Monthly Archives: May 2011

Decision-making: Flipism, Gut Feeling, and Systems Intelligence

Dan Ariely knows all about our irrationality.

There’s a sea of different theories on decision-making. Most recently I’ve read Dan Ariely‘s Predictably Irrational, a very good read.

A Disney version of decision-making is flipism. It is a pseudophilosophy under which all decisions are made by flipping a coin.

In this 4-minute video Henry Mintzberg explains his theory of management and also speaks about decision-making, presenting these three paths: Thinking first, Seeing first, and Doing first.
I recognize them all.

I personally find intuition and seeing the value of the tacit knowledge in decision-making is one of the most interesting options. I often believe in my gut feeling and I am not alone: “Gut feel” or “intuition” is popular and being used by many. Professor Weston Agor states that every one of us use tacit knowledge in our decision making process, at least to some degree.  Agor also argues that “it is perhaps best to think of intuition as being a highly rational decision making skill – one that is logical for managers to use”.

Check out this 5-minute video interview of Professor Agor where he describes the importance of intuition in business.

According to Agor intuition is a brain skill that organizations must learn to tap in order to remain competitive. Professor Agor speaks about experience-based intuition and he lists situations where intuition is used:

  • when there is a high level of uncertainty,
  • when facts are limited, ambiguous or incongruent with events,
  • when variables are not scientifically predictable,
  • when time is limited,
  • when several alternatives seems plausible, and
  • when cost of failure is large.

The situational facts listed above match perfectly with the life of the startup entrepreneurs: living and working in uncertainly, with time limitations both financially and commercially, and all that in a complex environment with huge numbers of variables.

What else than intuitive power does it take to be creative and successful in the rapidly changing environment?

Firstly, the equation must include a certain degree of healthy curiosity and stamina, but also risk-taking capabilities and on top of that some sweet serendipity.

Secondly, this becomes easier if you’re using your thinking and perception capacity more widely. In a complex environment Systems Intelligence approach is one of the methods that might help you. I am very fond of it. Professor Esa Saarinen describes Systems Intelligence as follows:

“Systems Intelligence (SI) involves the ability to use the human sensibilities of systems and reasoning about systems in order to adaptively carry out productive actions within and with respect to systems.”

Far too often we are having a surprisingly narrow sense of ourselves! When both systems – the rational & analytical and the intuitive & associative – are active, there’s a room for intuition, interaction and emotions which in turn nourish and create the trust-based relationships – which in turn helps us in decision-making.

What is Strategic Intuition?

I often act intuitively in the daily decision-making situations and I have been able to recognize situations of different nature. I was glad to find a good classification by Columbia professor William Duggan. He writes about three kinds of intuition: ordinary, expert, and strategic. He explains these nicely:

Ordinary intuition is just a feeling, a gut instinct. Expert intuition is snap judgments, when you instantly recognize something familiar, the way tennis pro knows where the ball will go from the arc and speed of the opponent’s racket. (Malcolm Gladwell wrote about this kind of intuition in Blink.) The third kind, strategic intuition, is not a vague feeling, like ordinary intuition. Strategic intuition is a clear thought. And it’s not fast, like expert intuition. It’s slow. That flash of insight you had last night might solve a problem that’s been on your mind for a month. And it doesn’t happen in familiar situations, like a tennis match. Strategic intuition works in new situations. That’s when you need it most.”

Most interesting!

I cannot resist thinking about Mikael Granlund’s incredible goal against Russia in IIHF World Cup semi-finals in Ice Hockey – he did indeed use his expert intuition and had the extreme courage when he made this absolutely amazing trick and the winning goal for Finland! Check out this video (with crazy Finnish announcer Antero Mertaranta shouting wildly in Finnish):

When you look at the Finnish ice hockey team this year and especially the young talents, as this goal wizard 19-year-old Mikael Granlund, I cannot help thinking what kind of role intuition plays in the fast “the decision-making game” in the digital, creative startup sphere, and further in helping us (and them) to reach our goals and success?

I strongly feel that the ‘trial and error’ culture and mentality among entrepreneurs does – at least partly – rely on this kind of intuitive power, and as a bi-product it does make the entire ecosystem buzzing and high-spirited. I am lucky to be part of it.

Long live the gut feeling!

PS. Here’s some related reading:
My recent post about Mental Bodybuilding for Knowledge Workers
Harvard Business Review blogs: Intuition Isn’t Just about Trusting your Gut
Henry Mintzberg: Patterns in Strategy Formation [pdf]


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