Facts, Schmacts. How to Know When to Go With Your Gut

Nearly half of all executives trust their gut over data,* and I am often one of them. Good intuition and common sense can yield faster, better results than facts and figures in many business situations. Even when data is good and well-employed, sometimes the best bet is to make a gut call and just move ahead rather than get trapped in the dreaded "analysis paralysis."

If you run a small business, trusting your intuition is even more important. You don't have the resources to collect and use extensive amounts of data. Besides, odds are that if you're an entrepreneur with a growing business, your gut had a lot to do with getting you there, and you depend on it to stay fast, scrappy, and nimble.

Here are three examples in which good instincts will probably serve you better than any data:

Hiring: To be sure, some things leave little to subjective judgment: A skilled position requires specific, appropriate, qualified skills. A surgeon has to be able to, well, surge. A hand model has to have nice hands. But those things go without saying. I'm talking about determining whether a person is a fit for your organization.

No amount of testing or employee profiling will come to a better conclusion than sitting down and having a human conversation. Meyers-Briggs knows nothing about you as an employer, or your company culture. Testing tells you about an archetype; talking tells you about the person you're sitting with. Why is it that so many large companies with incredibly sophisticated testing and hiring practices have miserable employees and revolving-door turnover? I've worked in and with a few, so I've seen it first-hand. And that's why when I make new hires at my business the final decision is based on simple, unstructured conversations and good judgment of character and fit.
The test says you're an ENTJ? Super for you. But can you hang with us? Sounds silly and simplistic, but without socio-cultural compatibility, an employee is unlikely to stick around, much less succeed, in the long run.

Promotions: It's equally wise to apply a good dose of gut to decisions about promotions and other changes of responsibility. Sure, you can use performance metrics, advancement tests, and other hard data, and perhaps in many situations you must. But cold info isn't always a reliable predictor of how someone will perform when thrown into a new situation. Your personal experiences and familiarity with the employee, her relationships with colleagues, and your innate sense of her adaptability and capacity will help you make a better decision.

Product development: How many big, famous companies with limitless resources have introduced products based on massive research, focus groups, A/B testing, and all kinds of other "science"... only to see them flame out in spectacular and costly fashion? (Can you say "New Coke"?)

By contrast, some of the most successful and game-changing products (iPod/Phone/Pad, the Dyson vacuum cleaner) have been born of little-to-no factual background or market research. Facebook sprung from a simple hunch that kids would want to share their lives online. If statistics and data had been the deciding factors, there would be no Tom Brady in the NFL -- he's the result of a couple of coaches' intuition and willingness to ignore the facts and hard figures of his mediocre early days. Even Henry Ford knew that relying on existing information doesn't result in revolutionary products: "If I'd asked my customers what they wanted, they'd have said a faster horse."

But it's not just about big-league, high-profile stuff. Small business owners and their employees make effective gut decisions every day -- they often have no alternative. No resources for significant formal market research or focus groups. No professional HR person or means to implement complex hiring practices and testing, even if they wanted to. Most small businesses have to find inexpensive, creative ways around their limitations, and that usually involves making best-judgment decisions in many areas of their operations.

I am by no means dismissing the value of data, used properly and safely. Some things (usually the stuff I admittedly hate, like inventory forecasting, cash flow analysis, manufacturing calculations, and tax planning) you can manage only with data. And I am not suggesting that it is useless for people and product decisions. But intuition is a very powerful and effective tool in the hands of the right humans.

When you are faced with highly subjective decisions, go ahead and look at the reports and spreadsheets, listen to as many opinions and suggestions as you want, and consider every fact and data point available to you. But in the end, if your gut is telling you something, your best decision may be to listen to it.

Are you a "just the facts, ma'am" kind of manager, or do you rely heavily on your instincts? Spill your guts.

[* That's according to some Accenture research conducted a few years ago, but a variety of other studies and articles over the years have come to similar conclusions.]

(Flickr photo by giopuo)