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Business Decision-Making: Gut Instinct or Hard Data?

business.com editorial staff
business.com editorial staff

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

  • When it comes to business, your decisions matter. But, it's important to recognize whether you decisions are based on intuition or emotions.
  • Following your intuition in business can help you avoid making poor business decisions that may ultimately affect your business.
  • Emotions play a critical role in everyday life; however, when emotions are used in decision making, it may come at a cost to the business.

"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 for this analysis of intuition versus data in business decision-making. Jobs was well known for making decisions on pure gut instinct, as the above quote demonstrates.

The story goes that Jobs once accurately predicted that the tablet would one day overtake the desktop, despite lots of forecasts and reports suggesting the latter.

In the world of business, decisions matter. They play a massive role in the lifecycle of every business, no matter its size or what it does. Everyone involved in a business has to make decisions from the CEO to the HR manager, the shop-floor worker, the factory manager and everyone in between.

Yet despite the vast amounts of data available to us alongside the technology to help us bring it all together and make sense of it, many companies make important business decisions based on intuition rather than facts.

Are they right? Is trusting your gut a better option than trusting a report or a gathering of the facts? Let’s look at gut instinct and data when it comes to making critical business decisions.

What is intuition and how does it relate to business?

As a business owner, you, like other business owners, develop your sixth sense or intuition, which is extremely valuable for helping you make good decisions about everything you do in business.

Whether you call it gut feelings or intuition, everyone experiences it in some way. For instance, you may go by your gut feeling when it comes to business deals, business projects or customers. You just get a feeling; have a sense about what is going on without having any real information.

Intuition can play an essential role in your business; trusting your intuition can help in a lot of different ways, such as not agreeing to a risky deal, because your gut was telling something wasn't right. Some of the ways you can utilize what your intuition is telling may include:

  • When you encounter someone, take a minute while talking with them to see how you think and feel about the person; remember, when your gut is telling you something isn't right, it probably isn't.

  • Don't look for the bad or good things; instead, try to understand how you are feeling. The goal is to look for the reality of a situation.

  • Find time for quiet moments to do nothing but sit and think about the things you are struggling to make a decision about.

Emotions and business

Your emotions can have a significant effect on 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. It's important to learn how to control your emotions and to know the difference between intuition and emotion.

The case for trusting your gut

"I rely far more on gut instinct than researching huge amounts of statistics," said Richard Branson, founder of Virgin. A poll of executives reported that 62% "trust their gut," relying on "soft" factors and instinct to help them make key decisions.

This infographic from gaming experts 888 Casino looks at the issue of trusting your gut. It shows that intuitive decision-making can be effective up to a whopping 90% of the time.

The case for hard data

Research reports that data-driven firms are 5% more productive and 6% more profitable than their gut-trusting competitors. The 888 graphic shows that in the U.S., 30% of factories have formally adopted data-driven decision-making.

Relying on data over intuition seems to make sense. An emerging hybrid is informed decision-making.

Informed decision-making

Making decisions is complex. It involves different processes reason, data, intuition and emotion to name a few. Instead of choosing one over the other, one way to make good decisions could be to lace the two together.

Image Credit: Ivan-balvan / Getty Images
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