Imagine the leader of a successful business decided to merge with another business. When probed why, they expressed that this decision was based on a ‘gut’ instinct. You may judge this as a demonstration of ineffective leadership, but emotions are not trivial responses that should be ignored. They are judgements from what has just been experienced or thought of; they are also a form of information processing. However, emotions are also not always the most effective basis for making decisions in business.
Fast or frugal
Scientists at the University of Iowa conducted an experiment where participants were required to partake in a game of gambling. The objective was to win as much money as possible. Unbeknown to the participants, one pile of cards would result in a slow and steady stream of wins (with modest penalties) whereas the other pile resulted in big wins – yet massive losses.
Most participants developed a ‘hunch’ about what was going on but it would take turning between 50-80 cards for most participants to figure the game out and be able to explain it.
However, as a twist in this experiment, participants’ also had the sweat glands in their hands monitored. These glands are responsive to stress and temperature. The participants started generating a physiological stress response to the big win/big loss cards as early as playing the 10th card and started unconsciously favouring the ‘safer’ cards. Participant were reacting to the circumstances without conscious awareness and even their behaviour started changing before they knew what was happening.
Developing effective leadership: can intuition be improved?
Intuition is the result of processing that occurs in our brains – but can it be developed as a leadership skill? Research suggests that the brain is a large predictive machine, constantly comparing incoming sensory information and current experiences against stored knowledge and memories of previous experiences, and predicting what will come next. The brain is always as prepared to deal with the current situation as best as possible. When something happens that wasn’t predicted, the brain updates its cognitive models. This is a typical demonstration of learning.
This matching between prior models (based on past experience) and current experience happens automatically and unconsciously. Intuition occurs when your brain has made a significant match or mismatch, but this has not yet reached conscious awareness.
When you have a lot of experience in a certain area, the brain has more information to match the current experience against. This makes your intuitions more reliable, and that intuition can actually improve with experience, demonstrating that intuition is a skill that can be developed!
Intuition vs analysis: effective decision making
Intuition is often explained as one of two general modes of thinking, along with analytical thinking. Intuitive thinking is described as automatic, fast and subconscious. Analytical thinking is slow, logical, conscious and deliberate.
Many interpret this as two opposing thinking processes, seeing a ‘rational’ approach as contradictory to applying one’s intuitive skill. However, according to a recent investigation, whilst analytical and intuitive thinking are typically not correlated, they could in fact happen at the same time! These two thinking styles are in fact complementary and can work in unison. Think of a new concept or idea, or ground-breaking scientific research: it may start with a ‘hunch’, which is later validated through rigorous testing and analysis.
As an astute business leader, how do you make critical decisions? You may recall instances where you may have felt frustration in yourself or others when a poor decision was made in haste because it ‘felt right’, or an opportunity was missed because there was too much exploration of information before a conclusion was reached.
One mode of thinking is not superior to the other. Relying primarily on intuition can be a risky business, as our insights rely heavily on evolutionary order as well as automatic and fast brain-processing, putting us at risk of cognitive biases. However, making decisions by exploring, reflecting upon and analysing information may render us ineffective if we spend too much time deliberating, instead of moving forward.
Effective decision making is not a contest on whether to adopt a scientific approach in favour of an intuitive one, or vice versa. Intuition is a fast, automatic, subconscious processing style that can provide us with very useful information that analysing cannot. Analytical thinking is a robust, evidence-based approach that likely cuts out the noise of biases and preconceptions, and provides us with the assurance to move forward with an effective decision.
The true magic happens when business leaders can confidently balance these two approaches when making critical decisions.
Interested to learn more? Blackmore Four is hosting our Effective Leadership in Action breakfast workshop on 15 June, and we would love for you to join us.
In this workshop, we look at how you – the ambitious business leader – can make effective decisions, and how to tell whether these decisions rely on the need for data and science or the application of effective judgement and intuition.
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