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Academy of Management Executive, 2004, Vol. 18, No. 4

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The intuitive executive: Understanding and applying ‘gut feel’ in decision-making
Eugene Sadler-Smith and Erella Shefy Executive Overview........................................................................................................................................................................
Balancing Intuition and Rationality Executive intuition is the skill of focusing on those potentially important but sometimes faint signals that fuel imagination, creativity, and innovation and feed corporate success in globally competitive businessenvironments. A former vice president of the leading cosmetic MNC L’Oreal is quoted as saying that decision-making intelligence requires a fine balancing of two seemingly contradictory capabilities: intuition and rationality. The first one allows executives to pick up on important but weak signals; the second enables executives to act on them. The CEO of the same company sees the challenge for executivesas a matter of imagination and intuition in equal parts: “It is intuition [when one asks] ‘What do these brands have that just might seduce the world?’ But also in terms of imagination, [one asks] ‘What could they become to seduce the world?’”1 We are only too well aware that businesses are
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Even though the conditions under which executives operate may sometimes limit or even preclude theuse of rational analysis, it is nevertheless the norm in many organizational decision processes. Intuition, on the other hand, is often considered to be the antithesis of this approach and is usually overlooked or disregarded in decisionmaking. However, in recent years there has been resurgence of interest in intuition, perhaps because of some dissatisfaction with rationality and its limits and alsobecause some psychologists are now arguing that much of cognition occurs automatically outside of consciousness and in the realm of intuition. Knowledge of intuition has made significant advances in recent years, and it can now be understood as a composite phenomenon involving interplay between knowing (intuition-as-expertise) and sensing (intuition-as-feeling). Furthermore, rather than being setin opposition to each other, intuition and rational analysis are better conceived of as two parallel systems of knowing. Against this backdrop we consider the significance of the two facets of intuition for executive decision-making processes. From this integrated perspective we offer some guidelines whereby executives can make more effective and intelligent use of intuition in ways thatacknowledge its limitations while maximizing its potential in enhancing firm success in complex and fast-moving business environments.

often contradictory, ambiguous, and surprising places, and that their environments are becoming increasingly complex and unpredictable. Together these factors make fragmented and multiple demands upon executives. Fast, high-quality, strategic decision-making in thiscontext represents a fundamental dynamic capability in high-performing organizations. The traditional response to this challenge has been rational analysis: information is collected, collated, analyzed and interpreted, alternatives are formulated, and a logical choice is consciously arrived at.2 However, in modern business environments, a number of factors can affect the efficacy of an exclusivelyrational process. Strategies and tactics can be thrown off course by factors ranging from wars, global terrorism, and new diseases to more mundane everyday matters such as computer glitches and minor accounting foul-ups. Technological advancement and developments in organizational systems and processes have contributed to an explosion in the volume of

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