In the world of business, decisions matter. Should you trust your gut or rely on the hard data?
“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”. So said Steve Jobs, the late CEO of tech innovators Apple.
Indeed, Jobs is a good case study for this analysis of intuition versus data in business decision-making. One of the most infamous decision-makers of all time, Jobs was well-known for taking 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 really 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.
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The Case for Trusting Your Gut
“I rely far more on gut instinct than researching huge amounts of statistics”, Virgin founder Richard Branson once said. He definitely knows a thing or two. Indeed, a poll of executives found that 62 percent "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 whole issue of trusting your gut. It shows that intuitive decision-making can be effective up to a whopping 90 percent of the time.
It’s not clear why companies continue to rely on feeling and intuition when analytics and data are so widely available to support them in their decision-making. Indeed, the process of making a decision is a complex one. Who knows what’s really going on when we weigh up a decision? Perhaps it’s just something in our gut.
The Case for Hard Data
When you look at the sheer variety of business information available to companies customer relationship data, email marketing and financial databases to name a few it’s a wonder why businesses continue to rely on gut feeling for decisions.
Indeed, research suggests that data can have significant real-world benefits for companies, with data-driven firms being five percent more productive and six percent more profitable than their gut-trusting competitors. The 888 graphic shows that in the U.S., 30 percent of factories have formally adopted data-driven decision-making.
Relying on data over intuition seems to make sense. At least, that’s what some research points to. But what is really emerging is a mixing of gut instinct and fact-gathering to reach what we could call informed decision-making.
Making decisions is complex. What’s emerging is that it involves an awful lot of 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.
Research by the Economist Intelligence Unit suggests this is something that is starting to happen, with some executives using data to “confirm that their gut feeling and pre-existing beliefs are correct”. What’s more, 57 percent of business professionals say they would take a fresh look at data if it went against their gut feelings.
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Perhaps the best way, then, to make business decisions is to look at all the data and research available to you, before wrapping up your decision with your gut instinct.