Instinct vs insight: how should leaders make decisions?
Almost a decade ago Malcolm Gladwell's Blink was published. An against-the-grain exploration of the science behind decision making, it sold by the score. Gladwell celebrated the art of what he termed snap decision making, "the power of not thinking". He wrote: "Great decision makers aren't those who process the most."
It was a provocative argument. A key pillar of our western rational philosophy is that the longer we spend or the more effort we put into making a decision, the better it will turn out to be. This belief, as Gladwell pointed out, can be seen everywhere. When we are not happy with a diagnosis we ask for more tests or when we are unsure about one person's argument we look for a second opinion.
These same beliefs underpin our attitude in the workplace. The more data we get, the more analytical we become. The more analytical we learn to be, the better prepared we are.
For Gladwell, this was misleading. It underplayed the role of instinct, or what the psychologist Gerd Gigerenzer dubbed "fast and frugal thinking" – decisions we make in the blink of an eye.
Successful managers have always had good instinct. Sri Sharma, founder and managing director of the paid search agency Net Media Planet, says he has often relied on what he terms his personal radar as he built his company from a single person startup to a multimillion-pound business. It allowed him to think fast.
"I think of your instinct, your gut feeling, as a personal radar that is built up over the years," says Sharma. "Often the data you analyse confirms the instinct of your personal radar, but it can't replace it. Instinct is vital."
But does instinct play less of a role in the decision-making process today? It was a very different world a decade ago when Gladwell was writing Blink. Over the years since, the world has been quantified like never before. Business intelligence, analytics packages, information databases, all these combine to give companies unprecedented statistical understanding of their customers or client base. All this is gathered under the umbrella of that blunt term big data, a tsunami of statistics that floods into businesses day after day. In the face of such a wealth of data, what place is there left for instinct?
"But data is only insight, not an answer," Sharma says. Overall he thinks it's had a positive effect in the workplace. "There is definitely more data today," he points out, "and as a result better decisions are being made. A line graph would show an upward progression of good decisions."
Dr Martin Clarke, programme and business director at Cranfield School of Management, agrees with Sharma. "Data does not provide the answer," he says. Though some managers can fall prey to what he calls "management by spreadsheet", the real challenge is to interpret the data and he feels there is "no shortage of instinctive decision makers" doing that today.
Instead, Clarke thinks there has been a different consequence of the boom in data. It, Clarke says, "has made the decision-making process more complex, more messy." Because there is more data to go through, there are more people involved and therefore more perspectives to consider.
For Clarke, decision making has become a more diplomatic exercise than it was in the past. "You might know the right decision because you have 20 years' experience working in a sector," Clarke says, "but you might have to sacrifice 20% of this right answer to please everyone. What you end up with is what I call the best answer, because it satisfies the greatest number of people. That is the balance you have to achieve."
Has this proliferation of data made people less decisive? The fear among some is that too much data can lead to what psychologists call analysis paralysis, the idea that having too much data can hinder the accuracy of decisions or the speed with which they are made. Clarke thinks not. "If we are more cautious, it is not because of data but of economic uncertainty."
Nicola Stevens, a leading London business coach who works with managers, has a different take. She worries about the challenge of handling the data and simply processing or archiving it efficiently. "But the biggest problem," Stevens says, lies in interpretation – "finding the nub of the wisdom".
Stevens believes that balancing insight and instinct is a fascinating question for managers today. It is a balance that Sharma has long pondered at Net Media Planet. "Managers have to rely on their instincts," he says. "But the time not to do so is when your emotions get involved – if you're being led by your emotions that is when you can make bad decisions."
Sharma's point is one that Gladwell touched on in Blink. An emotional response to a situation, he argues, can blind our instincts. But with a cool head, Sharma argues, intuition must play an important role in businesses today: "It's your personal radar. You learn to rely on it."