by Eric Bonabeau
Intuition plays an important role in decision making, but it can be dangerously unreliable in complicated situations. A new set of analytical tools can help you leverage your instinct without being sabotaged by its weaknesses.
Making high-stakes business decisions has always been hard. But in recent decades, as the complexities of global commerce havedeepened, it’s become tougher than ever. The choices facing managers and the data requiring analysis have multiplied even as the time for analyzing them has shrunk.
One decision-making tool—human intuition—seems to offer a reliable alternative to painstaking fact gathering and analysis. Encouraged by scientific research on intuition, top managers feel increasingly confident that, when faced withcomplicated choices, they can just trust their gut. Indeed, a survey that was conducted in May 2002 by executive search firm Christian & Timbers reveals that fully 45% of corporate executives now rely more on instinct than on facts and figures in running their businesses. Decision-making consultant Gary Klein, in his book Intuition at Work, expresses the common wisdom when he says that intuitionis “at the center of the decision-making process” and that analysis is, at best, “a supporting tool for making intuitive decisions.”
The trust in intuition is understandable. People have always sought to put their faith in mystical forces when confronted with earthly confusion. But it’s also dangerous. Intuition has its place in decision making—you should not ignore your instincts any more thanyou should ignore your conscience—but anyone who thinks that intuition is a substitute for reason is indulging in a risky delusion. Detached from rigorous analysis, intuition is a fickle and undependable guide—it is as likely to lead to disaster as to success. And while some have argued that intuition becomes more valuable in highly complex and changeable environments, the opposite is actuallytrue. The more options you have to evaluate, the more data you have to weigh, and the more unprecedented the challenges you face, the less you should rely on instinct and the more on reason and analysis.
That brings us back to the essential conundrum facing today’s harried executive: How do you analyze more in less time? The answer may lie, it now appears, in technology. Powerful new decision-supporttools can help executives quickly sort through vast numbers of alternatives and pick the best ones. When combined with the experience, insight, and analytical skills of a good management team, these tools offer companies a way to make consistently sound and rational choices even in the face of bewildering complexity—a capability that intuition will never match.
Thestories are certainly seductive. Fred Smith has an insight into the transport business and, despite widespread skepticism, goes on to create Federal Express. Michael Eisner hears a pitch for an offbeat game show and, knowing in his heart it’s going to be a blockbuster, immediately commits millions to developing Who Wants to Be a Millionaire? George Soros senses in his bones a big shift in currencymarkets and, acting on that hunch, makes a billion-dollar killing. Robert Pittman has a vision of the future of on-line media while taking a shower and rushes to lead America Online in an entirely new direction.
The reason such tales (whether apocryphal or not) have become business legends is that we want to believe in the transformative power of intuition. For one thing, it’s romantic. It raisesbusiness above the drab world of spreadsheets and income statements and turns it into something of an art form. The executive office becomes a place of inspiration and vision rather than planning and number crunching. For another, it simplifies. It says that we needn’t worry if we can’t decipher complex challenges rationally—our subconscious mind will automatically deliver the right answer. We just...