Venturing beyond bounded rationality – what can intuition give us and should it be cultivated?

Head vs heart

Whether we we like it or not, intuition plays a role in our personal and business decisions.  While early theories of decision making focused on rationality as the main driving force, we understand now that this is not really the case. It is for this reason that intuition has been gaining attention from both Psychologists and managers/leaders within organisations.

An official definition: Intuition, or “gut feeling” is a feeling of knowing something or wanting to take a particular course of action, without knowing why (Hensman & Sadler-Smith, 2011).  It is thought to result from unconscious processing that involves making connections between information.  Also, it is thought to develop with experience because the more knowledge and experience a person has within a certain situation, the more he or she is able to link that information together and make associations.  In fact, intuition is just a name for something that happens naturally in most people.  But it is distinct from the following:

Instinct “Fast, reflexive responses that enable organisms to react to a threat and enhance its possibilities of survival” (Hodgkinson, Langan-Fox & Sadler-Smith, 2008).  Instinctive responses are not based on prior learning and expertise.
Insight A sudden moment of realisation.  Unlike intuition, this realisation often occurs after a period of conscious processing. (Hodgkinson et al., 2008)
Creativity The creation of novel and unusual ideas and outcomes.  Whilst the early, pre-conscious stages of creative thinking may involve intuition, intuition is distinct from creativity as it is made up of ideas drawn from experience rather than necessarily novel ones (Hodgkinson et al., 2008)
MBTI Intuition “Personality preference for taking in information through a “sixth sense” and noticing what might be” (www.opp.com)

When people think of intuition, they often see it as unreliable, irrational and subject to biases, a contrast to rational and reasoned thinking.  For example, Professor Daniel Kahneman’s popular book, “Thinking Fast and Slow”, contrasts two interlinked systems.  The “slow” system refers to, rational and conscious thinking that takes effort whereas the “fast” system refers to unconscious but fast thinking.  The message is that “fast” thinking is useful for making efficient decisions and is often the default way of thinking, but it is more subject to thinking errors and biases.  This fast system incorporates aspects of intuitive thinking, such as making connections between information.  Other researchers, similarly, speak of bounded rationality and our limited capacity to think rationally (Simon, 1987).

However, have we really stopped to think about the benefits of intuition, especially its relevance to businesses today?  In particular, intuitive decision making has been shown to be important for decisions that:

–          Need to be made quickly

–          Have no right or wrong answer

–          Require taking into account lots of different information

–          Must be made with incomplete information                       (Agor, 1986, Woiceshyn, 2009)

These are decisions that executives make every day: strategic decisions, evolving decisions and, importantly, decisions made in VUCA situations (Volatile, Uncertain, Complex, Ambiguous).  With changes in technology, social attitudes, social media, marketing and the economy, business decisions are often and increasingly made under these conditions.  Intuition is therefore likely to add value for individuals making these types of decisions – value that we should be tapping into.

However, how would this work in practice?  Unfortunately, it seems that improving decision making is not as simple as just using more or less intuition.  Research is seriously lacking around whether cultivating intuition actually improves decisions.  Psychologists have begun to explore the role of context and this is where the complexities lie.  Using intuition is seen to be beneficial in some situations and not in others.  For example, senior managers have reported that using intuition is linked to positive organisational performance in unstable environments but actually relates to negative performance in stable environments (Khatri & Ng, 2000).  This indicates that intuition should be used cautiously in stable environments in which more reliable information is available to analyse and make a reasoned decision.  In contrast, other researchers conclude the opposite; relying on intuition and heuristics may be useful for routine tasks, in order to speed up decisions, but these are unlikely to be useful in new and uncertain situations (Woiceshyn, 2009).  Rob Briner, too, suggests that intuition should be used for every day, routine decisions but never for large decisions that are new and have lots at stake (www.cebma.org/presentations).  Other aspects that affect the reliability of intuitions include personality, mood, importance of a decision and attitudes of others.  The whole picture is rather complicated and, as of yet, incomplete.

As part of my own Master’s degree research I investigated these complexities and interviewed 10 HR Directors (HRDs) on the subject.  I was drawn to HR, because typically HR and people decisions are amongst the most likely to involve intuition.

The first-hand accounts gave a fresh perspective on the topic.  Overall, characteristics of the individual, organisation and the decision itself all impacted on how intuition was used and the consequences of this.  All 10 HRDs used gut feel in some form, mostly relying on both intuitive feelings and other sources of evidence, such as talking to others.

Especially interesting were HRDs insights into the value of intuition in their context.  For example:

  • Intuition was a useful way of linking individual goals to the organisation’s, in order to make a good decision.  For example, when turning round a business on the brink of collapse, one individual used his gut feel to make immediate changes to the workplace and workforce based on his understanding of individuals’ skill sets as well as his understanding of how the business needed to develop at that time.  He put people into teams based on the products they were contributing rather than their function.
  • Social factors influenced intuition.  Stakeholders and colleagues influenced decision making as HRDs have to provide a clear rationale for the decisions they make, so they needed to have evidence, not just gut feel.
  • Intuition gave HRDs confidence in their own decisions.  For example, even though an individual looked for reasoning and evidence for a decision, they needed to feel that the decision was right too.  Confidence also helped HRDs to convince others of their decision, as they were convinced themselves.

In practice, relying on a combination of gut feel and other sources of information seemed to be a way of acknowledging limitations whilst maximising the potential that intuition had.  Like most practitioners, HRDs agreed that intuition must be used with caution, alongside other sources of evidence, and only in certain situations.

It is important to point out that these results only apply to this group of HRDs.  Still, it gives us food for thought and opens us up to benefits of intuition that I hadn’t considered before.  For example, intuitive feelings can give a person, and others around him, confidence in a decision, and this in itself is valuable.

There is much more to do before wholeheartedly encouraging the use of intuition, such as investigating the contexts in which it improves decision making and organisational outcomes.  However, I think it is time to look further than the reduction of thinking errors (as emphasised by Kahneman) and start to explore more widely, how we might maximise the potential of our own gut feelings.

References

Agor, W. H. (1986). The logic of intuition: How top executives make important decisions. Organizational Dynamics,14(3), 5-18.

Dane, E., & Pratt, M. G. (2007). Exploring intuition and its role in managerial decision making. Academy of Management Review, 32(1), 33-54.

Hensman, A., & Sadler-Smith, E. (2011). Intuitive decision making in banking and finance. European Management Journal, 29(1), 51-66.

Hodgkinson, G. P., Langan‐Fox, J., & Sadler‐Smith, E. (2008). Intuition: A fundamental bridging construct in the behavioural sciences. British Journal of Psychology, 99(1), 1-27.

Kahneman, D. (2011). Thinking, fast and slow. Macmillan.

Khatri, N., & Ng, H. A. (2000). The role of intuition in strategic decision making. Human Relations, 53(1), 57-86.

Simon, H. A. (1987). Making management decisions: The role of intuition and emotion. The Academy of Management Executive, 1(1), 57-64.

Woiceshyn, J. (2009). Lessons from “good minds”: How CEOs use intuition, analysis and guiding principles to make strategic decisions. Long Range Planning, 42(3), 298-319.

www.cebma.org/presentations

www.opp.com

Nikhita Dost bio

Nikhita is a Psychologist and Coach.  She currently works at Human Systems (Business Psychologists) Ltd, a global consultancy specialising in executive coaching, training and development.  She is also a strategy coach with Genius Within Ltd.  Nikhita is an Oxford graduate and gained a distinction in her Organisational Psychology MSc research on intuition and executive decision making.

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