Strategic Decision-Making Still Based on Hunch, Not Data

Business decision-making. Should it be based on science where data is used to analyse and evaluate the options? Or is management intuition and hunch a better bet, basing decisions on the experience and gut-feel of management?

A recent survey of top marketing management reported here in the Harvard Business Review blog suggests that hunch and gut-feel are the dominant methods of decision-making (specifically in strategic marketing).  This is despite the increasing availability of detailed marketing data (so-called “Big Data”) which could be used in the decision-making process.

A good evaluation point for students to make is that it is inevitable that many management decisions will be based on factors other than scientific analysis of data. Almost by definition, senior management are in their positions because of their experiences and skills; why not draw on past experience of what works (and what doesn’t).

On the other hand, as the HBR article points out, there are inherent dangers with relying on hunch and intuition, particularly when it comes to marketing decisions. For example, past experience may be unreliable in markets that are fast-changing:

“But in today’s volatile business environment, judgment built from past experience is increasingly unreliable. With consumer behaviors in flux, once-valid assumptions (e.g., “older consumers don’t use Facebook or send text messages”) can quickly become outdated.”

Those managers who do rely on data and science also come in for some criticism in the article. Some, who are too prone to data analysis, are criticised for being too reactive and short-termist. They allow the data to get in the way of more considered, long-term decision-making based around goals and objectives.

So the best approach is…? A decision-making approach that combines the best elements of data analysis (spot and respond to the key trends & insights) with management experience.

 

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Head of Economics and Business Studies

St Aidan's Church of England High School, Harrogate, North Yorkshire

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