With the advent of ‘big-data,’ is there still room for intuition and emotion in business decision-making?
Based on my own experience working with business leaders in large organizations as well as small, success is all about making the right decisions at the right time. Some people believe it’s all about intuition and experience, while others are fanatics in gathering data, doing the analysis, and suppressing intuition and experience. I’m a proponent of always striking the right balance.
I’m sure you all agree that all decisions are not the same, with some being strategic for your future, and others required due to daily operational crises. For some, data collection and analysis is key, while others benefit from using intuition to get instant action. I’m always looking for some insight on how to recognize the parameters that strike that balance between data and intuition.
I found some good guidance in a new book, “Decisions over Decimals: Striking the Balance between Intuition and Information,” by Christoper Frank, Paul Magnone, and Oded Netzer. These seasoned executives and educators bring a pragmatic mix of scientific research and real-world experience to guide you, with my additions, through the following seven decision-making steps:
1. Re-affirm every case and need for a change decision.
This is an important first step, since people often resist making any decision, even when the data is clear. You need to clearly show the dissatisfaction and pain of making no decision, as well as a clear vision of the ideal state. Address resistance factors, and why the decision must be made now.
The most challenging cases are the ones where your intuition tells you that you need to be looking ahead for new growth opportunities, because the market landscape is new, and there is little quantitative data yet. Don’t be afraid to rely on your intuition here.
2. Provide absolute clarity on the desired outcome.
Most teams and clients are quick to conclude on what they don’t want, but have disparate views on the best solution. You need to be clear on what success looks like, and be careful to avoid overengineering a decision with too much data or process, reducing the speed of arriving at a decision.
Another key to this step is to continually communicate your company mission and values to all your constituents. These will solidify who you are, what you stand for, and where you’re going next. Amazingly, I still find many decision makers out of touch with these.
3. Clarify how and if a decision must be reversible.
Most people don’t like to make irreversible decisions, due to the risk of failure and long-term potential consequences. Identify key points in the process where the decision can no longer be undone, and provide data on when and if the scope of the decision can be reduced to be reversible.
4. Break a large decision into many smaller steps.
I have found that skilled decision-makers always break down the overall decision into micro-decisions that require less time and/or have lower risk. This may not be the shortest distance between points A and B, but like sailboats tacking, you can handle new data, priority changes, and redirections.
5. Match every decision to skills, people and timing.
Decisions in a crisis situation need to be made quickly, as opposed to strategic changes which may require key leaders or technologists. For most business decisions, I recommend smaller teams with short timelines to keep the focus on the nimbleness required in today’s fast-paced economy.
6. Pressure test every decision – explore the extremes.
Usually this means running a pilot program and looking for outliers in the data and subjective feedback from customers. Another extreme may be the impact of doubling the budget, or cutting the price in half. For required fast decisions, consider the impact of an extended data gathering process.
7. Balance data versus intuition, and seek consent.
Consent is about making fast, smart, decisions, based on data and experience, and moving on. I do not recommend consensus decision making in business, where everyone has a say, and everyone agrees on a solution, since this too often leads to vanilla decisions and lost agility.
I recognize that the advent of “big data” and the Internet has led to a driving force to always rely on real data, and less intuition, in making business decisions. Yet I caution all of you to not forget the power of your own insights and opinions, and balance your data analysis against the forces driving the need for change, most notably including timing and customer needs in the future.