Intuition valued highly by 'data-driven' decision-makers: Report

Organisations that can use their data effectively to make decisions in this ever-changing and complex world will thrive; those that do not will perish, according to a survey commissioned by The Economist Intelligence Unit and sponsored by Applied Predictive Technologies (APT).

“An organisation’s ability to make decisions effectively underpins everything from operations to strategy. And yet, decision-making in business management is poorly understood and rarely discussed explicitly,” the report added.

Based on a survey of 174 senior managers and executives from around the world as well as interviews with practitioners and experts, this report explores how business executives believe they make decisions and investigates whether their actions match that belief. And it asks whether explicitly focusing on decision-making as a core capability might help organisations to better achieve their goals.

The survey found 42 percent of senior managers interviewed describing their decision-making style as “data-driven”, but they also say that if data contradict their gut feeling, they will reanalyse these data. “This reveals the important role of intuition in checking and contextualising analysis,” the report added.

Nearly three-quarters of respondents (73 percent) say they trust their own intuition when it comes to decision-making. Even among the data-driven decision-makers, over two-thirds (68 percent) agree with that statement. And 68 percent “would be trusted to make a decision that was not supported by data” - in other words, their peers and superiors place some trust in their intuition.

The data show that business leaders from North America and Asia-Pacific are most likely to describe themselves as “data-driven”, while Europeans are most likely to pick “collaborative” as their chosen decision-making style.

“Intuition is also valued highly, even among decision-makers who consider themselves data-driven. Evidently both intuition and analysis contribute to effective decision-making, in business as in life. Rather than a weakness that must be avoided, intuition should instead be seen as a skill that is appropriate in the right circumstances.”

The survey also reveals that decision-making is not always as collaborative as it might be. Over half of respondents (56 percent) say decision-makers at their organisation will seek input from “a few” stakeholders before taking a decision. This compares with just 40 percent who say decision-makers will seek the views of a large number or the majority of stakeholders.

“Respondents are divided over whether making decisions collaboratively improves the outcome, but including multiple stakeholders in a decision is an important way to build support for that decision, and to ensure that any and all risks have been identified,” the report noted.

Just over half of respondents (51 percent) report that, at their organisation, decision-makers are explicitly assessed on the quality of their decisions. A worrying proportion of survey respondents (19 percent) say that decision-makers at their organisation are not held accountable for their decisions at all. Meanwhile, nearly half believe that boosting accountability would help improve their organisation’s ability to make decisions.

Executives are more constrained by their ability to analyse data than by access to data itself. Most respondents believe that decision-making would be improved by enhancing their ability to analyse data. In mature markets, where there are ample data to analyse, achieving this improvement is more a matter of applying new analytical techniques, such as controlled testing, and integrating new data sources rather than simply stockpiling more historical data.

“The clear majority of survey respondents believe that improving decision-making would boost their organisation’s financial performance. Happily, this is eminently achievable, as decision-making is “a teachable and learnable skill for which almost everyone has potential,” revealed the survey.