When Gut Instinct Reigns

Many executives rely on their intuition and other subjective factors when making business decisions, according to a new study. Here’s a look at some of the pros and cons of following your gut instinct.

When making a decision, specifically a business decision, are you likely to base it on hard facts or do you go with your gut? If you’re in the latter camp, you’ll probably be interested in the results of a new study on the emotions behind business decisions.

The study, “Only Human: The Emotional Logic of Business Decisions,” conducted by FORTUNE Knowledge Group and global advertising agency gyro, polled 720 U.S. senior executives to find out whether they rely more on data or intuition to make decisions. Results suggest that while execs are using more data than ever because there is more of it, they’re still relying predominantly on emotions to make decisions.

For instance, about 60 percent of executives said it is often necessary to rely on gut feelings and “soft factors,” and roughly the same percentage said that human insights must precede analytics when making decisions.

“Results show that executives increasingly rely on emotions, intuition, or ‘gut feelings’ when making important choices,” the study noted. “Our respondents strongly agree that as the amount of information available to them increases—often to the point of becoming overwhelming—they place greater emphasis on ‘softer’ factors, such as a business partner’s corporate culture and reputation.”

Relying on gut instinct proved enormously valuable for Jason Della Rocca while serving as executive director of the International Game Developers Association several years ago. A veteran of the video game industry, Della Rocca was less familiar with association management when he began working at IGDA, and he often used methods he later described as counterintuitive and “sometimes downright heretical.”

“I plowed forward on gut instinct and tons of input from members and stakeholders,” Della Rocca wrote in Associations Now. Having little knowledge of running an association, Della Rocca made many decisions based on what felt right, especially in the beginning.

For example, the association had no formal marketing and communications plan—it didn’t put out press releases, undertake a membership drive, buy print ads, nothing. Instead, IGDA relied on social media and “guerilla-style,” or member-driven, marketing tactics.

“The feeling was always that if we did good stuff, we’d get attention automatically,” Della Rocca wrote.  “Through word of mouth, members would be our marketing.”

And it worked. During Della Rocca’s nine-year tenure, IGDA’s membership grew by 3,000 percent, from 500 to 15,000 members.

Despite some people’s success in relying on instinct, others warn against trusting your gut too much. Case in point: author and Nobel laureate Daniel Kahneman, who has stated that there are times when your intuition can lead you astray.

For example, when faced with two choices, we will usually go for the easier option. “It’s not necessarily that we don’t like to work, but when there are two ways of doing two things–one easy and one hard–we naturally gravitate to the easy way,” Kahneman told Inc.  “So the bias toward finding the easy way means that sometimes we pick the easy way and we get the wrong answer. “

When making business decisions, do you go with your gut or do you trust the facts? Let us know in the comments.


Katie Bascuas

By Katie Bascuas

Katie Bascuas is associate editor of Associations Now. MORE

Got an article tip for us? Contact us and let us know!