Business Decision Making

Think back to your own experience. The time you ‘knew’ what needed to be done, but because of the perceived difficulty in implementing it, you held back and sought another ‘more ‘perfect’ solution. Many decisions are made (or avoided) simply to maintain personal comfort.

A common saying in business is “The best is the enemy of the good.” Such analysis paralysis is rightly recognised as the enemy.

At the operational level, many follow the dictum of energy and drive. We carry out parallel trials, we ‘fail fast’ in order to get the feedback which guides our aim more accurately. We have the confidence to push through discouragement and rejection and the self-belief to overcome our ‘head trash’ and fear of failure because we’ve learnt that (in the absence of intuition), it’s just a numbers game. Marketers in particular are versed in throwing lots of mud at walls in order to find what sticks.

The downside of such activity is that failure ‘costs’. “Half of our money is wasted, but we don’t know which half” While persistence is often praised, it can take us where we really didn’t want to go, hence the tale of the executive reaching the top of the executive ladder, only to discover it was leaning on the wrong wall.

In business, where complex decisions need to be made quickly you need to improve the odds of success and this is where intuition scores highly. Intuitive judgements are characterised by their speed, and ‘good sense’. Speed of the decision is matched by the ability (because all emotions are in agreement) to act on the decision. Such clarity and decisiveness is a characteristic of many successful people.

It’s interesting that few successful business people believe they have superior knowledge. Rather, they are acutely aware and respectful of their gut feel or intuition.

Napoleon promoted generals who were ‘lucky’ (But then he lost the battle of waterloo)

Financial institutions use analytical software to reduce risk. They ’showed the door’ to Edison, Walt Disney etc who “failed” repeatedly, only to turn these experiences into later successes.

We have seen in previous posts, the role of intuition in our decision making processes

Decision making

When intuition doesn’t work out it’s because it wasn’t intuition. One of the common errors is the inability to differentiate between ‘true intuition’ and something that feels similar but what is actually guided by our emotional prejudices.
Emotion based decision making has serious disadvantages. An option may seem appealing because you are actually being influenced by what you crave or what you are familiar with based on past experience. The latter is a strong factor in recruitment.
Suppose you need to decide whom to hire for a job. If you are prejudiced against people of a particular sex, age, or ethnicity, then what you believe is your intuition will tell you not to hire them, even if they have better qualifications for doing the job well. It is difficult to determine introspectively whether your intuitions derive from reliable or irrelevant information and emotional prejudice formed from past experience. With research indicating that 40% of executive hires fail, with costly consequences, this is an area where intuition can make a major difference in your profitability.

Scott and Bruce (1995) building on work by Driver (1979) and Driver et al. (1990)
described decision making style as “the learned, habitual response pattern exhibited by an individual when confronted with a decision situation” .
They were concerned less with the demands of the decision task and environment and more with individual differences in decision making behaviour, in doing so, they identified five decision making styles.

(1) Rational: logical and structured approaches to decision making;
(2) Intuitive: reliance upon hunches, feelings and impressions;
(3) Dependent: reliance upon the direction and support of others;
(4) Avoidant: postponing or avoiding making decisions;
(5) Spontaneous: impulsive and prone to making “snap” or “spur of the moment”
decisions.
Who can see which of these styles is the most effective?  In practice, experienced managers should be able to demonstrate a flexibility in thinking which enables the most effective style to be used in the most relevant situation.

Frances E Vaughan, psychologist and author of ‘Awakening Intuition’ defines it as a ‘way of knowing…a way of recognising the possibilities in any situation’
Intuitive decisions come from a capacity to integrate and make use of both the left and right sides of the brain. Intuition is a product of both factual and feeling cues – unclouded by the deep personal ego involvement in the issue at hand.
Carl Jung, found in his research, (which has been recently corroborated by others), that those skilled in the use of intuition tend to have particular decision-making skills not normally possessed by others. Thus managers with good intuition can see new possibilities in any given situation. They have a sense of vision of the future and thus are better equipped to move their organisation in response to it. These managers are particularly adept at generating new ideas and providing ingenious new solutions to old problems; usually they function best in rapidly changing environments or crisis settings.

We remember talking to the Chief Exec of a technology firm. His biggest problem was not information. He was overwhelmed with information. His problem was knowing which information to attend to, which to act on. Many can relate to that.

In business, men often refer to their ‘gut feeling’ while women are more comfortable in accepting that they are calling upon their ‘feminine intuition’. Since we feel our emotions in the body, (especially in the abdomen) this explains why sensitivity to ‘how the body feels’ is so relevant in any discussion on intuition

If you ask such a person to explain how they know, they will be unable to explain the rationale behind their conclusions. At the risk of being labeled illogical or irrational, we quickly learn to keep such information to ourselves. Nevertheless, it is accepted that a highly developed intuition has its place in business.

In a recent lecture on “The Manager’s Dilemma:Analysis V Intuition” Mr R Gopalakrishnan (Exec Director of Tata Sons, and author of “The Case of the Bonsai Manager” said:

“‘Logic and analysis are very important to leadership not making mistakes, but they have limitations. Intuition is a powerful ally, after the powers of logic have been exhausted.  ‘Intuition is not a substitute to analysis. It is a companion to analysis.’

Elaborating, he said, “Knowledge is ‘what you know you know’. Intuition is ‘what you don’t know you know’. A combination of both is wisdom”