Trust your Gut

By on November 12, 2012

Intuition can give people the vital – even life-saving – ability to make decisions that are fast and right. But how reliable is it? John Morrish talks about the new  insights psychologists have into our sixth sense.

Steve Jobs based his career on it, but Bill Gates used it too. Richard Branson is a big fan. It helps Alan Sugar pick his Apprentices; it helped Einstein devise the theory of relativity. It is intuition – and its importance in management is growing all the time.

Intuition – which some call a ‘gut feeling’ or a ‘hunch’ – has been discussed in philosophical and scientific circles since the 17th century, and has often been considered mystical or paranormal: a ‘sixth sense’. For the past 30 years, however, it has been the subject of intense scientific scrutiny in departments of psychology, economics and management. They have agreed, mostly, on what intuition is. It is a form of thinking that is ‘non-conscious’: you know things, but you don’t know why. It is ‘holistic’: it sees the big picture. It produces judgements that are ‘affectively charged’: connected to our feelings, rather than our analytical minds. And, most usefully for our purposes, it is quick.

Steve Jobs took the mystical view of intuition, which he says he learned on his youthful trip to India. ‘Intuition is a very powerful thing,’ he told his biographer Walter Isaacson, ‘more powerful than intellect, in my opinion.’ Jobs’s gut feelings dominated Apple, even when he was wrong (presented with the prototype iMac, he insisted it should be called the MacMan).

Bill Gates, as you might expect, has a very different understanding of intuition, though he values it nonetheless. Speaking to CNN in 2002, he told his interviewer that he trusted ‘my own intuition’ about new products. ‘I’m often wrong,’ he added, ‘but my batting record is good enough that I keep swinging every time the ball is thrown.’

The difference between the two men – one a believer in intuition as a potent force outstripping rational thought, the other a pragmatist aware that gut feelings can be fallible – mirrors the two poles of recent thought on the subject. On the one hand there are those who admire the near- supernatural achievements of intuitive experts; on the other are those who point out the errors to which the intuitive mind is prone.

In the 1990s, a research psychologist called Gary Klein began interviewing professionals who had used their intuition to make instant life-or-death decisions. One of his subjects was a fire-fighter in Cleveland, Ohio who had taken his men into a burning single-storey house. The kitchen was ablaze,

so they doused it with water, but the fire did not abate. Suddenly, he had a feeling that there was something wrong. ‘Let’s get out, now!’ he shouted, and with that the floor on which the fire-fighters had been standing collapsed: the fire had been in the basement. The man told Klein that he believed he had ESP.

Klein carried out many similar interviews, including one with a Royal Navy officer who shot down an incoming missile without knowing whether the blip on his radar was enemy ordnance or a friendly plane; he too attributed his success to ESP. By rigorous questioning, Klein found he could identify the ‘cues’ that triggered the experts’ actions, even when they were not conscious of them at the time. Nonetheless, he applauded the speed and accuracy of their intuition.

Not everyone was convinced. Psychologist Daniel Kahneman has made it his life’s work to identify the flaws in human decision-making; he won a Nobel prize for economics in 2002. In Thinking, Fast and Slow (Allen Lane, 2011), an international bestseller, Kahneman identifies two systems of processing within the mind. System 1 is fast, automatic and effortless: it lets you tell a dog from a cat, or detect hostility in a voice on the phone. System 2 is slow, voluntary and effortful: it will let you count every letter ‘a’ on a page, or fill in a tax return, but it is lazy.

Intuition, fast and non-conscious, is System 1. And, if Kahneman’s battery of psychological experiments are to be believed, it often gets it horribly wrong, jumping to conclusions, making logical errors, misunderstanding simple sums and failing to call on System 2 when it needs help. The book contains many examples of System 1’s failings. Answer this puzzle without thinking about it:

A bat and ball cost £1.10.

The bat costs £1 more than the ball.

How much does the ball cost?

Did you say 10p? That’s System 1 leading you astray. The answer is 5p.

So is intuition hopelessly error-ridden? Or is it an essential tool for fast and decisive decision- making? It’s a crucial question for anyone considering using intuition in management. Amazingly,

considering their profound differences, Kahneman and Klein produced a joint paper in American Psychologist in 2009 that found common ground. It laid out the ways in which even experts’ intuition can be led astray – overconfidence, making long-term predictions, making judgements outside their realm of expertise – but it also agreed that intuition works, with the right type of expertise, in the right situations. It works, Kahneman and Klein agreed, when experts encounter events that fit (or contradict) a pattern they have come across before. They don’t have to consciously see the resemblance: their non-conscious mind ‘just knows’ what to do.

The venture capitalist Jon Moulton, founder of Better Capital, is enthusiastic about the role of intuition in business, and his description of how it works matches the psychologists’ view. It is, he says, ‘something arrived at without conscious analytical effort. It’s pre-programmed by experience at my age. The way you behave to a smiling wife or a scowling wife, whether you choose to cower or not, is really quite intuitive rather than analytical, isn’t it?’

He uses intuition, he says, in critical negotiations and first meetings, where it saves a lot of time. ‘In the kind of business I’m in, we see a lot of fraudsters. It’s remarkable how often that thought seems to cross my mind before I’ve seen any evidence of it. It’s me sitting there and thinking, hang on, he’s a crook. The thing appears in my brain … It’s something to do with experience and spotting things out of a pattern.’

Eugene Sadler-Smith of the School of Management at the University of Surrey is the author of The Intuitive Mind (Wiley, 2009), which details some other roles of intuition. It informs many ethical decisions; it aids creativity. Intuition, he says, is about feelings: it doesn’t speak to us in words but in imagery or metaphor. That’s why we say a situation ‘smells funny’. And gut feelings are real: modern science shows our bodies reacting to challenges and threats before our conscious minds are even
aware of them.

Some business people admit to experiencing strong physical sensations when their intuition kicks in. ‘Often when I have a project,’ says literary agent Robert Kirby, ‘on the surface everything can look good – the author’s great, the idea sounds great, there’s a potential gap in the market – but I get a strange kind of nauseous feeling: I can’t fathom it, but it’s as if something’s not quite right. It’s pragmatic and practical: every time I’ve felt it and ignored it, something’s gone wrong, or at least that’s the story I tell myself.’ Such feelings are difficult to explain to others. ‘Certainly, it’s not something you can say to an author, “When I read your proposal I feel nauseous”!’

Sadler-Smith is a follower of the pattern-matching theory, originally developed by Nobel prizewinner Herbert Simon, who studied the decision-making of chess professionals with 10,000 hours of practice behind them. Sadler-Smith says intuition works when long experience is salted away and then instantly recalled by the non-conscious mind. ‘There are no short cuts,’ he says. ‘You have to have had the explicit learning, the expertise, the experiences; your analytical mind compresses all
that stuff and feeds it into long-term memory.’ He says it takes five to 10 years for a manager to achieve the necessary expertise, and that’s not just 10 years of doing your job: it means structured practice, stretch assignments, coaching and lots of honest feedback.

Some people are naturally more analytical, he says, and some are more intuitive. But it’s best to combine both in decision-making: intuition followed by analysis, or vice versa. He recommends a ‘traffic light system’. If intuition and analysis both say No, that’s a red light. If they both say Yes, that’s a green. If one says Yes and one says No, that’s amber: proceed with caution. ‘We have to recognise that if we make an intuitive decision, there’s no guarantee of it being right. In the same way as with analysis; no one expects analysis to be right 100% of the time.’

Moulton says that there are things he would not entrust to intuition: ‘deep-down analysis: complicated tax or investment activities’. Nonetheless, intuition has worked for him ‘very many’times. Only last year he identified that a company he was examining did not have an accounting system: ‘the numbers were fabricated.’ Three lengthy accountants’ reports, 1,000 pages or thereabouts, had not alerted him to the problem, but gut feeling did. ‘That was intuition,’ he says, ‘it wasn’t analysis.’

Sarah Curran is the founder of She says intuition has ‘absolutely been key to growing, because I had this inherent gut instinct; I refer to myself as the brand barometer, because I know what’s right and what’s wrong with the brand.’ She says that intuition works for entrepreneurs, but that it would be ‘too wishy-washy’ for the boardroom of a large corporation.

She saves it for the ’emotional touchpoints’ of the brand, rather than strategic decisions, but finds it especially useful in recruitment. ‘I just have this feeling, a gut instinct, that something doesn’t feel quite right,’ she says. ‘With appointments that have not worked I have felt this kind of ‘rumbling’. It’s very hard to describe it, but I know something’s not right because it will continuously come up in my mind. And because it’s not settled, I’m not happy with it.’

As it happens, the role of intuition in recruitment has been much researched – and it comes out badly. Simple numerical scores and algorithms achieve better results than interviewing. System 1, it seems, cannot help stereotyping or judging on looks. Required to ask a hard question (How will this person perform professionally over the next few years?), it substitutes an easier one (Do I like this person?).

Nonetheless, intuition is growing in importance in management education. Erik Dane of the Jesse H Jones Graduate School of Business at Rice University in Houston, Texas says it might offer a solution to the ‘speed/accuracy trade-off’. Intuition offers the possibility that decisions can be both fast and right, which is why management researchers and psychologists have been so interested in those fire- fighters.

Dane, with colleagues from two other business schools, has recently published two laboratory studies of his own (‘When should I trust my gut?’ in research journal Organizational Behavior and Human Decision Processes). In one, he asked business students to assess the quality of baseball shots; in the other, they looked at designer handbags and tried to decide which ones were fakes. In both cases, participants with some degree of expertise were able to use their intuition effectively: novices did much less well.

These were not people with five to 10 years of relevant experience. In the case of the handbag test, they just owned several similar bags. The results have left Dane suggesting that expertise, and hence accurate intuition, might be achieved more easily in future. ‘I’d be open to the possibility that there would be ways to develop intuition more rapidly. That might involve some sort of training or education programme with feedback. It could also involve some sort of simulations, where again
we’re getting rapid feedback, more so than we would typically get on the job or even working with traditional coaches.’

In the meantime, one clear lesson emerges from the mountain of research into intuition conducted over the past 30 years: judgement gets better with experience.



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