The Winner's Circle
Management gurus Jeffrey Pfeffer and Robert Sutton give these companies kudos for using hard evidence to profit and grow
DAVITA. Facility managers at this health services company, which runs 1,200 dialysis centers in 41 states, take classes at an in-house school called DaVita University, where they learn what has worked and what hasn't across the organization--from Excel basics to budgeting and labor scheduling. The result is some of the most consistent, highest-quality care in the industry.
HARRAH'S. Gary Loveman, the company's CEO, joined the casino in 1998 and began running experiments that challenged the industry's conventional wisdom. His findings--that older customers, not families, generated the most revenue; that direct-mail campaigns work better than media advertising--inspired changes in strategy. Since Loveman's arrival, profits and the stock price have continued to climb.
YAHOO! Because of the high volume of traffic to its website, Yahoo! can run controlled experiments to constantly evaluate customer tastes. Small tweaks matter, the company has discovered: By moving the search box from the side of the page to the center, Yahoo! found it could produce enough extra click-throughs to generate an estimated $20 million in annual revenue.
QVC. The home shopping network is a model of evidence-based management: Producers are constantly adjusting their program, moving products around, and changing the lighting. They watch videos of the previous day's broadcasts to spot successes and failures. "Every day, every hour, every minute, they're adjusting in real time," says Pfeffer.
FEDERAL AVIATION ADMINISTRATION. Proof that government agencies don't have to act like big-footed oafs, the FAA has a system that allows pilots and air traffic controllers to report problems anonymously. "It's a 'Let's learn, let's fix it' sort of culture," says Sutton. The goal is to find systemic problems and solve them rather than assign blame. Most errors and mistakes are caught early, and accidents are rare.
This story appears in the March 27, 2006 print edition of U.S. News & World Report.