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Scientists have proved that intuition beats rationality when it comes to challenging business decisions.
“What is your gut saying?” – we hear now and then from our friends when we hesitate to make a decision in private life. But when it comes to business, gut feelings are not welcome. Rational, well-calculated solutions are expected.
However, numerous studies have proven that intuition is not an unreliable mystery, but a highly valuable skill for managers. In the early 1990s, the “International Survey on Intuition” had already revealed that more than 70% of executives rely on their instincts when making business decisions. Two decades later, another piece of research demonstrated that intuition can even significantly outsmart a careful fact analysis.
So when should we listen to our intuition rather than rationality? And how can we approach our instincts?
Intuition beats model analysis
During the World Cup 2014, an exciting experiment was conducted in Germany. To find out whether intuition can be helpful in complex and unpredictable situations, over a hundred football fans were asked to give their forecasts for 48 upcoming matches. The participants were divided into two groups, one of which was instructed to carefully consider each match before making a decision about the possible outcome. The other was put under time pressure and asked to follow their first instinct.
The comparison of the average results of these two groups showed no significant difference. But as soon as the researchers examined amateurs and experts among the participants, they revealed something extraordinary. In the group that made rational predictions, inexperienced participants correctly guessed more scores than the experts.
On the contrary and much more remarkable, in the “intuitive” group the experts were totally thriving. Not only did they score significantly better than amateurs, they even made better forecasts than the analysts from Goldman Sachs. The latter developed a statistical model that included over 14,000 different parameters for predicting World Cup matches. But even their amazingly complex data-based model could not outperform the intuition of experts.
In short, what are the lessons of this experiment? If the topic is new to you, take your time to come up with a better solution. But if you are an expert in the field, don’t overthink it; your intuition can be far more effective than a rational analysis.
When rationality fails
Not only the quantity, but also the complexity of the tasks calls for our intuition. A high degree of uncertainty, the lack of facts and having several plausible options to choose from are among the circumstances under which we cannot make purely rational decisions.
Therefore, in turbulent times or when working on innovative solutions, managers simply have to make intuitive decisions. As Agor discovered in 1985 when he interviewed top managers of companies such as Walt Disney Enterprises and Tenneco Oil, intuition works better for them than rationality. Participants indicated that it was consciousness that led them to make mistakes, or circumstances in which they failed to listen to themselves.
This brings us back to the World Cup experiment, where football experts could not correctly predict matches when they thought about them rationally, as opposed to outstanding performances when they listened to their instincts. Apparently, the rational approach blocks access to the precious subconscious of the professionals, which, as we have seen with football predictions, can deliver better answers than complex statistical models.
Access your intuition
Psychologists have identified several basic principles that help us to approach our intuition. It seems that intuition can best be activated when we are in a relaxed emotional state, are self-confident, have support from others and do not feel any pressure.
Well, as nice as it sounds, these feelings are rarely present when it comes to important business decisions, especially in turbulent times. Uncertainty, stress, fear of making mistakes are what executives experience every day. But those who recognize the value of intuitive decisions use specific techniques to approach intuition, even in the most stressful times.
In his research, Agor has identified two main ways in which top managers use their intuition in practice: Freedom of thought and structured approach. The first can be described as explorative and is in some ways similar to brainstorming, except that with intuition it is done without a group of others. Then we deliberately switch off our thoughts about all possible difficulties and let completely unexpected solutions come to mind.
The second is more practically oriented and based on a clear goal. Managers using this approach define the task to be solved, collect and analyze all available information and then leave it alone for some time so that intuition can synthesize it in the back of the mind. They say that the more complicated the issue, the less time it takes for the insight to surface. Fascinating, isn’t it?
Since intuition is a trainable skill, scientists recommend practicing using it as often as possible. Try to listen to your intuition when you make next important decisions. Then later, even if you choose the rational path after all, you can compare conscious and intuitive solutions. In this way, we learn to listen to our instincts, and when the next challenging task comes, perhaps our intuition will come to our rescue.
And for now, just start by asking yourself a simple question: When did I have an intuitive feeling that later proved to be right?