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Updated Apr 10, 2024

Business Decision-Making: Gut Instinct or Hard Data?

In the world of business, decisions matter. Should you trust your gut or rely on hard data?

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Sean Peek, Senior Analyst & Expert on Business Ownership
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“You have to trust in something, your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life,” said Steve Jobs, the late CEO of tech innovator Apple.

Indeed, Jobs is a good case study to analyze the difference between relying on intuition versus data in business decision-making. As the above quote demonstrates, Jobs was known for making instinct-based decisions. However, when it comes to running your business, every decision matters. They play a massive role in the life cycle of every business, no matter the size.

Thanks to today’s technological advances, businesses have vast data available to help make informed decisions. Yet despite the immense amounts of information available, many companies rely on instinct and intuition rather than facts to make essential business decisions.

Is trusting your gut better than relying on data and facts regarding critical business decisions? Let’s find out.

Making business decisions based on gut instincts 

As a business owner, you develop your sixth sense or intuition, which can be a valuable tool for helping you make good decisions for your company. Depending on your gut instincts allows you to access your innate knowledge that’s not always consciously available — but is a wealth of information we’ve been gathering for our entire lives.

Whether you call it gut feelings or intuition, everyone experiences it. For instance, you may go by your gut feeling regarding business deals, projects or customers. You get a feeling; you have a sense of what is going on without consulting objective data or facts. For experts, it might be wiser to rely on their gut instincts rather than external data to make business decisions because they’ve spent their professional careers harnessing their skills and cultivating a specific knowledge base. So, gathering external opinions, facts and big data could muddy the waters and, ultimately, waste time and energy.

Intuition can play an essential role in your business. Trusting your intuition can help in many ways, such as not agreeing to a risky deal because your gut was telling you something wasn’t right. Some of the ways you can rely on your intuition may include:

  • When you first meet someone, take a minute while talking with them to see how you feel about the person. Remember, if your gut is telling you something isn’t right, it probably isn’t.
  • Rather than looking for good or bad signs, take a quiet moment to understand how you feel about a situation.
  • Trusting your gut instincts means paying attention to how your body reacts. If you’re ready to trust your intuition to make a decision, but need buy-in from others, make a business case for why others should also trust your direction.

Pros of basing decisions on gut instincts 

In the age of information overload, relying on your gut instincts may seem counterintuitive. However, studies, like this one in Psychological Science, have shown that listening to your gut can yield more accurate and confident decisions. [Read on to learn how to understand and incorporate customer emotions into your sales strategies.]

  • Our minds hold a wealth of aggregated unconscious knowledge: The internet is known as the information highway, but our brains can contain massive amounts of data we accumulate daily. However, our conscious minds can only process a fraction of the information our bodies send to our brains, even though our bodies retain that knowledge. This unconscious knowledge is what we access when we listen to our gut instincts when we otherwise wouldn’t.
  • Your gut instincts can push you out of your comfort zone: Relying on your gut instincts rather than logic can help you push your boundaries and explore new ideas, opportunities and experiences.
  • You can make decisions faster and with less anxiety: Learning to rely on your gut instincts can help lessen any stress you might feel and help you come to a decision more quickly than you had before. You’ll also be less likely to second guess yourself since you rely on your instincts rather than logic.   
Did You Know?Did you know
Unconscious biases are comprised of likes, dislikes, stereotypes and prejudices. Often, they’re influenced by culture and reinforced by our surroundings.

Cons of basing decisions on gut instincts

  • Emotions can cloud judgment: Your emotions can significantly impact your decisions. Emotions can interfere with your ability to make rational decisions, especially anger, which can affect your team, your organization and your business deals. Learning how to control your emotions and knowing the difference between intuition and emotion is essential.
  • Human cognition is fallible: As humans, we’re susceptible to unconscious or implicit biases. Once we form those biases and opinions, it can take a lot of self-awareness and effort to alter them. 
  • It’s easy to confuse intuition with fear: Our bodies can react to fear and similarly show our gut reactions to certain situations and people, so it can be easy to confuse the two sensations. It’s worth taking some time to parse your physical responses to understand if what you’re experiencing is fear or your intuition.  
  • Some decisions are too important to leave to gut instinct alone: Suppose a particular human relations decision requires buy-in from multiple stakeholders. In that case, consider the facts, gather and analyze external data and seek expert opinions rather than following your gut instincts alone.
  • It’s possible to make truly horrible decisions based on instinct: While the press typically glorifies successful gut instincts, making a terrible decision by leaving everything to your intuition is possible.      

Making business decisions based on hard data

We live in the information age, and everything is accessible instantly at your fingertips. Because we have easy access to so much information, we look to facts, science and data to confirm our ideas and decisions rather than relying on our instincts. Leveraging big data and embracing business intelligence has been the trend for the last couple of years, and it’s easy to see why. [Learn more about incorporating facts and emotions in your sales strategy.]

Making decisions based on sophisticated data can lead to significant leaps in growth, innovation and commercial success. Of course, some decisions are better suited for relying on your gut instincts. Still, most business decisions require gathering and consulting data and insights to ensure your choices align with your overall objectives and strategies. Basing your decisions on hard data can also help you gain the support and traction you need to execute your vision.

TipBottom line
Invest in business intelligence software to help collect, extract, configure and report insights across your organization.

Pros of basing decisions on data

  • Knowledge drives progress and innovation: Data-driven decisions can make or break a company. Those embracing data-driven decisions tend to be more collaborative than companies that don’t. Analyzing data across your business allows you to identify emerging industry trends and patterns. You can then compare your results to those across your industry to make informed decisions and ensure your business remains competitive.
  • Leveraging information encourages adaptability and fosters better communication: When you foster a culture of data-driven decisions, everyone has access to the information they need to learn from previous triumphs and identify and strategize how to improve and optimize where necessary. Relying on data to make business decisions also encourages better cross-company communication since everyone in the organization works with the same data. Your workforce can analyze past performances, seek opportunities for improvement and develop strategies to ensure your business is always relevant and successful.  

Cons of basing decisions on data 

  • You might be working with “bad data”: Every industry has to deal with bad data or information that can be confusing or misleading and is, ultimately, a hindrance more than a help. Your database could be rife with several kinds of bad data, including outdated, inaccurate, duplicate, missing or unformatted data — the most common type of bad data. A study by Great Expectations found that 77 percent of the 500 data practitioners they surveyed had data quality issues and 91 percent reported that those problems impacted business performance. You must have the proper processes in place to review your data and correct any inaccuracies as soon as possible.
  • Your data results could be skewed or biased: Just like our thoughts and opinions can be biased, so can your business data. There are three types of biases to watch for in your data: technical, human and methodological. Implement proper training and processes so that your workforce is aware of these data-based biases and accounts for them to avoid skewed conclusions as a result. 

Informed decision-making

Making decisions is complex. It involves different processes: reason, data, intuition and emotion. Instead of choosing one over the other, merge using your gut with gathering facts and data to make the most informed and confident business decisions possible.

author image
Sean Peek, Senior Analyst & Expert on Business Ownership
Sean Peek co-founded and self-funded a small business that's grown to include more than a dozen dedicated team members. Over the years, he's become adept at navigating the intricacies of bootstrapping a new business, overseeing day-to-day operations, utilizing process automation to increase efficiencies and cut costs, and leading a small workforce. This journey has afforded him a profound understanding of the B2B landscape and the critical challenges business owners face as they start and grow their enterprises today. In addition to running his own business, Peek shares his firsthand experiences and vast knowledge to support fellow entrepreneurs, offering guidance on everything from business software to marketing strategies to HR management. In fact, his expertise has been featured in Entrepreneur, Inc. and Forbes and with the U.S. Chamber of Commerce.
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