2.3 Leadership and management

HL only: Every management decision sits somewhere on a spectrum between two broad approaches: reasoning from evidence, or acting on experience and instinct. Neither is automatically superior. Knowing which to apply, and when, is one of the defining skills of effective management.

The two are not opposites to be chosen between; they are tools to be combined depending on the demands of the situation.

HL only: Scientific thinking follows a recognisable sequence:

1. Recognise the problem or opportunity: define what actually needs a decision.
2. Set objectives: establish what a good outcome looks like.
3. Establish decision criteria: agree on the factors that will determine which option wins, and how heavily each one counts.
4. Develop alternatives: map out the realistic courses of action.
5. Analyse data: apply quantitative and qualitative evidence to compare the alternatives.
6. Choose and implement: commit to the best-supported option and act on it.
7. Review and evaluate: measure results against the original objectives and adjust.

This process is most valuable where precision matters and the cost of error is high. Pharmaceutical companies, for instance, rely on it when evaluating drug development decisions, because an incorrect call based on intuition alone carries serious consequences.

Limitations to keep in mind:

• Gathering and processing data takes time and money, which smaller firms may not have.
• The output is only as reliable as the input: incomplete or outdated data produces flawed conclusions.
• Some variables simply cannot be quantified, particularly in fast-moving or novel markets.