Intuition in strategic decision making: Friend or foe in the fast-paced 21st century?

Matthew Haines

Summary:

In this article, authors C. Chet Miller and R. Duane Ireland discuss the pros and cons of intuition and its use in decision making. They begin by describing Honda’s entrance into the American market and how preliminary analysis was completely contrary to the endeavor being a success. However, Honda took a risk on its executive’s intuition and had a huge success in the American Market. The authors then begin by defining what intuition is saying that at its core there are two types of intuition, holistic hunches, and automated expertise. Holistic hunches are judgements that come from a subconscious process involving a synthesis of diverse experiences, novel combinations of information, and strong feelings of being right[i].

Automated expertise on the other hand is a partially subconscious choice. It comes from past situation-specific experiences and a replay of those experiences.[ii] Then, the authors outline two specific types of strategies and how intuition can be used within these strategies. First, exploratory strategies can benefit from holistic hunches because they can lead to novel ideas and aide in trial and error type testing. Automated expertise on the other hand can create consistency in an uncertain environment. Exploitation strategies benefit more from automated expertise because executives have some sense of factors influencing the decision. However, holistic hunches also provide a break from the norm and help generate new ideas.

Critique:

This article did very little in defining the actual effectiveness of intuition in decision making and forecasting accuracy. However, the authors do a great job of defining intuition and how it differs in application. It also cites a number of different studies on the accuracy of an experts forecasting ability. The authors also show some of the steps a manager can take to limit the negative effects intuition can have. I especially liked their recommendations for using holistic hunches to experiment with business practices that won’t break the bank and to encourage a culture where failed experiments are ok. These practices lead to better brainstorming collaborations and help break down some biases people have. However, I still believe this article did a poor job in taking any kind of stance on the use of intuition. It could have easily been improved if the authors had included data on topics other than automated expertise.

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[i] http://eds.a.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=1&sid=895e0361-0340-4d57-86bb-97800ea8c229%40sessionmgr4009

[ii] http://eds.a.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=1&sid=895e0361-0340-4d57-86bb-97800ea8c229%40sessionmgr4009

Source:

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