I recently asked a partner at a CPA firm how many important decisions he makes on gut instinct and without using data to support them. He thought about it for a second and said it’s almost entirely gut feel. “I know, not good,” he added. Given how much useful valuable information his firm creates and collects as a course of doing business, he seemed to realize it’s time to change.
The reality is many executives are more comfortable relying on intuition and experience when making key decisions. It is a system that has worked for them, sometimes for many years. But is it something that will keep working when the amount of quality data available is increasing exponentially. Probably not.
Gut-instinct decisions are most effective when a lot of certainty and stability exists, when one’s experience is the most important thing. But when certainty is lacking and conditions are fluid — what most businesses today face — over-reliance on intuition can be risky. A real danger is not knowing why an outcome occurred or how to fix it when a bad decision is made. If you find this happening, perhaps a different approach should be tried, one that more equally balances gut feel with the insight that can be gained from all that data you collect.
A few other points to consider:
- Consistently making the right call is hard when good information is available but ignored. Important answers are often right in front of you, lying within your data. They just aren’t assembled neatly enough, and this contributes greatly to the data not being leveraged the way it could be.
- Gut-instinct decision making is common when the resources or technology needed to collect information is lacking, when decision makers are unaware valuable information is available, and when impatience wins out over making the necessary time to gather and analyze the right data.
- Many people are good at finding data to justify decisions they have already made, but far fewer are skilled at collecting the data in advance that will help them make better decisions.
Making instinctual decisions and leveraging the data you’ve worked hard to obtain should go hand in hand, especially given the power and affordability of data analytics technology today. It’s ok for intuition to drive a decision, as long as relevant data is being used to validate or refute the intuition. Including data analysis in the process helps people see past their biases and assumptions that have accumulated over time.
The volume of data companies are collecting is both good and bad. Much of it is useless “noise” that should be filtered out and not stored for unnecessary lengths of time. But some of it contains gems of insight that can be invaluable for validating even the best gut-instinct decisions. If you don’t already have data expertise in-house, now might be the time to consider a new hire or a 3rd party that specializes in helping companies get the most out of their information. As important as intuition and experience are, data-driven decision making will dominate in the future. Gut feel can only take your business so far.