HiPPO, the acronym for Highest Paid Person's Opinion, is the manager who shows up on a project at the last minute and offers a personal opinion, all available data aside, about what to include to make the project a success.
Taken together, HiPPO theory describes an organization's reliance on human instinct rather than data in the decision-making process.
Ron Johnson, a former Apple senior vice president of retail, joined JC Penney with a mission: to reverse the three-year trend of steadily declining revenue that the company was struggling with.
At the time, Johnson was also arguably the highest-paid person in the company, at $52 million. During his tenure as CEO, Johnson relied on his instincts rather than available data and ignored both historical insights and new information. This attitude and way of doing internally produced two types of employees:
- Skeptics: Reluctant to follow a strategy that is not backed by data.
- Believers: True followers of a control freak leader who could take the company to innovation and profit heaven.
Ron Johnson finally left JC Penney with achievements far removed from the goals for which he had been hired:
- The company spent nearly $17 billion in 1.8 months, reducing its cash capacity from $930 billion to $XNUMX million.
- Revenue fell 25 percent in 2012.
- The company's market capitalization fell nearly 50 percent during Johnson's watch.
A/B testing to the rescue
When asked how to deal with a HiPPO that is clearly high on the chart, AB testing can be a good answer.
During the execution of a project, there are many possibilities to receive comments from the superior without any documented basis. Instead of simply responding with something like “Your opinion, while interesting, is irrelevant,” which could lead to a call from HR for an impending departure from the company sooner rather than later, it's better to opt for “Great idea, boss! We will test it."
And it really proves.
A couple of basic and relevant metrics are selected, a hypothesis is made and the suggestions that the boss has kindly provided are applied. After that, the result is tested on a subset of the clients.
If the new version underperforms the current one (on any of the hypothesized metrics), you have a good argument for why the business should rely on data-driven decisions, rather than managerial guesswork. learned in the best business schools.
Google Vision
On the Web https://www.howgoogleworks.net/ a promotion of the book of the same title written by neither more nor less than Eric Schmidt, Jonathan Rosenberg and Alan Eagle who are, respectively, the CEO, Director of clients and director of communication of Google. You can see more details regarding the position of the authors on the web.
The book is from September 2014 and it is absolutely essential to read it, and above all, to reflect on why the decisions that have been made, the direction, the mistakes, the successes and the management of them.
Already then it is highlighted how harmful these types of profiles are, their decisions, for a company.
On the web there is a summary document in word format and explains the position, already at that time, of Google regarding the HiPPOs (point 13 of the 50).
If you have to be careful with a HiPPO, don't forget to ZEBRA.
