and funded the establishment of doctoral programs at Harvard Business School, the Carnegie Institute of Technology (the predecessor of Carnegie Mellon), Columbia, and the University of Chicago.
But is it true that management is a science? And is it right to equate intellectual rigor with data analysis? If the answers to those questions are no and no—as we will suggest in the following pages—then how should managers arrive at their decisions? We’ll set out an alternative approach for strategy making and innovation—one that relies less on data analysis and more on imagination, experimentation, and communication.
But first let’s take a look back at where—or rather with whom—science started.
Article continues below
Is Business a Science?
What we think of as science began with Aristotle, who was a student of Plato was the first to write about cause and effect and the methodology for demonstrating it. This made “demonstration,” or proof, the goal of science and the final criterion for “truth.” As such, Aristotle was the originator of the approach to scientific exploration, which Galileo, Bacon, Descartes, and Newton would formalize as “the Scientific Method” 2,000 years later.
It’s hard to overestimate the impact of science on society. The scientific discoveries of the Enlightenment—deeply rooted in the Aristotelian methodology—led to the Industrial Revolution and the global economic progress that followed. Science solved problems and made the world a better place. Small wonder that we came to regard great scientists like Einstein as latter-day saints. And even smaller wonder that we came to view the scientific method as a template for other forms of inquiry and to speak of “social sciences” rather than “social studies.”
But Aristotle might question whether we’ve allowed our application of the scientific method to go too far. In defining his approach, he set clear boundaries around what it should be used for, which was understanding natural phenomena that “cannot be other than they are.” Why does the sun rise every day, why do lunar eclipses happen when they do, why do objects always fall to the ground? These things are beyond the control of any human, and science is the study of what makes them occur.
However, Aristotle never claimed that all events were inevitable. To the contrary, he believed in free will and the power of human agency to make choices that can radically change situations. In other words, if people choose, a great many things in the world can be other than they are. “Most of the things about which we make decisions, and into which we therefore inquire, present us with alternative possibilities….All our actions have a contingent character; hardly any of them are determined by necessity,” he wrote. He believed that this realm of possibilities was driven not by scientific analysis but by human invention and persuasion.
We think this is particularly true when it comes to decisions about business strategy and innovation. You can’t chart a course for the future or bring about change merely by analyzing history. We would suggest, for instance, that the behavior of customers will never be transformed by a product whose design is based on an analysis of their past behavior.
Yet transforming customer habits and experiences are what great business innovations do. Steve Jobs, Steve Wozniak, and other computing pioneers created a brand-new device that revolutionized how people interacted and did business. The railroad, the motor car, and the telephone all introduced enormous behavioral and social shifts that an analysis of prior data could not have predicted.
To be sure, innovators often incorporate scientific discoveries in their creations, but their real genius lies in their ability to imagine products or processes that simply never existed before.