Governance helps leaders make better decisions by clarifying things like vision, priorities, risks, decision rights, decision structures and so on. I have witnessed many times improvements in productivity and savings in the millions of US dollars after improving an organization's governance. However, I do feel that there is a place for intuitive decision making in the business world. In fact, the clarity and alignment achieved through formal governance, actually sets the groundwork for "safer" intuitive decision making.
I read this morning a great article on this topic in the London Times online. The article is by Professor Eugene Sadler-Smith, author of the upcoming book "Inside Intuition." Enjoy!
From The Times
August 13, 2007
When you just know. . .
We all have intuition – a gut feeling, a hunch or sometimes business instinct. It is a hallmark of how human beings think and behave. Though we are often exhorted to be cool and rational, to rely on hard data and logic, it is impossible to function without gut feelings when making decisions. Intuition presents itself to us in an instant, quite unbidden – a neurological alarm bell, if you like – and its effects can be life-changing.
If we can distinguish this intuitive feeling from fears, biases or wishful thinking it can be a potent, sometimes life-saving, force. A small child has a high temperature: nothing unusual about that. But a parent may have a gut feeling, take action – and discover meningitis, just in time.
It is also very relevant in the world of business. From research in the UK and the US, we know that 90 per cent of managers use intuition, in areas such as hiring and firing, new product development and business strategy; with two thirds saying that intuition led to better decisions.
There are many famous examples of commercial intuition. Sir Richard Branson claims in his autobiography that he makes up his mind about people and business proposals, and whether they excite him or not, within 30 seconds (not always effectively: witness Virgin Cola), and for entrepreneurs in the long run intuition seems to pay dividends.
Ray Kroc, the founder of the McDonald’s chain, has said that he followed his funny-bone instinct when deciding to borrow $2.7 million in 1960, against his lawyer’s advice, to buy out the fast-food franchise that he had started.
However, what my own research has proven, is that the unpremeditated, effortless spark of creativity does not arrive in an unprepared mind. It is the outcome of extensive learning and experience – a precondition for accurate intuition.