Data Driven or Instinct?
With every corner of modern business getting inundated with data, is there any space left for instinct to fit into business strategies? Data and intuition are frequently seen as conflicting concepts, but taking both ideas and numbers into account in policymaking can improve confidence and drive campaign goals.
Great leaders often cite intuition as a major contributor to their success, but from HR to expansion to revenue-allocating decisions, it seems like all important conclusions are reached on the basis of number-crunching algorithms. Is it time for statistics to replace speculation, and if so, how meaningful are data-driven decisions on their own? And if a balance is better, what’s the magic formula of data and intuition that results in 100% fool proof decisions every time?
“Is it time for statistics to replace speculation, and if so, how meaningful are data-driven decisions on their own?”
Even as information floods the C-Suite, this doesn’t have to mean the fall of intuition. Being completely dependent on facts and figures can inhibit understanding and lessen the capacity to make the right choice. Numerous studies suggest that managers who rely solely on data lose their ability to see how their decisions play out in reality. However, when big data has been properly integrated into the business decision-making framework, businesses can use it to sharpen their original belief, rather than substitute it.
Big data is huge and by 2020 the digital universe is set to hold up to 44 trillion gigabytes of data. In the face of such size and magnitude, intuition must remain an important part of the decision-making process. It is too easy to focus on the accumulation of information via digital platforms such as customer feedback, employee engagement and mobile phones, and businesses could end up collecting more data than they can analyse and make sense of. While there is certainly a place for data in decision making, not all decisions can be driven by cold, hard numbers. Data is also open to the possibility of misinterpretation, which would deem the respective decision unfeasible. A McKinsey survey from 2018 suggests companies that fully integrate creativity and data enjoy growth rates twice as high as companies that don’t.
Successful managers have always possessed a good instinct in the past as intuition was their personal big data. Recent research conducted by Laura Huang for the Harvard Business Review suggests that the gut feeling is very valuable, especially in ambiguous circumstances where further data gathering and analysis won’t influence you one way or another. Huang adds that a key role of intuition is often to inspire a leader to make a choice, especially when the decision is risky.
What happens though when the company has looked at the data, heard from the company’s experts, and yet thinks the best solution is contrary to both? What should a decision maker do when all of the research points to Plan A, but s/he has a feeling that Plan B is the better option? Huang advises there are times when it is unwise to allow a hunch to dictate strategy, and before deciding on whether to go with your gut, a couple of things need to be clarified:
- Identify the type of problem being dealt with.
Research suggests that intuition based decision making works best for decisions that are unpredictable and where calculations of probabilities and risks are infeasible. If, however facts and figures exist and are appropriate, then depend on those.
- Identify the context in which the decision is being made
Different business environments require different approaches. If successful rational models have already been established and demonstrated and can be aligned within the context, then this should be the go-to approach.
We live in a data-driven world, where data and analytics are only going to impact more and more on business. Its time to strike the right balance between information and intuition, as an overreliance on either could spell disaster for a business.
“Successful managers have always possessed a good instinct in the past as intuition was their personal big data.”
The key is to have an integrated approach, including research, data and analytics, combined with intuition and experience. It’s a tricky balance to achieve, but getting it right will deliver the best results. Leadership and ethos, are essentially two sides of the same coin, and a CEO who can facilitate a data-driven culture while encouraging confidence and self-belief, will ultimately cultivate long-term success and increase profits.
Case in Point:
Apple became the world’s first trillion-dollar public company last year. The tech behemoth’s continued success serves as a lasting testament to late co-founder Steve Jobs’ business competence and innovation, who attributed his achievements to his intuition. Jobs claimed that intuition was central to his success, and that this instinct led him to stand against the tide.
“Intuition is a very powerful thing, more powerful than intellect, in my opinion,” Jobs told writer Walter Isaacson in his self-titled biography. “That’s had a big impact on my work.”
Paradoxically, the fact is that for some decisions, data alone won’t suffice.