Is there room for intuition in the data-rich world?

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In this article in Graziadio Business Review, Mark Mallinger, professor of applied behavioural science at the Graziadio School of Business and Management at Pepperdine University, and Matt Stefl, Clinical Professor and Co-Director of the M-School programme at Loyola Marymount University’s (LMU) College of Business Administration, discuss the dichotomy between rational thought and intuition and emphasise the importance of integrating both in order to enhance the quality of decisions, especially in data-rich environments.

Strategic decision-making is a critical role of leaders, for which they rely on facts, intuition and statistics. Today, technology gives access to unlimited data and provides different methods of data analysis.

However, there are a few pitfalls of relying heavily on sophisticated analytical tools/models/algorithms and quantitative decision frameworks for complex decisions: the input may not always be accurate, complete and reliable; a focus on granular data may ignore the big picture; more information does not guarantee a better choice; some data analysis results may raise more questions, complicate or confuse decision-making. Also, data promises certainty, but blindly following this certainty may lead to disastrous consequences.

Therefore, leaders should use both intuition and big data when making decisions. In data-rich environments, leaders should follow these guidelines to ensure quality decisions:

• Clearly define the objectives, examine whether the objectives validate the data or whether the data is being used to achieve the objectives.
• Evaluate the available data objectively and have experts validate the data. Do not attach undue importance to data.
• Listen to gut feelings, especially in the early stages of the decision-making process. Do not dismiss them without a second thought.
• Be aware of emotions regarding actions. Do not allow any emotions to influence or prejudice decisions.
• Step back and think reflectively. Question assumptions and consider other options. Keep an open mind and adopt a broad perspective.
• Seek contradictory viewpoints. Question the validity of decisions and actions. Examine the limitations of decisions.

Big Data Decision Making, Graziadio Business Review