Decision-makers rely on intuition over analytics

Business strategy

Decision-makers rely on intuition over analytics

Cliff Saran

Business leaders are more likely to trust their intuition than rely on business intelligence dashboards, a report from the Economist Intelligence Unit (EIU) has found.

The report, based on a survey of more than 100 major organisations and commissioned by Applied Predictive Technologies, found that nearly three-quarters of respondents (73%) trust their own intuition for decision-making.

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Even among decision-makers who said they were data-driven, more than two-thirds (68%) said they trusted their own intuition in the decision-making process.

Alison Robb, group director for people, customer, communications and commercial at building society Nationwide, who was interviewed for the report, said: "However much data you take in, and whatever the interview process, when you get to the end, there has to be an element of gut feel too. It’s partly chemistry, experience and knowing what you do and don’t like."

In the study, 57% of executives said they would re-analyse data if it did not match their intuition. Dan Humble, director of insights and research at Alliance Boots, who was also quoted in the study, said: "You’d want to check that the information is correct."

Nearly nine out of 10 (87%) of respondents agreed that improving the quality of decision-­making would improve their organisation’s financial performance.

Pete Swabey, senior editor at EIU and author of the report, said: "The execs use their intuition as a sense check for the recommendations coming from the data. We are clearly beyond the need to collect data. The survey showed that 54% said they wanted better ways to analyse data."

There is no perfect system for collecting and analysing data, said Swabey. The idea of a totally autonomous organisation, where data drives decision-making, is not only a long way off, but this could also be a risky approach, he said. "The experience of senior decision-makers de-risks the organisation."

The report also looked at collaboration as part of the decision-making process. In the report, Gerard Hodgkinson, professor of strategic management and behavioural science at Warwick Business School, said: "Skilled decision-makers are often reluctant to admit they use intuition, and don’t officially sanction it even though they use it all the time to tune into their feelings and interpret them in the light of their expert knowledge."

The study found that more than half (56%) of decision-makers preferred to take the views of a few stakeholders on board. Only 40% said they considered the views of a large number of stakeholders. However, the study found that respondents who thought their company was growing more quickly than the competition were slightly more likely to say that decision-making involved a large group stakeholders.

Gerry Grimstone, chairman of insurer Standard Life, said: "I expect big decisions to have been looked at from different axes by these various committees before they come to the board."

The report also found that decisions are not necessarily taken in a linear fashion. EY chief operating officer Robin Tye said: "Most decisions require people to support and engage with their consequences. What is important is that everyone feels part of the process. It’s no good the decision being right if no one supports it."

The ultimate decision should be based on data that is analysed properly.

Rupert Naylor, UK vice-president at Applied Predictive Technologies (APT), said: "In the past, companies have abused data. People have been able to cherry-pick data to back up their decisions. What is needed is one consistent set of facts."

Naylor said APT’s approach to data analysis is comparable to the way a scientific experiment would be run – starting with a hypothesis, which forms the basis for a test to gather data. This data is then analysed and the results fed back into new hypotheses, and further tests, each building on the previous results.

"Marketers think about ways to map the customer journey, which can’t be controlled, then they try to make sense of the data they collect," he said.

"If you are the size of Amazon, you can run an A/B test and it can be representative of the UK. But for smaller organisations, you need to cope with external influences beyond your control."


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