In today's fast-paced and data-driven world of business, it is essential to make evidence-based decisions to better inform choices. It’s a no-brainer as data-driven companies have better financial performance,are more resilient and innovative, according to Harvard Business School.

However, that’s easier said than done when navigating the political landscape of the corporate world. One of the biggest obstacles to overcome is the Highest Paid Person’s Opinion, or HiPPO. This phenomenon occurs when senior leaders or executives rely on their intuition or experience instead of data and analytics to make decisions.

The problem with the HiPPO

Relying on the opinions of a few executive decision makers can pose significant problems for an organization. One of the most significant of those problems is that it can lead to people not in leadership lacking confidence in sharing their opinions. This stifles creativity and leads to a lack of diverse perspectives, as people are less willing to speak up if they feel their opinions are not valued or considered.

Additionally, when decisions that impact the entire company are made by just a few individuals, it can lead to:

• A lack of buy-in from the wider organization
• The implementation of well intentioned strategies that lack research or validation
• Decisions made without considering the perspectives of those closest to the end-users (such as the sales teams, customer success managers and technical support staff).
  

The holistic experience can result in decisions that don’t align with the wants and needs of customers.

When trusting the HiPPO works

However there are situations where the HiPPO acts as a net positive For example, when there’s limited data or when there’s no time to analyze the data, the intuition of an experienced leader can serve valuable. They can make quick decisions based on their past experience and knowledge, which may help the organization navigate certain situations.

Netscape’s founding CEO Jim Barksdale was famously quoted as saying about data-driven decision making:

“If we have data, let’s look at the data. If all we have are opinions, let’s go with mine.”

You also have to also consider whether challenging the HiPPO is worthwhile, especially if the decision is ultimately unimpactful. Continuously challenging every suggestion and testing every hypothesis may lead to both high financial costs for the company and personal costs to the individual.

A study from the Rotterdam School of Management found that projects led by senior leaders failed more often while projects led by junior managers were more likely to be successful. This is because junior managers were more receptive to criticism and sought out advice from all corners of the organization in order to build a strong plan, while employees didn’t feel as comfortable giving critical feedback to higher status colleagues.

The author of the study, B. Szatmari, also went on to say that staff were likely to fear "the possible consequences of criticizing the work of high-status employees". (Source: BBC article)

Leveraging centralized data to overcome the HiPPO

So when is the right time to go beyond the HiPPO? Well data helps! It provides more than just an opinion, generating quantitative metrics to draw conclusions from. That’s why companies of all sizes are leveraging Fivetran’s automated data movement solution to centralize data sources, democratize data access, all to make faster, more informed decisions.

For example — companies such as Square leverage Fivetrans to free data engineers from spending time rebuilding infrastructure within multiple legacy systems. They’ve instead refocused resources on higher value work to support the C-Suite in overcoming the HiPPO and embracing evidence-based decision making.

The use of modern data stack continues to help organizations overcome the reliance on the HiPPO by facilitating greater independence and informing collaborative conversations that are sourced from available data. After all, databacked conclusions are more powerful than opinion alone — whether from the intern or the CEO.

If you’re interested in learning more about how Fivetran and its strategic partners are helping companies automate their data processes and reduce time to insights, sign up today for a demo.