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Is good old-fashioned intuition out of date?
Is There Still a Role for Judgment in Decision Making? Harvard Business School Professor James Heskett wonders if recent advice to eliminate decision-making biases might have gone too far in an effort to supplant independent judgment with data and probabilities and decision trees:
The replacement of customs and biases with data, “big” or “small,” has been intended, at least in part, to drive out such things as tradition, habit, and even superstition in endeavors ranging from child rearing to professional sports. After all, wasn’t the book and film, Moneyball, at least in part a glorification of the triumph of statistics and probabilities over intuition and managerial judgment in professional baseball? …
In fact, if there is a sense that one gets from all of this work, it is that we are our own worst enemies when it comes to making and implementing good decisions. We need tools to correct the errors and biases of our own judgment. This is puzzling, because we are frequently reminded that the ability to exercise judgment is what sets humans apart from other forms of life. (Perhaps judgment is what leads us to adopt recommendations such as those of these authors.)
Every leader has internal biases, some of them subconscious or hidden, which can create especially tricky traps that complicate sound decision making. So it is important to think systematically and design the decision-making process to account for the zoo of biases managers face. Astute management of the social, political, and emotional aspects of decision making can help account for the underlying biases of the participants.
On the other hand qualities such as judgment, engagement and strong communication skills are critical attributes because interpersonal chemistry plays a role in any decision involving more than one person. What we’ve oft said about boards is true of any team: processes and best practices may be important, but great teams rely on ‘robust social systems’ and mutual accountability among its members to ensure that they function properly.
As we argued in Thinking consciously, unconsciously, and semi-consciously: the best results often come from a combination of deliberation and intuition. Too much deliberation can become analysis paralysis; and studies show that those who rely on intuition alone tend to overestimate its effectiveness. (They recall the times it served them well and forget the times it didn’t.
Furthermore, the more complex and detailed the process the greater the likelihood managers will mistake process for purpose and manage to the rules without exercising any judgment. In the wake of the last financial crisis, BoE Director of Financial Stability Andrew Haldane argued that this had been precisely the case with regulators, who tiptoed right up to the hot red line at which a crisis can be triggered.
Mr. Haldane deployed an analogy about a Frisbee-catching dog to explain how increasingly complex (and sometimes frivolous) attempts at regulation push the limits of data or modeling or even the nature of knowledge itself. The dog can catch the Frisbee despite the complex physics involved because the dog keeps it simple: run at a speed so that the angle of gaze to the Frisbee remains roughly constant.
So while we still do value “good old-fashioned intuition,” it’s also unwise to rely only on one’s instincts to decide when to rely on one’s instincts. The dog’s doing just fine, but if it involves more than a Frisbee he might want to crunch some numbers too.