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Even data-driven businesses should cultivate intuition

Thor Olavsrud | June 9, 2014
The desire to make better decisions faster is one of the fundamental drivers of new big data analytics technologies and a general push toward data-driven decision-making. But the relationship between data and intuition -- the old 'gut feeling' -- is a complicated one, says Peter Swabey, senior editor, technology at the Economist Intelligence Unit (EIU), the research and analysis division of The Economist Group.

As an example, Rupert Naylor, vice president of APT, says that just last week, an APT client ran a test of the effectiveness of putting inserts into newspapers: Would they drive more sales?

"They ran the analysis and the results came back completely flat," Naylor says. "There was no difference between the performance of the tests and the control."

Surprised by the results, which on the face of it suggested that inserts don't drive additional sales at all, the client asked APT to check whether anything had gone wrong with the analytics software. But APT found the analysis had been run properly. Dumbfounded, the client spoke to the media agency responsible for the test, only to discover that the agency had failed to run it.

"That was a great victory for data," Naylor says. "The data was saying that nothing had happened."

"It's also a vindication of intuition," Swabey adds. "It's the fact that the result was counterintuitive that indicated something was wrong."

Even as organizations move to become more data-driven in their decision-making, Bird says the survey findings suggest that intuition should also be valued and cultivated.

"Evidently both intuition and analysis contribute to effective decision-making, in business as in life," she says. "Rather than a weakness that must be avoided, intuition should instead be seen as a skill that is appropriate in the right circumstances."

In fact, she suggests that to improve the nature of decision-making within organizations, those organizations must acknowledge that decision-making itself is a standalone skill that can be improved just like other skills. Furthermore, she says, organizations must hold executives accountable for the quality of their decisions.

In the report, 19 percent of respondents said decision-makers in their organizations are not held accountable at all, while 59 percent acknowledged that poor decision-makers will still be allowed to progress within their organization. And it may be that this state of affairs persists due to a lack of transparency in decision-making. Two-thirds (64 percent) of respondents said information about who makes decisions and why is restricted to sufficiently senior employees; only 26 percent said that information is freely available to everyone.

"This implies that in a significant minority of organizations, senior managers take decisions behind closed doors for opaque reasons and, should those decisions turn out to be the wrong ones, are not held accountable," Bird says. "This is a disturbing state of affairs."

Gerry Grimstone, chairman of insurer Standard Life, says it is essential to cultivate accountability while at the same time ensuring that executives don't exist in a climate of fear that prevents them from raising serious issues until it is too late.

"I'm a great believer in accountability, and I'm happy that my board members have got some liability," he says. "They take better decisions if they think that there are reputational consequences if they get it wrong."

 

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