Another day, another decision — should you go with your gut or rule by the numbers? Jack Welch earned his spot as one of America’s most-admired chiefs by virtue of his “uncanny instincts.” (As hinted by his bestselling book, Jack: Straight from the Gut.) Meanwhile, the McKinsey Global Institute annual report says that “long gone is the day of the ‘gut instinct’ management style.” A recent BusinessWeek article by Roger Martin attempts to make sense of this dichotomy and concludes that scientific management is past its peak:
I can understand the appeal to the young minds at McKinsey Global Institute of such a Cartesian, deterministic, analytical world. [...] Let me suggest an alternative trend—the rise of heuristics over algorithms; qualitative over quantitative research; judgment over analytics; creativity over crunching. Why would this be? Smart executives are beginning to recognize that the analytic, algorithmic approach to business has overreached. They read the crisp reports spit out of their ERP systems, and while they know exactly how many widgets they shipped to the Midwest the previous week, that isn’t helping them figure out the next great thing that customers want.
Of course not. If you’re using an ERP system to do market research, that won’t help very much no matter how finely tuned your instincts may be — it’s the wrong tool. But if you run statistical analyses on a well-designed market survey, you’re likely to learn a lot about what your customers want. So it’s true that misguided or excessive analysis can get you into trouble.
Ultimately, intuition and analysis are not mutually exclusive. Good heuristics, for example, are based on good analyses, and creativity plays an important role in analytical thinking. The challenge is finding the right balance somewhere between airy intuitions and convoluted analytics.
(Image of Scatter Plot by Gare and Kitty, CC 2.0)
