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Thursday, January 22, 2009

Analytics vs Gut Feelings

An Accenture study says that 60% of major decisions are made with analytics and 40% are made with gut judgement. Business leaders think that more attention should be paid to analytics. Plus some other related statistics. I wonder what percentage of executives would admit they use gut feelings alone for a major decision? Even when analytics is used it is often illogically intertwined with the emotional. And how does the new attention to the 'right brain' decision influence this?

This is an area where while working with executives, I have seen lots of changes over the years. Also many personality based opinions. Most common was when an executive wanted to be seen using the latest analytical methods, but felt they knew best, based on their own network. Of course they bore the greatest responsibility for the decision.

And you can't forget the influence of books like Gladwell's Blink, which provide justification for not being analytical.

So how often was a gut decision better than analytics? Hard to measure, but I am tabulating some examples I have.

Link pointer via SASCOM magazine.

Update: To Hell with Guts.

2 comments:

Alison said...

Thanks for the hat tip, Franz. I'll look forward to reading the examples you mention here.

I also notice that the suvey reports on executive *perceptions* of how decisions are made. How accurate do you think their perceptions are?

Franz Dill said...

Interesting question, they are human like the rest of us and blinders are often put on. What usually happens is that many inputs come to them and they make a decision based on all of them.

Analytics are almost always used to some degree in an important decsision, but my view is that often analytics is not suffciently weighted. In fact this weighting process itself, via methods like scenario analysis, is an important tool.

Note my additonal mention of the Blink book, this too has been thrown at me as a means of underweighting analytics!

'Right Brain', another topic that changes the playing field.