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Benchmark Six Sigma Expert View by Venugopal R HiPPO is an acronym believed to be originated from Microsoft and it stands for “Highest Paid Person’s Opinion”! However, this topic is not new at all and has been a subject of discussion across companies for ages. A person holding a very senior position could intentionally or unintentionally influence decisions in an organization. This could result in diverting the decision-making away from a team and fact based exercise. The onus of avoiding such undesirable incidents rests with the leaders of the organization. Why would a HiPPO effect emerge? Some possible reasons might include the following: The leader is impatient and feels that the decision is getting delayed if left to the team. The leader’s confidence level with team may not be good. Not much faith in data-based decision. Too much of dilemma within team and they are unable to narrow down to a decision. The leader has taken several past decisions through ‘HiPPO model’ and feels they had been successful. The decision involves certain sensitive content that cannot be shared with many others. Decision is of urgent nature and cannot wait for data. There could be certain exceptional decisions that have to be taken considering several factors and the wisdom of experience & seniority may be warranted. There are many leaders who are careful to avoid creation of the HiPPO effect and conduct themselves accordingly. Some such traits would include: Building confidence among teams over a period of time. Have a constant practice of engaging teams on decision-making. Establish individual rapport with each team member and understand his / her areas of strengths. Provide the overall direction and expectations to team and allow them to work without interfering when they meet and discuss. Even if the leader feels strongly against a team’s decision, he/she will deliberate with them, so that the team realizes the rationale, rather than bluntly overruling them. In the event of certain decisions that cannot be left to the team, the leader will upfront make the basis clear to the team For successful decisions, the due credit and recognition will be shared fairly with the team and in case of unsuccessful decisions, the leader owns up responsibility and works with team for remedies rather than pointing a finger of blame. Such leaders will be cautious for even a gesture of appreciation or rebuke towards a junior employee, breaking the hierarchy, since it could send strong unintended signals across the organization. Is HiPPO effect still a deterrent for Data Based decision making? Overall, the HiPPO effect may continue to prevail to an extent in any organization at varied levels of perception. It's influence with respect to Data Based decision making would vary from organization to organization. Companies that have imbibed a good TQM culture are likely to have overcome the influence of this effect considerably, since any TQM or Business Excellence model emphasizes Fact-Based Management and Team Involvements. Any organization should not only distinguish those decisions that need to be taken through fact-based approach but also prepare the teams by equipping them with the necessary skills, tools, mindset and confidence. It is important for the senior leaders to set example and drive the overall organization culture towards team working and fact-based management.

In this context, HiPPO refers to Highest Paid Person’s Opinion. HiPPO Effect in simple terms is when a group of people trying to make tough decisions and relying more on opinion rather than on data analysis. Executives at the top of the organizational pyramid, typically who are paid more, expresses what they think. It would be difficult to disregard Highest Paid Person’s Opinion and it would be risky in organizational environment. Below are some of the effects of HiPPO: Effect could be very subtle It could lead to Reverse Engineering, approaching from outcome and viewing at the data, resulting in losing/ignoring vital data sets It could be much riskier, when it is more like an order and less an opinion Possibility of declining idea trend Org wide, as the ideas and data analysis are not considered, conceived and materialized Loss of customer and goodwill due to unrealistic commitments (considering Ballpark estimates over realistic estimation techniques) Digital-native companies, including e-commerce, high-tech, telecommunication, consumer electronics, computer software and online service organizations rely more on data trends and have strong digital culture and vital information’s and decisions are informed by data and analytics. Administrators and Executives act on analytically derived insights and specifics, rather than intuition/experience or opinion. On the contrary many traditional companies are struggling with HiPPO’s and adopting big data and AI/ML initiatives still remains a major challenge. Few organizations have adopted data-driven practices and approach that would enable them in digital transformation. Most organizations have a long way to go in developing the data driven practices that enable them to realize the competitive edge. Below survey conducted by McKinsey shows the data and digital adaptability by various organizations and industries. Source: McKinsey, Nov 2018 Handling HiPPO: HiPPO Effect is the major barrier to data-driven decision-making. However, it can be handled and managed by using below steps: Having numerous engagement activities at various levels Creating digital culture Transforming core parts of business through digitization Having clear strategy in place driven by analytics Adopting to industry wide best practices Involving cross functional experts and consultants while making decisions Using decision making tools – Decision Matrix, Pugh Matrix, DACI Model, FMEA, Multi-Voting, Force Field Analysis, etc., Turning Assumptions to Hypothesis, running “Safe to fail” experiments to validate assumptions Certainty, HiPPO is one of the biggest deterrents to the use of data-driven decision making. However, it can be managed. Opinions aren’t Facts! It is just the medium between knowledge and ignorance