Decision Making: The Death of Intuition?

On a flight the other day, I was catching up on the stack of “Newsweek” magazines that’s been weighing down my computer bag for the past few weeks. I ran across an article, “Era of the Super Cruncher,” that points out the book, “Super Crunchers,” is trying to capitalize on the wildly successful “Freakonomics.” While I haven’t read “Super Crunchers,” I surely will. But it got me thinking about losing intuition.

The book’s premise is there’s more data available and its cost continues to decline. More decisions are being driven by data instead of relying on human intuition.

Looking at the Web, we see this constantly. Think of all the changes Omniture and WebTrends have made to their products with each new release. They offer more data, views, and the like, but the software tools’ cost doesn’t skyrocket. Surveys are becoming easier to run for less money. You get back-end system data based on your leads, transactions, and so forth and competitive insight. And you can now collect data that show the impact of social networks on your brand.

One of the best examples of increased availability of data might be the information produced by Google Analytics and Google Website Optimizer, which are free to use. Will they provide everything a top-tier analytics tool offers or a testing tool like Offermatica, Optimost, or Memetrics? No, but for many companies it isn’t a bad place to start.

Citing “Super Crunchers,” the “Newsweek” article points out two great examples of how intuition is losing ground to data:

  • Criminal sentencing, “where statistical projections of recidivism are taking discretion away from judges and parole boards.”
  • Wine making, “where a formula involving temperature and rainfall is a better predictor of quality” than the palate of a top wine expert.
  • With Web data, we often see initial pushback from designers or people leading the charge on brand. They don’t want to be told how to do things; they rely heavily on their intuition and experience. Is that a bad thing? In some cases, yes. But in many cases, relying on data can go too far.

    Today’s analytics tools will identify a problem, but they don’t offer a solution. Through solid analysis based on the overall goals of your business, customers, and prospects, you can identify opportunities and try a series of actions to see which works best for which audience.

    You could say you’re letting the data that performs the best select the winner for each segment. Though this is true, there’s a tremendous amount of educated intuition — intuition informed by solid data — that goes into deciding what you’ll specifically try and test.

    As someone who’s made a career of using data to make smarter decisions for our clients, I’m keenly aware of the advantages to this approach. Still, I’ve seen far too many individuals and companies allow data to paralyze decision making because they don’t have all the data they’d like or have concerns about its quality.

    There’s a fine line between decisions based totally on data and those based totally on intuition. From my experience, you get the best of both worlds when you use data to better educate yourself on the challenges you face and encourage your people to take chances and try something new. The educated intuition will help you get a better outcome, always leaving the true measurement of success to your customers and prospects.

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