When to Trust Your Gut

How do you make your most crucial decisions—those with so many variables that they demand more than rational analysis? Like many executives, you may rely on gut instinct. The more complex your decisions—and the less time you have to examine all options—the more you may depend on intuition, hunches, professional judgment.

Rarely a cold, analytical process, decision making does depend, in part, on gut feelings. But we use intuition in different ways. Some executives say hunches guide them in early phases of decision making, when they’re subconsciously filtering numerous possibilities quickly, until their conscious minds can make good choices. Others use their gut in later decision-making phases—after reviewing mounds of already analyzed quantitative information. The numbers may look terrific, but it’s intuition that suggests whether a deal is promising or dubious.

While instinct coupled with analysis may make a powerful decision-making combination, beware intuition’s pitfalls. Often, your gut is just plain wrong—because it’s subject to biases. For instance, we usually overestimate our abilities—failing to get feedback on our decision-making mistakes, and therefore not learning from them. And we conveniently forget about the times when trusting our guts led to poor decisions.

Nevertheless, we can learn to avoid these pitfalls—and apply our intuition judiciously to make higher quality choices.

The Idea in Practice

To sharpen your intuition, consider these practices:

• Place yourself in unfamiliar situations. You’ll begin seeing new connections.

Example: 

When former Six Flags Entertainment CEO Bob Pittman worked incognito as an amusement-park janitor, he realized why Six Flags janitors were surly to guests: management had ordered janitors to keep the parks clean, and customers were sullying them. Pittman redefined janitors’ jobs as “making sure people have the greatest day of their lives at Six Flags”—which required clean parks.

• Acquire a diverse background. Our instincts often kick in when we draw on patterns we’ve seen but can’t quite articulate. The more varied your experiences, the more extensive your “encyclopedia” of patterns. You’ll begin seeing similar patterns across disparate fields—patterns others may overlook. This “cross-indexing” elevates your intuitive skills from good to sublime.

• Know—and check—yourself. Watch for tendencies that cloud your decision making: taking unnecessary risks to cover a loss, “overfitting data” (seeing patterns where none exist), practicing revisionism (failing to remember times when you were right not to trust your gut), and being too confident to get feedback on your mistakes (hence failing to learn from them).

Protect against these tendencies by checking yourself throughout the decision-making process. Ask, “Why are we doing this? Is it right for the company?” If you have an uneasy feeling about a decision you’re considering, consult with trusted advisers who weren’t involved in the original discussions. Analyze—and learn from—past decisions.

• Don’t fall in love with your decisions. Be willing to constantly, subtly adjust them—and quickly change direction when you make a wrong decision. Continual feedback enables you to hone your intuitive decision making to a sharp point.