THE PROS AND CONS OF BUSINESS INSTUITION IN STRATEGIC DECISION MAKING

Postgraduate

          CHAPTER ONE: INTRODUCTION

 The Importance of intuition research work

 

Entering 21st century, we start experiencing series of fast changes: economics tends to globalize; companies are multinational; computers are entering every field; sophisticated software are competing with human brains; machines are replacing manual labors. These changes form a management climate where is dynamic, unpredictable, and requiring decisions are made rapidly and in limited time. In this situation, decision-making which follows the common procedure: data collecting, analyzing, listing options, comparing options and making final decisions, seems to be far from inefficient and time consuming. Therefore, Intuition which used to be thought “irrational” or “non-rational” turns out to be a unique managerial tool and catches academic attention. Can intuition be used in decision-making? Can intuitive decisions be relied and trusted and in which grade? Intuition, a topic seeming easy to discuss, however hard to fully understand, provides art of management and decision making science a lot of debate space.  

 

Thus, what is intuition and why is it so important to study it? Here Albert Einstein believed intuition was “a sacred gift”, and emphasized the important role of intuition in the decision-making. According to him, intuitions are “the solutions come to you, and you don’t know how or why.” However, Herbert Simon (Simon, 1997, p139, 2003) believes “that intuition is actually analytical thinking frozen into habit and into the capacity for rapid response through recognition of familiar kinds of situations".

 

Goldberg (1990, p73) claims that intuition is central to all decisions. He says rational-analytic methods can “seldom be used exclusively; by its very nature prediction deals with the unknown, and we can calculate or measure only what is known…At the very least, a forecaster has to use intuition in gathering and interpreting data and in deciding which unusual future events might influence the outcome. Hence in virtually every [decision] there are always some intuitive components.” Concerning business or strategic decision making, intuition plays such an important role that B. Jajko, an intuitive consultant and the director of New Vision Institute (newvisioninstitute.com), even states “Some businesses live on the bleeding edge, others have the competitive edge. The difference is an intuitive choice.” 

 

In management studies, decision-making by intuition has gained an increasing amount of interest (Klein, 1999; Mintzberg, 1976; Sjöstrand, 1997). It is easy to list many reasons. The business environment has changed dramatically in the last decades due to de-regulation of markets and globalization, new and rapid technological development, newly emerged risks, and unpredicted future environment. Intense competition causes problems in decision-making through ‘rational’ reasoning (Erat & von Krogh, 2000). Since intuition in many texts and in different articles is referring to ‘instinctive knowledge, immediate cognition or feeling’ about something related to daily life and forthcoming events, or part of common sense heuristics in making decisions in different ambiguous situations, it seems that intuition can deal better with fast-changing, uncertain and complex business decision-making situations and intuition is about arriving at good decisions without the classic “reasoning power” (Mintzberg, 1976; Sjöstrand, 1997)