Hurry, a decision must be made
Speed and intuition in decision making
The prevailing cultural model in business holds that leaders have to be people ‘of character’ who make decisions in the blink of an eye. However, gut decisions often fail, and what is worse, they do not allow us to learn from experience. Is it possible to train intuition? How do we take advantage of our thinking system to improve our decision making?
In companies, there is a bias towards action that proposes that decisions must be made quickly, in order to prevent them from getting bogged down in endless meetings or by excessive bureaucracy that slows everything down.
In contexts of uncertainty, however, this bias towards action is often used to justify the power of intuition, or even the lack of analysis of those decisions that, due to their complexity, would require assessment. Thus, this culture of ‘getting issues out of the way’ works for some executives as a good excuse to skip perhaps the most uncomfortable stages of the decision process and focus fully on the details of execution.
Furthermore, in a rapidly changing world, this space for reflection, analysis, or even doubt, is often perceived as a symbol of weakness. If a leader does not make decisions quickly, they will be seen as lukewarm or indecisive. Hence, the value of intuition is often favored over analysis, even when the analytical capacity that companies can use today is enormous and provides many advantages. It is usually believed if a decision is the product of one’s ‘gut’, it has more merit than if it was thought out. We applaud the waiter who remembers our order by heart, instead of applauding the one who writes it all down and never gets it wrong.
Complex decisions, those with high uncertainty, great ambiguity or simply lack of information, require a space to fully understand the situation, review assumptions or consider new points of view.
In recent years, the more intuitive approach has seen its main advocate in Malcolm Gladwell, the author of Blink. While those who tout that analytics is crucial to their company’s success have found it in Thomas Davenport, author of Competing on Analytics. However, all decisions cannot be made by method, nor based on gut feeling.
The 2002 Nobel Prize in Economics, Daniel Kahneman, explains there are two systems of thinking. The first is fast, automatic, and done almost unintentionally. For example, when we calculate the distance between two objects when walking, or when we recognize that someone is ‘angry’ just by looking at their frowning face. This way of thinking is very fast and one has no control over it; it just happens to us.
Intuition is nourished by this non-conscious thinking system, which is the result of accumulated experience or repetition. Through it, we can ‘know’, even without even knowing how we know (this can be a problem in companies when trying to explain how we arrived at a given conclusion). This system of thinking can save us a lot of time and is very useful for many decisions. As experience is gained, executives empower themselves to use it in a wider variety of situations when speed is critical.
However, the countless errors we can fall into by relying solely on our intuition means that only the most experienced can have the confidence that allows them to make these decisions with no other basis than what their ‘heart’, ‘stomach’, ‘gut’, and other parts of their body (except their head) dictate to them. This way, intuition ceases to be a ‘sixth sense’ and is reserved for those who have the knowledge acquired from having experienced the same decision-making situations many times.
Following Kahneman, there is a second system of thinking that is slower, more reasoned and controllable. For example, if we want to calculate how much 54 x 12 is, we need to make the decision to solve. Changing business environments require us to consciously make the decision to evaluate the decisions that need to be made.
However, the culture of action often undervalues the use of more consistent approaches, or even decision-making methodologies that, of course, never suffer from distractions, fatigue, boredom, anger, nor do they make mistakes from time to time.
The complexity of many decisions requires a rigorous process that can ensure their quality and minimize the risk of making mistakes. We would not want an executive who, faced with a complex situation, and in order to show determination, shot from the hip without having properly studied the decision and its consequences, would we? We need these types of thinking to complement each other.
One system controls the other
For intuition to help in business decisions, the second system of thinking needs to control the first. That is, there needs to be methods for recognizing when to use intuition, how to evaluate information, and how to make decisions. In the last twenty years, studies have proliferated on cognitive errors: the traps that our mind sets for us when making decisions, and how to identify them.
Nowadays, it is already known that even the most talented executives in the world have a ‘method’ for being intuitive. In their book Judgment, Tichy & Bennis have studied the way in which great executives -such as the CEO of General Electric, Jeff Immelt, or the CEO of Boeing, Jim McNerney- make their business decisions, and have found that the most successful executives are those who do so following a pattern that includes mechanisms to analyze information before giving their ‘judgments’, during the decision making process, and even providing feedback after making their decision.
It is known that in order to learn a skill, in addition to practice, immediate and unequivocal feedback on successes and errors is needed. If this feedback is delayed or ambiguous, the learning fades away. Much of the difficulty in learning from business decisions lies in the fact that we do not keep a record of our estimates and our judgments, which would allow us to learn from them when the results arise.
In short, we know that intuition can help us gain time in some decisions, but the risk involved in interpretation, analysis and estimation errors is high. We also know that our capacity is limited, and that our judgments are influenced by our mood, amount of sleep and more. Therefore, in each particular case, we must evaluate which is the most convenient method to use in order to maximize our decisions, so that the culture of action is one of effective actions while minimizing all avoidable risks.