1. Intuition-Based Decision Making: The Other Side of Analytics
In the Johns Hopkins University Magazine, Aneesh Chopra (the US’ first chief technology officer) said “When it comes to making major decisions, there are two camps. One consists of people who believe intuition trumps analysis—go with your gut. The other rejects intuition in favor of careful data analysis—where there is enough data, there’s no need for intuition. The ideal is a marriage of the two.” I also feel that we need a complementary set of both analytics and intuition, and I would like to focus on the latter part which hasn’t been discussed much in the analytics conferences.
Dr. Jay Liebowitz
Distinguished Chair of Applied Business and Finance
Harrisburg University of Science and Technology
March 10, 2017

2. BI/Analytics Conceptual Framework (Liebowitz, 2016—Delphi Survey)
Business and IT Drivers
Decisions (faster, more informed)
Innovate
Lower TCO
Reduce stock-outs
Improve margins with localized assortments
Increase share of wallet
Improve in-store/e-com execution
Remove data silos
Improve data quality
Improve BI tool quality/access
Deliver fast, properly-filtered BI
BI/Analytics Strategy
Grow market share
Increase shareholder value
Improve risk management BI
Roadmap
BI Enablers
Build trust in BI/Education
Customer/business focus
Culture (availability & use of data)
Data (data management practices)
Balance/control with IT/shadow systems
Sponsorship (exec. support and
Involvement)
Funding
Expertise
BI Success Factors
Data quality (single truth)
User access (ease of use)
Decision environment (BI supports
flexibility and risk in decision making)
Source of value (actions and
decisions that generate value)
Measurement (evaluating impact
on business outcomes)
From looking at the research and best practices in the BI/Analytics area, I decided to create a conceptual framework as shown here for further testing and enhancement.

3. Pretz and Liebowitz (Nov
Pretz and Liebowitz (Nov. 19, 2016) “Executives in data analytics trust intuition over analysis”

4. “Intuition is something that occurs in the moment, and if you are open to it, if you listen to it, it has the potential to direct or redirect you in a way that is best for you.”
Tim Cook, CEO, Apple
Now that we have the lay of the land for analytics, let’s turn our attention to intuition and how it could play a role in management decision making. Here is a quote from Tim Cook the CEO of Apple.

5. Many senior executives believe the key to improving decision making is to move fast and learn from your mistakes. Learning from your mistakes is difficult and people often overestimate their ability to do it.
Professor S. Finkelstein
Tuck School of Business
Dartmouth University
Professor Sydney Finkelstein of Tuck at Dartmouth has this quote about the importance of moving fast and learning from your mistakes as a key part of executive decision making; however, this may be difficult to do and people often overestimate their ability to do it.
In his book, Think Again, a follow-up to Why Smart Executives Fail, Professor Finkelstein cites examples of major strategic decisions to explain why decision-makers sometimes think they're right when they are actually wrong. For example, in telling the story of Matthew Broderick, then director of the Homeland Security Operations Center during Hurricane Katrina in August 2005, he shows how a person’s thinking can be blinded, identifying the difficulty we have in challenging our thoughts so that we can spot and correct errors.

6. The Really Valuable Thing is Intuition.
Albert Einstein
When we look at intuition, perhaps Einstein said it best.

7. Intuition = Analytics + Instinct
Many people believe intuition is an instinctive knowing without the support of logic, analysis, or actual evidence
But in reality, intuition is founded upon the scrutinizing of failures and lessons learned
That “instinctive knowing” as part of intuition is really developed over time and is founded upon careful analysis of failures, lessons learned, and learning from your mistakes. Some people may say that there is some structure behind it (perhaps calling it analytics in some sense).

8.  Experience-driven  Holistic  Affective  Quick  Non-conscious
So, if we had to characterize “intuition”, these are some of the factors that come to mind:
--Experience-driven
--Holistic (intuitive)
--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)

9. “The Intuitive Executive” (E
“The Intuitive Executive” (E. Sadler-Smith & Shefy, Academy of Mgt Executive, 2004)
Do you trust your hunches when confronted by an important decision?
Do you feel in your body if a decision is right or wrong?
Do you put a lot of faith in your initial feelings about people and situations?
Do you put more emphasis on feelings than data when you make a decision?
Do you rely on your gut feelings when dealing with people?
Do you trust your experience when arriving at the reasons for making a decision even if you can’t explain why?
Does your intuition often turn out to have been right all along?
What is (or would be) the reaction in your organization to decisions made on the basis that they felt right?
Do you keep your intuitions close to your chest? If so, why?
So, how do you know if you are using your intuition as an executive or key decision maker. Eugene Sadler-Smith from the University of Surrey in the UK, and one of the leading researchers in this area, feels that these are some of the questions that the “intuitive executive” should be asking oneself.
Let’s see how these questions apply to you. Mark which ones apply to you to see if you are an “intuitive executive”.

10. “Trust your gut” Linking domain expertise to effective intuitive decision-making
More performance and experience in a given field will help create a stronger basis for your intuition and expand the number of situations in which your intuition will be effective and efficient
“Trust Your Gut” (Dane et al., When Should I Trust My Gut: Linking Domain Expertise to Intuitive Decision-Making Effectiveness,” J. Org. Beh & Human Decision Processes, 2012)
Intuition may be just as effective in decision-making as an analytical approach—and sometimes more efficient and effective, depending on the decision-maker’s level of expertise on the subject at hand
If you’re working in an industry where you’ve risen through the ranks, your domain expertise will likely better serve an intuitive approach.
If you gained your expertise in a different field, you may not have the background to rely as strongly on your intuition. For example, some companies spread people too thin sometimes—but if you don’t spend enough time in one domain, say you’re moved from finance to marketing to R&D—you may become a well-rounded employee but you may not obtain the experience you need for intuitive decision making.
(Dane et al., When Should I Trust My Gut: Linking Domain Expertise to Intuitive Decision-Making Effectiveness,” J. Org. Beh & Human Decision Processes, 2012)

11. “I believe in intuition only if you discipline it.”
“We generally have good intuition about things that are similar to what we encounter every day, and are able to make ‘instinctive’ decisions (based on comparisons with our experience) that are generally correct.”
“But we have poor intuition about things that are outside of everyday experience and very poor intuition about things that are totally alien.”
“The Role of Intuition in a World of Big Data” (Parkinson, CFO.com, January 29, 2014)
Certainly, intuition has its disadvantages. As this article points out, we generally have good intuition about things that are similar to what we encounter every day, but we have poor intuition about things that are outside of everyday experience and very poor intuition about things that are totally alien.
For example, we know what a “fair” price, or how long a task should take based on our experiences. But we have poor intuition in how to identify and react to the risks represented by a tsunami or things outside of all human experience like quantum mechanics.
And Peter Drucker, one of the fathers in management, feels that you shouldn’t be a “hunch artist”—believe in intuition only if you discipline it.
“I believe in intuition only if you discipline it.”
Peter Drucker (one of the fathers of Management)

12. Minimizing damage in high-risk decisions
“In the most difficult case of no-time and high-risk, reliance on ‘rational intuition’ may be a preferred way to minimize direct and/or collateral damage if the decision goes wrong”
So to hedge your bets, “rational intuition” may be a way to go.
“What’s the Best Way to Make Careful Decisions?” [J. Heskett, HBS Press, Feb. 2010]
Intuition based on analysis and experience
“In the most difficult case of no-time and high-risk, reliance on ‘rational intuition’ may be a preferred way to minimize direct and/or collateral damage if the decision goes wrong
Malcolm Gladwell (Blink) advised to place faith in intuition based on experience in deciding many things quickly.
Michael Mauboussin (Think Twice) suggests that we place too much emphasis on intuition and personal experience as opposed to wisdom of crowds, mathematical models, and systematically-collected data.
“What’s the Best Way to Make Careful Decisions?” (J. Heskett, HBS Press, Feb. 2010)

13. Educating Informed “Intuitants” (Liebowitz, 2014, SAS Exchange)
Skills integral to the informed intuitant include:
Collaboration abilities
Creativity-enhancing skills
Business-speak, summarization, and data visualization techniques
Learning by doing
I believe we need to educate “ Informed ‘Intuitants’”, as I pointed out in a column in the SAS Exchange.
CEB: As applied to analytics, skills include problem solving, intellectual curiosity, issue diagnosis, insight generation, synthesis of internal and external data, problem framing, and synthesis of financial and qualitative data. Other skills integral to the informed intuitant include (Liebowitz):
Collaboration abilities, such as team building, project management, and interpersonal communications (oral and written)
Creativity-enhancing skills to think outside the box
Business-speak, summarization, and data visualization techniques for the analyst to explain their results to C-level executives
Learning by doing or testing by learning methods to sharpen the analytical and decision making skill sets.

14. Do Leaders of SMEs Base Decisions on Intuition?
“Qualitative interviews and an empirical investigation with more than 300 managers and entrepreneurs at SMEs revealed that intuition is a key resource for managerial decision making.”
In looking at some of the technical journal research, intuition plays a key role in decision making worldwide. For example, in last year’s reported research of small and medium-sized enterprises in Africa, over 300 managers and entrepreneurs at SMEs revealed that intuition is a key resource for managerial decision making. I know there is a lot of interest in Poland regarding small and medium-sized businesses.
“Do Leaders of SMEs Base Decisions on Intuition?”
(Bocco and Merunka, 2013)

15. “Executive Decisions: Gut Feel, Big Data, or Collaborative. ” (J
“Executive Decisions: Gut Feel, Big Data, or Collaborative?” (J. Loechner, June 18, 2014)
The study finds:
“. . . Even people who think of themselves as data-driven decision makers also place trust in their own intuition.”
73% say they trust their own intuition when it comes to decision making
Back in June, Loechner reported a study where even people who think of themselves as data-driven decision makers, also place trust in their own intuition. 73% of executives surveyed said they trust their own intuition when it comes to decision making. Even among the data-driven decision makers, 68% agree with that statement. (Data-driven defined as “I collect and analyze data as much as possible before making a decision”).

16. “Knowing Without Remembering…” (Kyung and Thomas/Dartmouth and Cornell, 2013)
Purpose
Experiment under which they disrupted test subjects’ confidence in their intuition
Results
Subjects whose confidence had been disrupted by negative feedback no longer could rely on intuition
Research from Dartmouth, reported in the Journal of Consumer Research, showed that you couldn’t rely on your intuition if given negative feedback. In one of the experiments, the researchers gave false negative feedback to half the participants by telling them they were wrong even when their answers to some questions were correct. Subjects whose confidence had been disrupted by negative feedback lost the relative accuracy advantage from relying on their intuition.

17. Corporate Executive Board (CEB) Insight IQ (2013)
Assess the tendency of managers to rely on intuition versus analysis
CEB found that 19% of over 5,000 managers in major global companies are “Visceral Decision Makers” that rely almost exclusively on intuition
A key is looking for “conflict”—what could change my mind?
Some research is being done to assess one’s intuition, such as the CEB’s Insight IQ instrument. They found that 19% of over 5,000 managers in major global companies are what they call “Visceral Decision Makers” that rely almost exclusively on intuition. Some suggest that this figure may be too low. One key to effectively combine intuition and rational thinking starts with the ability to see conflict. Thus, for visceral decision makers, this could well be because the rational analysis lacks sufficient meaning to challenge their intuition.

18. Intuition Research in Management (November 2012; Tel Aviv University)
When forced to choose between two options based on instinct alone, the participants made the right call up to 90 percent of the time
The results of their study were published in the journal PNAS (Proceedings of the National Academy of Sciences)
In 2012, some of the psychologists at Tel Aviv University performed an experiment to have executives choose between different scenarios. When they relied strictly on their intuition, they made the right call 90% of the time. Thus, this was showing that intuition plays an important role in executive decision making. The details of the study appear in the Proceedings of the National Academy of Sciences journal.

19. “Strategic Decisions: When Can You Trust Your Gut” (McKinsey Q., 2010)
“Conditions for Intuitive Expertise: A Failure to Disagree” (American Psychology, Sept. 2009):
Gary Klein: “This is what my gut is telling me; let me gather information to confirm it.” (pre-mortem technique)
Daniel Kahneman: “When you are under time pressure for a decision, you need to follow intuition. My general view, though, would be that you should not take your intuitions at face value…Overconfidence is a powerful source of illusions…”
Among the most famous researchers looking at this area are Daniel Kahneman who won the Nobel Prize in 2002 and Gary Klein, a leading cognitive psychologist. Even though they may disagree, they each have some common ground as shown by these quotes. In essence, they are both saying that you need to take your gut feeling as an important data point, but then you have to consciously and deliberately evaluate it.
The pre-mortem technique is to say up front, at the start of a project, that a project has failed—now take 2 minutes and write down all the reasons why you think the project has failed.

20. “Business Intuition” (Williams, Journal of Management Policy and Practice, 2012)
Dimitrius and Mazzarella (2008):
Recognize and respect your intuition, not following it blindly or rejecting it outright.
Identify what your intuition is telling you. Follow the hunch, asking what is it?
Review the evidence by playing back the events in order to become more conscious of the signs.
Prove or disprove your theory. Gather additional information to consciously test your theory.
Recognize and respect your intuition, not following it blindly or rejecting it outright.
So what can we do to improve our decision making from a business intuition perspective. These are some suggestions:
Identify what your intuition is telling you. Follow the hunch, asking what is it?
Review the evidence by playing back the events in order to become more conscious of the signs.
Prove or disprove your theory. Gather additional information to consciously test your theory.

21. Intuition in Management Research (Akinci and Sadler-Smith, 2012)
Recommendations for Advancing the Current State-of-the-Art:
Careful conceptual framing
Greater cross-disciplinary collaboration and integration
Increased methodological rigor and pluralism
Closer attention to levels of analysis issues
Interestingly, much of the intuition in management research is being done in Europe (UK) and Australia. Not much in the US per se. If we want to improve this area of research, there are some suggestions for advancing the current state-of-the-art.

22. Guidelines for developing intuitive awareness (Sadler-Smith and Shefy, 2004)
Open up the closet
Use imagery
Don’t mix up your “I’s”
Play Devil’s advocate
Capture and validate your intuitions
Elicit good feedback
Get a feel for your batting average
Open up the closet:
1. To what extent do you: experience intuition; trust your feelings; count on intuitive
judgments; suppress hunches; covertly rely upon gut feel?
2. Don’t mix up your I’s Instinct, insight, and intuition are not synonymous; practice distinguishing
between your instincts, your insights, and your intuitions.
3. Elicit good feedback Seek feedback on your intuitive judgments; build confidence in your gut feel;
create a learning environment in which you can develop better intuitive
awareness.
4. Get a feel for your batting average
Benchmark your intuitions; get a sense for how reliable your hunches are; ask
yourself how your intuitive judgment might be improved.
5. Use imagery Use imagery rather than words; literally visualize potential future scenarios that
take your gut feelings into account.
6. Play devil’s advocate Test out intuitive judgments; raise objections to them; generate
counter-arguments; probe how robust gut feel is when challenged.
7. Capture and validate your intuitions
Create the inner state to give your intuitive mind the freedom to roam; capture
your creative intuitions; log them before they are censored by rational
analysis

23. Intuition  better strategies in business
Intuition breeds innovation. If you are tied only to statistics and analytics, you may miss new and better strategies, opportunities, and methods for your business to be more efficient, effective, and successful. Use your informed intuition, founded upon years in business and inspired by trends in big data, to navigate the future of your business.

24. To show you how timely this topic is, the Handbook of Research Methods on Intuition was published in August by Marta Sinclair from Griffith University in Australia.

25. These are some of my personal favorites (only kidding) that came out over the past year and half. The middle one on Intuition-Based Decision Making was published in August, and contains a research track and a practice track of about 20 senior level executives in industry, government, universities and not-for-profits explaining their vignettes on how they used intuition in their key decisions they had to make.

26. Intuition Experiments Ongoing (Liebowitz & Pretz, 2016)
Applying the Validated Scale for Measuring Intuition Instrument (Pretz) and the Cognition Scale to determine under what conditions/populations/Gender/Experience/etc. should intuition be favored over Analytics
In the Sept. 18, 2016 University of Cambridge Study, Financial Traders (Hedge Fund Traders) who relied on their Gut Feelings outperformed those who didn’t

27. Will Be Published in April 2017

38. I had a “feeling” this would work out!
Thank you
I had a “feeling” this would work out!
My intuition told me that this would be a great conference. Thank you!