Intuition - The Key to Business Success in Tough Times
For six years, Barbara Bird and J. Robert Baum, management and entrepreneurship professors, tracked a group of business owners. From 2002 to 2008, they…
They found that businesses which survived the economic downturn adapted to changing climates, pivoted for headwinds, and constantly tried new things. Bird, an associate professor at American University’s Kogod School of Business, says something even more important than a solid business plan: an entrepreneur needs to dive in, make quick decisions, learn from mistakes, and continually experiment.
These “street smarts,” as Bird defines them, appeared to be a better indicator of long-term success than any other factor.
“The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift.” - Albert Einstein
Does this mean planning isn’t necessary? That’s a mistake. Intuition can be a superior planning tool once you have deep knowledge of your business, products, and market. The intuition that drives entrepreneurs to succeed comes from expertise and preparation.
To build that expertise, work with someone who has expert-level experience. If you plan to start a business alone, work for someone else first. Learn the industry on their dime, not your own. To guide your business successfully, you must become your company’s biggest expert.
However, Andrew McAfee argues in his HBR post, “Managerial Intuition is a Harmful Myth.” He claims we’re all better off if we stop placing so much weight on the intuitive judgments of “experts.” Human experts are overconfident, inconsistent, and subject to documented biases they don’t even know exist.
Gary Klein, author of “The Power Of Intuition,” highlights that intuition can cause significant errors in decision-making, but it’s also very useful for business. Intuition loses its value when:
- We use inaccurate, inadequate, unreliable, or incomplete information.
- We don't properly consider all alternatives.
- Short-term emotional biases or prejudices make us overrule facts, or influence our decision.
- We try to use our intuition in areas where we have no experience.
According to Klein, to make a successful intuitive decision, you need to:
- Listen Better: Listening to others helps you understand the circumstances. Your team can provide additional information, which prevents assumptions and helps you figure out a better strategy. You understand the problem, your alternatives, and the outcomes of others' strategies.
- Evaluate your Decision: Identify where your feelings or beliefs might influence your decision. Are you missing any facts or evidence? Get an objective opinion from a third party. They might disagree, but they could highlight potential bias or alternatives you didn't consider.
- Communicate Clearly: The reasoning behind our intuition can be hard to explain. But others must understand your decision's logic. Otherwise, your company will likely fail to execute the idea.
- Practice Makes Perfect: Create an environment where mistakes are tolerated. Intuitive decisions improve with practice. People need space and time to learn to interpret their emotions. Emotions signal patterns from past experiences; you need to learn what they point to.
- Track Past Decisions: Study and document the outcomes of similar situations. This helps you improve decision-making and identify patterns in how your intuition works.