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HiPPO Effect


Vishwadeep Khatri
Message added by Mayank Gupta

HiPPO Effect is the effect where the Highest Paid Person's Opinion (HiPPO) affects the decision rather than underlying data. Such people are usually senior in the organization and their opinions influence the group's discussion.

 

An application-oriented question on the topic along with responses can be seen below. The best answer was provided by Mohamed Asif and Sourabh Nandi

 

Applause for all the respondents - Mohamed Asif, Saikiran Sagiraju, Premkumar T, Sourabh Nandi, Aritra Das Gupta, Meet Maheshwari.

 

Also review the answer provided by Mr Venugopal R, Benchmark Six Sigma's in-house expert.

Question

Q 289. What is "HiPPO" effect? Is it still one of the biggest deterrents to the use of data-driven decision making?
 

Note for website visitors - Two questions are asked every week on this platform. One on Tuesday and the other on Friday.

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What is the HiPPO Effect?

 

HiPPO, the acronym for the Highest-Paid Person’s Opinion.” This theory refers to the impact of rank or authority in a meeting where members often fall quiet, admitting, for various reasons, to the view of the person with the absolute power and most distinguished salary. This term is coined by Avinash Kaushik in his book Web Analytics: An Hour a Day. 

 

HiPPOs can get within the way of ethical Data-driven decision-making. Having a HiPPO within the meeting room can control an agreement as it often carries a lot more weight than other opinions. Members may feel too afraid to question a dominant opinion, although they will fundamentally trouble it, while others may pay hypocrisy and want to please and toe the road. The owner of the authoritative voice runs the danger of believing they alone have the most straightforward ideas and miss the chance of hearing the dear insights or ideas that come from different voices within the room. A stakeholder or product owner could also be conscious of the impact they need on others, but it is hard to form a culture where people feel it is safe to question a HiPPO without concern of reprisal.

 

Why is the HiPPO Effect dangerous?

 

When a highest-paid person has lost touch with customers or fails to recollect that the team has relevant perspicacity, the HiPPO effect is in absolute intensity. Since the highest-paid person experienced success, promotions, and typically consensus from others within the organization, they will still risk believing they are always the ones in the room with the best idea. However, they already have a track record of success, and it will not change in any circumstances. When others in the meeting room consent to the highest-paid person’s opinion without a challenge, it just adds to the highest-paid person’s confidence and sense of superiority. Alas, a wicked cycle begins, and it is hard to end.

 

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Dismissing the HiPPOs from daily scrum will ultimately lead to less waste, better growth, happier customers, and happier employees. However, getting there does not happen by establishing the latest machine learning method alone—it happens when analytics is interpreted into a context that internal users can follow, so they do not fall back on intuition or opinion alone.

 

The Scope of Data-Driven Decision Making (DDDM)

 

Data-driven decision-making is where data is collected, analyzed, and decisions are executed based on the insights derived from the accumulated information. The process is more objective and might be quickly evaluated in line with the influence of the information on metrics.

 

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Data-driven decision management is crucial for each industry. It helps the management to decide to see what is going to speed the rendering to avoid wasting time. Data based decision also helps to use past information to predict what is to happen within the future. Without data, there are many risks, like working on false assumptions and being swayed by biases. Big businesses can use the approach for giant data analysis, diagnostic modeling, and processing to strengthen excellent performance.

 

The success of data-based decision making depends on various factors, such as the approach used for data compilation and the characteristics of the data. Data based decision management is heavily quantitative. It requires convincing, and enough machines capable of computing and analyzing big data sets most efficiently.

 

Conclusion 

 

Despite having enough Data-Driven Decision Making (DDDM), many members would still prefer it over their gut instinct. HiPPO’s must recognize the role other team members have played in past achievements to create a spontaneous growth culture around them. Today, everyone within the organization is well-versed in using data to form decisions. Confirm that each employee has access to the information flow and tools to review it.

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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. 

 

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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.

 

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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

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HiPPO effect, Highest paid person opinion. While companies deny any existence and would quote substantial data to back the decision but more often then not the data is only created to back the hypothesis believed or shared by the HiPPO.

 

 

Below are few pointers Why I believe that  HiPPO is chronic across the market

 

1.  Backing the decision of HiPPO provides builds immediate trust with people who influence the promotions of Junior or Mid level managers

2. Indian corporate yet evolved but is still influenced by legacy knowledge and hierarchical worship, heads of most Level 5 companies are people who have a minimum experience of 20 years where there is not much work done on data science or data based decision making or not much data available in some sectors to take the decision

3. Retaliation is natural and hence most of the staff support the decision suggested by HiPPO

 

How Do we Fix HiPPO culture

 

Data !!! & More Data !!! 

 

 

 

 

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Edwards Deming once indicated “In God we trust, all others must bring data” the statement well related with this HiPPO effect, How & Why?
Its as follows, will start with what is HiPPO effect?
HiPPO is short form Highest Paid Persons Opinion; the term was first coined by Avinash Kaushik in his book Web Analytics: An Hour a Day

Anytime you experienced in your meetings, even though data presented in depth for decision making some time bosses will come with a decision based on this assumptions!!!

When a HiPPO (Highly Paid Persons Opinion) is part of the meeting and whatever the data, sometimes the group will often defer to the judgement of the HiPPO. The other key characteristic of HiPPOs is most experience and power. Once their opinion is spoken, views of others are usually shut out.

 Why it’s a deterrent for data drive decision making?

A Study from Rotterdam School of Management indicates “Projects led by junior managers had a higher success rate than those led by more senior ones”.

 For ease understanding wish to link with a real example at this moment “A Leading two wheeler manufacturer decided once upon a time to serve the market only with Motor Bikes & a big no for Scooters” event the data supports the country suffers with heavy traffics and in need of ease personal transportation.  Because of the decision now the competitors are leading in Scooters, but no wonder still the leading two wheeler manufacturer deals only with Motor Bikes”.

At this DATA driven moment, HiPPO leads to a culture let’s wait for boss instead entrepreneurial mind-set at all levels.

 How to Overcome HiPPO effect?

Build a culture towards open minded discussions, the instead the tree organization structure create a JAZZ type organization structure.

Ensure able to connect any employee to the top management.

Fix trigger rules for the defined Key Performance Indicators and record the results, even at the state of failure of business due to defined trigger rules ensure it as a learning and revise the trigger rule accordingly.

Nowadays even in the area of defence, moving towards autocratic instead bureaucratic to ensure the agile in action, the other way to overcome the HiPPO effect is to create trust between the team.

There are some other practices to avoid HiPPO effect, they are:

-      Clear Meeting Rules

-      Open house meetings

-      On spot Reward & Recognition for right opinions / suggestions

 One of the main key characteristic for a good organization or society or culture or country is to RESPECT INDIVIDUALS.

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HIPPO is one of the common problems that is there in an organisation. HIPPO( Highest Paid person's opinion).This happens when an organisation Instead of relying on data are relying more on an individual who might be at a very high position and has a very high pay.

Often when such a Person Gives an opinion The others stop giving any other opinion Which is different from what the hippo says .there is a tendency where people tend to either follow the hippo or state facts which validates what the hippo is telling. Hippo effect is one of the biggest challenges in some of the companies where the decision is made not based on data but based on the hippo which can be top executive. 

It is often seen Tata project which is undertaken Buy a hippo is bound to fail as compared to a project which is led by middle manager .this can be attributed by the fact that a hippo generally tends to think that the decision that he is taking is always correct and in spite of someone highlighting that he might not be correct he might still choose to continue or stick to the decision which might need to failure of any project .this is not in the case of a middle manager because he tend to listen to all the critical analysis or feedback which has been provided to him and tries to do course correction accordingly .

 

this insures that whenever any kind of business decision is taken It is more of a teamwork which is based on data which is available and not by a single person Making a decision Without referring to any data which can be termed as hippo affect. Often in business in spite of data been available there is always a need to take a decision Which will be based on some kind of intuition Which cannot be turned as hippo effect. This is an essential part of any business decision .

In case if there is no data available any organisation Can always look at competitors performance or take industry benchmark to make any kind of business decision. Companies often have cross functional team mistakes decision Or are involved in any diversified project this neck aids the role of a hippo.
 

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HIPPO is an acronym for "Highest Paid Person's Opinion". 

 

Yes it's still one of the biggest detergents to the use of data driven decesion making, infact according to an article published in Forbes magazine few months back it's one of the key barriers to more evidence - based data driven decision making.

 

So what is HIPPO?

HIPPO means taking decision based on the sole opinion of Highest Paid Person in the room. 

 

Why is it bad? Isn't he/she paid highest because he/she is an expert or most experienced?

In this scenerio, decesions are made to please the senior most person instead of data driven decesions. Althought the organization might have good quality and quantity of data available but because the HIPPO wants to do something, decesions are made as per his/her choice, just to please him/her.

 

These type of decesions can lead to catastrophic failures. Also the morale of team hits the bottom because their hardships in collecting/ sorting and analyzing data goes in vain.Thus personal opinions, even though based on experience or expertise shouldn't out weight data driven decesions .

 

Instead expertise/ experience should be used to complement the decesions based on data

 

I would end my answer with a quote

" In God we trust, all others must bring data"

- W. Edward Deming

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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?

 

  1. Some possible reasons might include the following:
  2. The leader is impatient and feels that the decision is getting delayed if left to the team.
  3. The leader’s confidence level with team may not be good.
  4. Not much faith in data-based decision.
  5. Too much of dilemma within team and they are unable to narrow down to a decision.
  6. The leader has taken several past decisions through ‘HiPPO model’ and feels they had been successful.
  7. The decision involves certain sensitive content that cannot be shared with many others.
  8. Decision is of urgent nature and cannot wait for data.
  9. 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:

 

  1. Building confidence among teams over a period of time.
  2. Have a constant practice of engaging teams on decision-making.
  3. Establish individual rapport with each team member and understand his / her areas of strengths.
  4. Provide the overall direction and expectations to team and allow them to work without interfering when they meet and discuss.
  5. 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.
  6. In the event of certain decisions that cannot be left to the team, the leader will upfront make the basis clear to the team
  7. 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.
  8. 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.

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