« October 2022 | Main | December 2022 »

November 30, 2022

In a data-led world, intuition still matters

A new book argues that the best decision-makers combine good data with sound judgment.


Decisions Over Decimals: Striking the Balance between Intuition and Information

by Christopher Frank, Paul Magnone, and Oded Netzer (Wiley, 2022)

For as long as there have been decisions, people have used facts (lately known as data) to make them, along with reason and intuition. Nowadays, though, data often seems to be making decisions for us. Just as ‘analytics’ has changed the face of sports, business data prompts computers to order products, cut prices, or take other actions that once required human thought and intervention.

But data needs people just as much as people need data. Business leaders must decide whether to launch a new product line, expand into a new continent, buy or sell a business, or change a venerable logo. So how can managers use the torrent of data available to them to make the best decisions? That is the timely subject of Decisions Over Decimals, a concise guide to decision-making in the age of analytics written by Christopher Frank, Paul Magnone, and Oded Netzer, a trio of business veterans associated with Columbia University (as well as American Express, Google, and Amazon, respectively).

“The challenge in today’s world is not the lack of information but the judgment to use it,” they write. Data-based decision-making is unavoidable but comes with risks: “Data and numbers tend to provide the comfortable feeling of accuracy and certainty, but they rarely tell us the full story. Numbers alone can never provide a perfect solution or answer, and they will never immunize decision-makers from faltering.”

What business leaders need, the authors argue, are techniques for combining good data with sound judgment. Over the years, they’ve developed an approach called Quantitative Intuition (QI) to help executives make informed choices. And they are convinced that QI, oxymoronic as it may sound, can be learned. “Combining quantitative information with intuition—human judgment developed through experience and close observation—is indispensable.”

In its broadest outlines, QI doesn’t look different from what any sensible person would do to make a decision. But as the authors walk us through their process chapter by chapter, various valuable insights, large and small, emerge.

For example, they cite the late organizational theorist Russell Ackoff’s observation that “we fail more often because we solve the wrong problem than because we get the wrong solution to the right problem.” They point out that you don’t know what data you need until you properly frame what you’re trying to decide. The data can only take you so far on this essential question because you have a view of the broader business landscape, including, of course, the complexity of your own business. “Don’t expect the data to provide both the questions and the answers,” the authors warn. “It is your responsibility to home in on the essential question and then combine data with intuition to identify the answers.”

Because the authors consider clarifying the problem significantly, they believe it’s worth senior management investing time to do so upfront, saving time and error for everyone later. “Why?” questions, asked of subordinates in a near childlike fashion, can help in problem-defining. Why do you want to conduct such a study? Oh, to know customers better. Great, but why do we want to know them better just now? And so forth, leading eventually to the real issue at stake.

In a data-led world, intuition still matters


Posted by ACASA on November 30, 2022 at 06:50 PM in blog post | Permalink | Comments (0)