How Well Do Executives Trust Their Intuition

Jay Liebowitz, Yolande Chan, Tracy Jenkin, Dylan Spicker, Joanna Paliszkiewicz, Fabio Babiloni

• Publisher: Auerbach Publications
• Year: 2018
• ISBN:
  9780429663826
• Edition: 1
• Topic: Computer Science
• Subtopic: Databases
• Index: Computer Science

In this age of Big Data and analytics, knowledge gained through experiential learning and intuition may be taking a back seat to analytics. However, the use of intuition should not be underestimated and should play an important role in the decision process.

How Well Do Executives Trust Their Intuition covers the Fulbright research study conducted by this international team of editors. The main question of their investigation is: How well do executives trust their intuition? In other words, do they typically prefer intuition over analysis and analytics. And equally importantly, what types of intuition may be most favorable looking at different variables? The research utilizes survey and biometrics approaches with C-level executives from Canada, U.S., Poland, and Italy.

In addition, the book contains chapters from leading executives in industry, academia, and government. Their insights provide examples of how their intuition enabled key decisions that they made.

This book covers such topics as:

• Using intuition
• How gender, experience, role, industry, and country affect intuition
• Trust and intuition in management
• Trusting intuition
• It's a matter of heart
• Leadership intuition and the future of work
• Creating an intuitive awareness for executives
• Improvisation and instinct.

The book explores how executives can use intuition to guide decision making. It also explains how to trust intuition-based decisions. How Well Do Executives Trust Their Intuition is a timely and prescient reminder in this age of data-driven analytics that human insight, instinct, and intuition should also play key roles.

Part One

Intuition

1

Using Your Intuition

Written by: Jay Liebowitz

Contents

The Three I’s

The Good, the Bad, and the Ugly

Becoming a More Intuitive Executive

Intuition-Based Decision Making in Practice: Insights from Executives in the Field

Some Closing Thoughts

Appendix A: Annotated Intuition Studies, with Special Emphasis on Executive Decision Making

References

Recent studies, including the KPMG Trust Gap Study, have shown that many CEOs rely more on their intuition for key decisions than strictly on their data analytics. Part of the reason is that the internal data quality in organizations is often spurious, causing a lack of confidence in any resulting data analytics from those sources.

Of course, applying “rational intuition” instead of becoming just a “hunch artist,” as Peter Drucker used to say, may be a preferred approach in combining one’s experiential learning with analysis.

In looking at how executives make decisions, there is usually a complementary set of both gut feeling and data-driven approaches. However, in this age of big data and analytics, the executive’s intuitive feel and awareness are often minimized in favor of “going with the numbers.” Intuitive awareness is real, and can also be extremely valuable, assuming that one has a good track record when benchmarking one’s executive decisions against the results based on the intuitive decision.

One story highlighting the power of intuition relates to one of the Netflix senior executives who relied on his intuition, versus all the data produced beforehand, in making a decision whether to approve an initial show. Even though the data indicated that the show should not be approved, the executive went with his gut feeling, which signaled that it would be a great show. And, indeed, House of Cards was!

The Three I’s

When we look at intuition (Liebowitz et al., 2018), there is sometimes confusion between what we refer to as the three I’s: intuition, insight, and instinct. In characterizing intuition, the following factors come to mind.

• Experience-driven

• Holistic

• Affective (closely connected with emotions; feelings-based signals)

• Quick (thinks quickly; primed for immediate action)

• Non-conscious (can’t easily map logical audit trails, so to speak, to the judgment; knowing without knowing how one knows)

Simply put, instinct is typically innate, similar to a maternal instinct. Insight is awareness gleaned from deep understanding. Intuition is non-conscious reasoning. According to the Max Planck Institute for Human Development and research on gut decisions performed by Shabnam Mousavi at Johns Hopkins University, “It’s clear that many business leaders believe there’s a time to put data aside when thinking through a problem” (Johns Hopkins Magazine, Spring 2015). Mousavi cites research from 2012 that indicated “almost half of the managers (i.e., subscribers to Chief Executive magazine, CFO magazine, CFO Asia, and CFO Europe) consider their ‘gut feel’ an important or very important factor in making capital allocation decisions” (Johns Hopkins Magazine, Spring 2015). Mousavi’s research examines the use of heuristics (rules of thumb acquired through experience) in executive decision making. However, well-known scientists such as Daniel Kahneman feel that heuristics may lead to errors and biases in judgments. Certainly, more research on, for example, fast-and-frugal heuristics (e.g., imitating the successful, etc.) is needed, but some of Mousavi’s initial research shows that these types of heuristics can lead to more accurate judgments (Johns Hopkins Magazine, Spring 2015).

Data visualization can also support executive decision making. However, even in this case, research from Moore (2017) and others indicates that there must be an “intuitive” platform that enables collaboration and newness.

Even outside the business field, we see intuition being applied. For example, in medicine, we appreciate an evidence-based approach to diagnosing and treating patients. However, here again, intuition plays an interesting role, as shown by this quote from Scott Zeger, former provost at Johns Hopkins University (Johns Hopkins Magazine, Spring 2015):

What we’re looking to do is take that special brand of experience and intuition that the best doctors have and turn it into something that has a scientific foundation based in data and can eventually form useful, effective practice tools that we can put in the hands of clinicians here and around the country and the world.

There have been numerous studies over the years that have looked at the role of intuition in clinical nursing practice. The research results indicate that expert nurses apply their intuition accurately in most cases. Rovithis et al. (2015) indicate that recognition and acceptance of intuition as a valid part of nursing practice is recommended so that the nurses’ confidence in their implementation of intuition will increase. Robert et al. (2014) found growing evidence suggesting that intuition in nursing is a critical part of effective decision making that supports safe patient care. Fox et al. (2016) also found that experienced clinicians are clustered into a single, common-factor response, which the researchers assert is due to the factor of intuition.

The Good, the Bad, and the Ugly

Intuition has been shown to be effective in time-sensitive and crisis situations. Marinos and Rosni’s (2017) research at Lund University found that managers employed intuitive processes in volatile environments, information scarcity, and complex situations, and when an immediate decision was of the essence. They also concluded that managers favored intuition in strategic decision making in cases of high decision uncertainty and volatile environments. Furthermore, the University of Cambridge found that hedge fund traders who relied on their gut feelings outperformed those who didn’t. Rauf (2014), in his study of 306 managers, found that the use of intuition is caused by uncertain situations and developed work groups to increase the chance of making effective decisions in the face of critical situations.

On a Leadership Imagination Retreat in June 2017 (Schwartz, 2017) at the University of Pennsylvania, a number of senior executives (CEOs, army generals, etc.) were asked, “What role does intuition play in your leadership practice?” This discussion centered on why leaders are not trained to be abductive thinkers. It was argued that most leaders are adept at inductive reasoning and deductive reasoning. It was suggested that leaders should be able to use abductive thinking to “leap to the right conclusion.”

However, as we all know, intuition can have its downfalls. For example, a Dartmouth study showed that subjects’ confidence had been disrupted by negative feedback, and they lost the relative accuracy advantage from relying on their intuition. Ma-Kellams and Lemer (2016) showed that in their study of executive-level professionals, those who relied on intuitive thinking also tended to exhibit lower empathic accuracy (i...

Table of contents

• Cover
• Half-Title
• Series
• Title
• Copyright
• Dedication
• Contents
• contributors
• PART ONE Intuition
• PART TWO Examples of Executive Decision Making and Intuition