Need management help with a business question about the third approach to decision-making - intuition

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what about the third approach to decision-making - intuition? How did you use intuition in your decision-making process? Explain. (Remember that we often combine our "gut feelings" with some rational dimension.)

Nov 29th, 2015

Thank you for the opportunity to help you with your question!

First, what do we mean by intuition in the context of decision-making? While different definitions emphasize different aspects, there are three key features that characterize the intuitive mode of thinking.

  1. The process is dominated by your subconscious mind, even if you use your conscious mind to formulate or rationalize the final results.
  2. The information is processed in parallel rather than sequentially. Instead of going through a logical sequence of thoughts one by one, you see the situation more as a whole, with different fragments emerging in parallel.
  3. You are more connected with your emotions. For example, it may occur to you that an option you consider does not feel right, even though there is no clear logic to prove that.
Decision making situations where intuitive approach can help most include the following.
  • Expedient decision making and rapid response are required. The circumstances leave you no time to go through complete rational analysis.
  • Fast paced change. The factors on which you base your analysis change rapidly.
  • The problem is poorly structured.
  • The factors and rules that you need to take into account are hard to articulate in an unambiguous way.
  • You have to deal with ambiguous, incomplete, or conflicting information.
  • There is no precedent.

Intuition versus rational analysis

The main alternative to the intuition-based approach is rational thinking. The rational decision making process relies mostly on logic and quantitative analysis. You consciously analyze all the options. You formulate the main criteria for judging the expected outcomes of your options and you assign certain weights to those criteria to reflect their relative importance. Then, based on the expected outcomes and their weights, you rate your options by their perceived utility. Finally, you choose the option that has the highest rating.

If, for some options, the expected outcomes involve uncertainty, you will also need to incorporate in your ratings the perceived probabilities of different possibilities, or even perform a Monte Carlo simulation.

Rational analysis still plays crucial role in many situations, especially when you have clear criteria and have to deal with extensive quantitative data, like quantitative finance. Yet, you will likely face even more business situations where the rational decision making becomes impractical.

How it works

The simplest way to make sense of why and how intuition works is to think of it as an advanced pattern recognition device. Your subconscious mind somehow finds links between your new situation and various patterns of your past experiences. You may not recall most of the details of those experiences. And even if you did, it may be very hard to express the lessons you learnt in a form acceptable for analytical reasoning. Yet, your subconscious mind still remembers the patterns learnt. It can rapidly project your new circumstances onto those patterns and send you a message of wisdom. That message comes as your inner voice and will most likely be expressed in the language of your feelings. For example, some of the options or solutions you consider may not feel right to you.

How to use intuition effectively

The first important thing to keep in mind is that even when you rely on intuition it is still very important to do your homework. The intuition will help you navigate faster through much of unstructured data and can work around certain gaps and conflicts in the available information. Yet, even intuition can be misled if too many of your facts are wrong or missing.

Pay attention to your emotional state. If you are stressed or in a bad mood, your true inner voice will be distorted or lost in the background of your strong negative feelings. A similar effect may happen with strong positive feelings. If you want to hear your inner voice, get over the background of your strong feelings. Feel them through or let them go. Take a walk. Do something refreshing. Say your prayers. Forgive and accept. Sigh. Unclutter your mind.

Finally, you can greatly increase the quality of your intuitive decisions if you include certain elements of the analytical approach. In particular, try to follow the procedure of the rational analysis first. As much as you can, capture on paper the ideas on the main options and the criteria for evaluating your choices. Write down the key facts and factors you need to keep in mind.

Following this procedure is an effective way to feed your subconscious mind with all the relevant data it needs. You will help yourself even more if you put all those notes together on paper as a mind map. By having all the important points written in one place you will also unclutter your mind. At that stage you are much more ready to listen to your inner voice.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Nov 29th, 2015

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