Intuition and Deliberation for Better Decision-Making

We live in an age of change and uncertainty. For businesses, this means that only the most versatile survive —innovate or die. Simply adapting to the digital age is not enough: company survival requires explorative business strategies, to find new opportunities to improve and renew products and services. To attain explorative success you need a combination of both deliberate thinking and intuitive thinking. This article explores how you can balance the two.

In this article we bridge theory and practice on organizing imagination and innovation by extracting key implications and offering new insights to innovation practitioners. This article builds on The Role of Intuition and Deliberation for Exploitation and Exploration Success by Kurt MatzlerBorislav Uzelac, and Florian Bauer and explains why intuition and deliberation jointly make for better decision-making.

When IBM’s Deep Blue computer defeated one of the world’s most renowned chess players Garry Kasparov in 1997, the world was in shock. Some feared the time of rationalistic machine-domination over humanity had finally come, while others embraced the technological advancement in awe: the birth of a grand human invention surpassing our very own intelligence.

Rapid developments in computing have led to an ever-increasing digitization, causing unprecedented rates of change to society. We live in an age of change and uncertainty. For businesses, this means that only the most versatile survive —innovate or die. Simply adapting to the digital age is not enough: company survival requires explorative business strategies, to find new opportunities to improve and renew products and services. To see how businesses might successfully do so, a new study, The Role of Intuition and Deliberation for Exploitation and Exploration Success, examines the link between explorative and exploitative business strategies on the one hand, and intuitive and analytical deliberate thinking on the other. Its authors, Kurt Matzler, Borislav Uzelac and Florian Bauer find that:

  • Intuitive and deliberate thinking are not two opposing poles of a continuum, but two intertwined modes of information processing.
  • Both intuitive and deliberate decision-making are positively associated with explorative success.

In other words: explorative success requires a combination of both deliberate thinking and intuitive thinking. The authors reiterate, “Companies that create a balanced mix are likely to outperform firms that focus on either activity alone.” Why do they make for such a strong combination?

First, consider deliberate thinking. Deliberate thinking is relatively slow, rule-based and explicit; a contemplative process of weighing pros and cons, gathering scientific or statistical evidence. It would appear that this makes for pretty solid decision-making. Indeed, recent research shows that today’s top-performing companies are “twice as likely to use analytics to guide future strategies and guide day-to-day operations compared to their low-performing counterparts.” To add, “organizations that used business information and analytics outperformed organizations that did not.”

You can hardly say that Deep Blue was required to use its gut feeling, and that a sudden burst of intuitive insight beat Garry Kasparov. If anything, chess is a game of strategy whereby each player is continuously required to anticipate the other’s next move, and decide on what steps to take in the face of uncertainty. Success depends on how good you can anticipate your opponent’s next move. Clearly, IBM’s Deep Blue machine was more capable of anticipating and calculating strategy. Still, we argue that human intuition is highly useful —especially when it comes to environments that present us with vagueness, incomplete, and/ or contradicting information, as it is often the case in the corporate world.

It is great to have data, but in the end you need a human touch to derive real-life implications and creative ideas from information at hand.

First, intuitive signals always guide deliberate thought —be it consciously or unconsciously. Deliberate insights rarely appear out of thin air. They’re the result of implicit and explicit learning, and of the innate structure of our information processing system.

Second, we should also embrace the fact that many companies struggle to benefit from data due to a lack of insight and expertise on how to apply data results in their day-to-day business. Two reports published by Accenture and PwC show that companies struggle to make use of big data. 37% of all companies cite lack of talent to implement big data as their main challenge. It is great to have data, but in the end you need a human touch to derive real-life implications and creative ideas from information at hand. What is more, there are many spheres of life that rationality, analytics, and data cannot touch: emotion, human connection, and creativity. Yes, analytical deliberation can optimize things more efficiently, but can it imagine and create? As one commentator recently put it, “algorithms are great at optimization, but terrible at imagination.”

At the same time, intuition can be deceiving. Gut feelings feel much more real than data and algorithms, so we are more comfortable acting on them. We have a hard time believing and remembering evidence that contradicts our beliefs. As Austrian author and management consultant Peter Drucker once said: “I believe in intuition only if you can discipline it. The hunch artists, the ones who make a diagnosis but don’t check it out with facts, with what they observe, are the ones […] who kill businesses.”

Even the combination can be deeply flawed. History has shown this too many times. One would assume that only intuitive hunches that are supported by empirical evidence would prevail. Interestingly, beliefs grounded on our immediate experience and gut feeling do so. A team of researchers recently showed people videos of two balls falling down, one heavier than the other. Ancient Aristotelian laws of gravity postulated that the heavier the weight, the faster it would fall. Simon Stevin had already disproved this 2,000-year old hypothesis in 1585 through an actual experiment with two lead balls of different weight dropped from the tower of the Nieuwe Kerk in the Dutch town of Delft. Still, almost all respondents in the experiment indicated they saw the heavier ball to reach the ground faster. Often our hunches and our perception are deceiving.

Both fast intuition and slow deliberation are limited at best, and harmful at worst.

You need intuition to support analytical reasoning and vice versa. When taken alone or one overriding the other, both fast intuition and slow deliberation are limited at best, and harmful at worst. With new ways to gather and collect data and empirical evidence at hand, the challenge now lies in properly employing deliberate decision making to guide and challenge intuition.

On a very practical level, this means constantly moving from deliberation to intuition and back. We analyze the current situation of our company to define that the status quo is not sustainable. We use our intuition to reframe this dire situation into an opportunity. We deploy intuitive thinking to dream a vision for a better future, and use deliberate thinking to list all the assumptions that need to be correct to make this vision come true and plan accordingly. We define a path for optimal implementation but our intuition tells us that we will encounter surprises along the way, so we use intuitive reasoning to avoid risk-it-all investments and keep an eye open for sudden opportunities as they emerge.

By Menno van Dijk, Laurie Kemp

About the authors

Menno Van Dijk, Co-founder and Managing Director at THNK. School of Creative Leadership. Menno is a Former McKinsey Director, working in strategy, organizational design and operational improvement in Media, High Tech and Energy. Functional focus: growth, innovation, digital. Was leading McKinsey’s European Media practice for 7 years. Created NM Incite, McKinsey’s first ever co-branded JV with a third party, Nielsen. NM Incite helps businesses harness the full potential of social media intelligence to drive business performance and is active in 22 countries. Work experience in most European countries, US, Australia, South Africa, China and India. Has lived in Netherlands, Australia and South Africa.

Currently finalizing a MSc Environment and Resource Management (Energy Studies), Laurie Kemp attained a BA in Liberal Arts and Sciences at Amsterdam University College (AUC) in 2013. The broad nature of the program allowed her to delve into Social Systems from various perspectives: focusing on Law, Political Science and Economics. An avid idealist and globetrotter, Laurie is passionate about social and green innovation and bottom-up initiatives seeking to empower individuals and drive positive social change.

This article was originally posted on THNK.org
Main image: businesswoman balancing from Shutterstock.com

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