The intuitive executive:Understanding and applying ‘gut feel’ in decision-making

Abstract

Even though the conditions under which executives operate may sometimes limit or even preclude the use of rational analysis, it is nevertheless the norm in many organizational decision processes. Intuition, on the other hand, is often considered to be the antithesis of this approach and is usually overlooked or disregarded in decisionmaking. However, in recent years there has been resurgence of interest in intuition, perhaps because of some dissatisfaction with rationality and its limits and also because some psychologists are now arguing that much of cognition occurs automatically outside of consciousness and in the realm of intuition. Knowledge of intuition has made significant advances in recent years, and it can now be understood as a composite phenomenon involving interplay between knowing (intuition-as-expertise) and sensing (intuition-as-feeling). Furthermore, rather than being set in opposition to each other, intuition and rational analysis are better conceived of as two parallel systems of knowing. Against this backdrop we consider the significance of the two facets of intuition for executive decision-making processes. From this integrated perspective we offer some guidelines whereby executives can make more effective and intelligent use of intuition in ways that acknowledge its limitations while maximizing its potential in enhancing firm success in complex and fast-moving business environments.

The role of intuition in entrepreneurship and business venturing decisions

“…The informational substrate of 'intuition-as-expertise' (Sadler-Smith & Shefy, 2004) is slow-in-formation (taking typically ten years or more of learning and experience, see: Ericsson & Ward, 2007) but fast-inoperation (see Lieberman, 2007). This contention is supported by two findings in entrepreneurship research: first, "successful entrepreneurs can be characterized by an expert mind-set" underpinned by a particular (i.e.…”

“…ventromedial pre-frontal cortex, amygdala) (Bechara & Damasio, 2005; Epstein, Pacini, Entrepreneurial intuition 3 Denes- Raj, & Heier, 1996; Evans & Stanovich, 2013a;Lieberman, 2007). Intuitive judgements are domain-specific manifestations of expertise (Hogarth, 2001(Hogarth, , 2010 Klein, 2003;Sadler-Smith & Shefy, 2004;Salas, Rosen, & DiazGranados, 2010) evoked and executed under conditions of uncertainty, dynamism, and time pressure (Burke & Miller, 1999). Indeed, some researchers refer explicitly to intuition as 'problem-solving intuition' (Dane & Pratt, 2009) or 'expert intuition' (Gore & Sadler-Smith, 2011).…”

Does Thinking Style Make a Difference in Environmental Perception and Orientation? Evidence from Entrepreneurs in Post-Sanction Iran

“…This type of entrepreneur has a high capability for solving organizational problems in more creative ways [5]. Furthermore, individuals with a non-rational style of thinking have a high tendency to be imaginative [30], which may enable them to simultaneously analyze a special situation from different perspectives.…”

“…Some entrepreneurs use more traditional rational or linear thinking, which relies more on data, facts, reason, and analytical tools, when making firm-level strategic decisions [2]. Others engage more in a non-rational style of thinking, such as nonlinear thinking, which is rather based on imagination, intuition, holistic appraisal, creativity, and perceptual flexibility, when making important organizational decisions [3][4][5][6]. The literature indicates that the difference in thinking styles may result in different perceptions [7] and courses of action [8].…”

Intuition and Professional Competence: Intuitive Versus Rational Forecasting of the Stock Market

“…These authors subsequently developed the theory of two parallel operating systems of information processing (Sloman 2002), which is widely applied in business and managerial decision-making research (e.g. Dane and Pratt 2007;Sadler-Smith and Shefy 2004). Referring to the theory's assumption, that individuals' engage in different working modes, various approaches of decisionmaking research proposed that there are two parallel and permanent operating information processing systems (Bruner 1962;Hogarth 2005;Kahneman and Frederick 2002;Sloman 2002).…”