Question of the Day: How Good Are “Gut” Decisions, Really?

Ever since Malcolm Gladwell came out with his bestseller Blink, the idea of relying more heavily on one’s “gut” instincts in business and life has achieved renewed support and prominence. Truth to tell, I’m not a fan of Gladwell’s book. He’s a good vignette-teller, but to say “rely on your gut, except when you shouldn’t,” is exceptionally superficial, in my view. The far more important question is when to rely on your gut, and when it can steer you wrong, and why, and what we can learn from that.
Clearly, there are split opinions on the effectiveness of “going from the gut” as a decision-making strategy. The Customer Insight blog notes an Accenture study that found 40% of senior executives relied on their gut for decision-making—apparently at least in significant part (61%) because the data was either unavailable or hard to sort through.
Accenture clearly thinks this is a bad thing, given that its web site is touting a new book called “Analytics at Work: Smarter Decisions, Better Results.”
In an article for the Harvard Business Review, Eric Bonabeau agrees, saying that we romantically love the idea of being able to make good decisions from our gut, but that it’s a dangerous strategy, resulting in as many disasters as successes.
But is intuition or going from the gut on big decisions a bad thing? Researchers at the University of Amsterdam, a few years ago, did a series of studies that seemed to indicate that people made better decisions by letting the data sit for a bit, then going with what “felt” right, when it came to big decisions—something the researchers called the “deliberation-without-attention” impact of our subconscious sorting info when we aren’t thinking bout it.
There’s even some scientific data to back up why we get a funny feeling in our gut (literally) about one choice or another: Apparently, there’s a bunch of nerves around our stomachs that link to our pre-frontal cortexes, which control the “executive function” of the brain. But the researchers also pointed out something that may help explain how and when our gut is helpful. They said the pre-frontal cortex compares new situations against patterns we already know. So the only way to get an effective “gut” decision-making capability is to have made a whole lot of decisions before and evaluated the outcome well.
This aspect of gut-level decision-making was emphasized in a Time magazine article, which noted that gut-level decision-making works if you’re an expert. But otherwise, people can be confused or distracted by the last information they receive, rather than the best information.
So one conclusion seems to be that gut-level decisions are like computer results. Good data (prior experience and expertise) in, good results out. Garbage in, garbage out. This is, I should note, something I’ve said before on this site … although I used professional basketball players instead of business executives to illustrate the point.
But the benefits of “going with the gut” also may depend on what kind of decision is at stake. A Fast Company article argues that analyzing data can show patterns that can make some remedial decisions far easier, with better results.
But our penchant for finding patterns can also lead us to see patterns where none exist. In addition, data can only analayze what is, not what might be. For that, it takes a more creative, imaginative process. Experimentation can certainly help provide that, if there’s time. But perhaps the reason top executives rely on their gut so much is that some of their decisions aren’t, in the end, in a realm where data can help. More on this subject later.
But here are the two best links I found on this subject. The first, from Psyarticles.com, provides a good overview of how intuition is really fast decision-making based on prior experience and situational cues. But it also points out that there’s a difference between intuitive decision-making and emotional decision-making. That’s a point that may be worth some more consideration.
And for a really intelligent, in-depth look at what is intuition, how does it play into decision-making, and is that a good or bad thing … I highly recommend a journal article by Erik Dane and Michael G. Pratt from the University of Illinois. It goes deeper without seeming bias one way or another, and asks important questions about how this intuition magic really works.