They can be based on a rapid appraisal of the situation. We might not always realise it, but the brain is constantly comparing our current situation with our memories of previous situations. So when a decision feels intuitive, it might in fact be based on years of experience.
Some decisions require fast thinking when there is not time to weigh up all the options before reaching a conclusion Credit: Getty Images. Take job interviews, for example. Despite most companies still relying on them, there is ample evidence that standard interviews are not a good way of selecting the best candidate. But despite all these biases and more, there are times when fast thinking serves us well and can even be logical. Some people are better at making intuitive judgements than others.
Research has suggested that students are quite good at judging their own uncertainty over an answer on a multiple choice test Credit: Getty Images. We put the choice off, rather than deciding. Trusting your gut allows leaders the freedom to move forward. Based on the objective and quantifiable information such as financial statements and market data, almost all of these entrepreneurial ventures would be considered risky investments that should be avoided.
First, recognize the type of problem at hand. What kind of decision are you being faced with? Take for example, the decision to divest a business. You will likely look at models and figures and predictions but there will be huge uncertainties and lots of factors will be unknowable. Follow us:. By Stephanie Vozza 2 minute Read. Impact Impact Only 2 of 52 top oil and gas companies have science-based climate targets Impact By , the U.
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It has enormous potential for helping managers make decisions in highly complex situations because it offers a way to generate options that would be invisible to even the most capacious mind. Stanford professor John Koza has developed a type of open-ended search, called genetic programming, for use in creating electronic circuits. Using a small number of parameters which is all the mind can handle restricts the search to a tiny, predefined subset of circuits, precluding truly creative solutions from emerging.
The process has generated radically new designs—ones that would never have been discovered by simply judging complete circuits against traditional performance criteria. Koza and his colleagues at Genetic Programming in Los Altos, California, have recently been using the technique to create circuits that replicate the functionality of other circuits without infringing on existing patents—a development that could, for better or worse, revolutionize the microchip industry.
My firm, Icosystem, has begun helping a major petrochemical company use open-ended search to evaluate pricing strategies for one of its most important products. These include upstream commodity prices, downstream finished-product prices, demand at various stages in the value chain, currency fluctuations, and competitor prices, all of which can change rapidly and unpredictably.
As with the electronic-circuit example, the open-ended design begins with the disaggregation of an initial group of pricing strategies which the company collects from various pricing experts into their component parts. A computer creates random combinations of the rules to produce a new set of strategies for testing. In this way, the computer can quickly explore millions of combinations, producing innovative strategies that go well beyond anything that might have come out of the conscious or subconscious minds of even the savviest marketers.
Just as with interactive evolution, people can aid in the evaluation of the options generated by open-ended search. The technique offers a rational way for managers to approach the most difficult business problems: those that have unbounded options with no well-defined criteria for success.
Intuition is thus allowed to inform decision making without short-circuiting or otherwise constraining it. And they may allow us to break through the interpretation barrier—our demand that our creations be intelligible to us. Think about it. When we create designs, whether for products or strategies, we are limited by our ability to understand those designs—their workings must be transparent to us.
But if we look at nature, we quickly find that some of its greatest creations are opaque—they lie beyond our understanding. They offer, it might be said, the true fulfillment of the promise of human intuition. Alden M. David G. For a good introduction to the unconscious biases in our thinking, see John S.
You have 1 free article s left this month. You are reading your last free article for this month. Subscribe for unlimited access. Create an account to read 2 more. Decision making and problem solving. The Idea in Practice Our Untrustworthy Gut Intuition—interpreting and reaching conclusions about phenomena without conscious thought—carries dangerous biases.
We givedisproportionate weight to: information confirming, not challenging,our assumptions; conclusions justifying, not upending,the status quo; and information we receive first—which distorts our interpretation of subsequent data. Consider these computer-based tools: helps managers make decisions about problems with many interrelated but unpredictable elements—such as global markets, supply chains, and large organizations. In, computers emulate nature—combining and mutating the best available options to create even better ones.
Example: You run a factory and want to determine the production schedule that will maximize plant output. In, people judge each generation of computer-generated alternatives. One automobile manufacturer employed artificial-evolution software to pump out new design iterations quickly—then designers used subjective aesthetic judgment to pick promising ones for new mating rounds. In, software generates and sorts through potential solutions to business problems with unbounded options and ill-defined success criteria.
Example: A petrochemical company uses open-ended searching to evaluate innumerable pricing-strategy options. A version of this article appeared in the May issue of Harvard Business Review. Read more on Decision making and problem solving or related topics Psychology and Analytics and data science.
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