We’ve all made decisions based on our instincts, feelings about the right course of action that have been honed by experience. The right choice seems obvious, even if we can’t quite articulate why that’s so.
Call it intuition, spider-sense, or a gut feeling, the best executives are able to make quick decisions that turn out to be right more often than they’re wrong. But that doesn’t mean we should put too much faith in our instincts, especially when the stakes are high.
Gerd Gigerenzer has studied decision-making using rules of thumb, heuristics, and instinct for many years. The good news for those who prefer to go with their gut is that quite often, your gut will be right. Those ineffable feelings are the conscious manifestation of millennia of cognitive evolution and years of personal experience.
And often, there’s no choice other than to go with your gut in leadership situations. Making no decision can be worse than making a non-optimal decision, and when every second count, your gut and situational awareness are all you have to go on.
But we should be careful not to put those business instincts on a pedestal. I’ve met CEOs who will follow their intuitions in the face of evidence, putting too much faith in their ability to pluck the right answer out of the air.
Counter-intuitively, the bigger the stakes, the more likely people are to be confident of their ability to make the right decision instinctively.
But, as Daniel Kahneman has it, confidence is just a feeling. We can be confident and wrong or confident and right. Our confidence about a decision has very little to do with whether it’s the right decision to make.
One of the reasons instinct and intuition lead us astray is that quoting Kahneman again, we tend to forget that what we see is not all there is. Our brains are highly evolved meaning machines, eager to weave “meaningful” narratives from the flimsiest of threads.
The classic example is of a person who is told that a politician is intelligent and firm. You have probably already formed an idea of how trustworthy the politician is, how likely you might be to vote for her. But what you see is not all there is: the politician is, in fact, intelligent, firm, and corrupt.
The point is that we’re prone to make up stories based on available information even when that information is limited and biased. This effect is known as the availability heuristic, and it’s a problem for instinctive decision-makers who believe that their instincts allow them to make great decisions on little evidence.
So what can business leaders do make sure their instincts don’t lead them down the wrong path?
- Gather more data — use your instincts as a hypothesis, but gather the evidence before making a decision. This is an area where analytics can be a big help. If you have a business decision to make, crunch the numbers first.
- Try to prove yourself wrong — Once you have an idea, your brain is primed to look for evidence that proves you right and to ignore evidence that proves you wrong, confirmation bias. Fight that urge and try to prove yourself wrong.
- Talk to someone you trust — Find someone who isn’t afraid to question you and discuss your decision. Other people are often quick to spot blind spots in our thinking.
The takeaway is not that making decisions based on your business instincts is always a mistake, but that if you have the time, put your instincts to the test.