Strategic Decision-Making for Leaders | Balancing Data and Intuition

Imagine you're the head of your own company and a major competitor just announced a revolutionary new product that's going to change the whole industry.

Now you're facing a decision that could make or break your business and half of your team is pushing you to accelerate your current product launch, but the other half is pushing you to pivot into a completely new strategy.

How do you make the right decision in this scenario?

Do you trust the detailed market data or do you follow your gut instinct?

Hey everyone. I'm Doug Howard. I'm a leadership coach and consultant, and I use this channel to share weekly insights, tools, and stories to help managers like you level up your leadership skills, especially when it comes to the intangible side of management, like soft skills.

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Kodak's Over Reliance on Intuition

By the end of this episode, you're going to learn how to improve your decision making by striking the perfect balance between data and intuition. To explain why this balance is so important, I'm going to start by taking a close look at the story of Kodak.

You younger viewers might not even remember this, but back in the late 20th century, Kodak was the king of film photography. Hitting over 16 billion in revenue in 1996 alone. Believe it or not, Kodak actually invented the first digital camera way back in 1975, which put them in the perfect position to continue dominating the photography industry well into the 21st century.

But as we all know, that didn't happen and it's because Kodak's leadership dismissed the potential of digital photography. Now it wasn't due to lack of knowledge or intel. They actually had tons of data that indicated a shift towards digital photography. All their market research showed growing consumer interest in digital photography and all of their internal reports highlighted the potential for digital cameras too. That's actually why they invented it.

Despite all this research, despite all this data, despite all this market studies, the leadership team chose to rely on their intuition. That intuition was telling them that film photography would remain dominant indefinitely. So instead of investing in digital cameras, they actually sold the rights to their invention because they believed that film would always be the cornerstone of photography.

This heavy reliance on gut feeling and this dismissal of clear data trends led to Kodak's eventual downfall. They lost out on competitors who embraced the digital revolution.

But just imagine where Kodak would be today if they leaned a little bit more on the data when making this decision. Perhaps you'd see people walking around with Kodak moment sticks instead of selfie sticks.

Titanic's Overconfidence with Data

On the other hand, ignoring intuition and using only data for decision making can lead to catastrophic consequences, too.

Now we all know the story of the Titanic. Rose selfishly refused to make enough room for Jack on the floating door, so he froze to death and died. But before that, the Titanic was the largest and most luxurious ship of its time.

It was erroneously deemed unsinkable based on the data and the engineering standards of that era. The ship's designers and operators received plenty of iceberg warnings and red flags during their maiden voyage, but their overconfidence in the ship's data driven design led them to disregard intuitive caution. The Titanic continued at full speed through iceberg filled waters, leading to one of the most infamous disasters of all time.

This is a great example of how ignoring intuition in the favor of data led to a tragic outcome. But if they had only factored intuition into their decision making at a time, Leo would have lived and Rose would have eventually realized that they weren't in love and that Jack was just a casual hot fling on a cruise ship. But I digress.

Lessons Learned from Kodak and Titanic

Let's unpack each of these stories starting with where Kodak went wrong.

Kodak ignored the data that was right in front of them. The leadership allowed their intuition and past successes to cloud their judgment, which led to strategic inertia. What should they have done instead?

They needed to balance their intuition with the data that they had available and they needed to use insights from both data and intuition to guide their strategic decisions.

On the other hand, Titanic's tragedy teaches us that blind faith in data without considering intuitive caution, can lead to disaster. Combining data with an intuitive sense of risk could have prompted more proactive safety measures.

Balancing Data-Driven Decision-Making and Intuition

Both of these stories emphasize why balancing data with intuition is crucial in strategic planning. Neither should be ignored because data provides objective insights and trends while intuition brings in experience and contacts that numbers alone won't capture. Think of it as the perfect blend of Spock with Captain Kirk.

Techniques for Gathering and Analyzing Data

To make sure you're bringing a balanced approach to your strategic planning and thinking, you want to start by collecting comprehensive data that's relevant to your decision. This can include market trends, customer feedback, financial metrics, and competitive analysis. Here are some steps to help you effectively gather and analyze data.

Step one, define your objectives. Start by clearly defining what you need to achieve with the data. Are you looking to improve product performance? Are you looking to understand customer needs? Or maybe you're looking to evaluate market opportunities. Create clear objectives up front and use that to guide your data collection process.

Step two is collect data from diverse sources. Make sure you're using a mix of quantitative and qualitative data. The quantitative data can include sales figures, market share, financial metrics. On the other hand, qualitative data can come from customer feedback, employee insights, and industry reports. This comprehensive approach ensures that you get a full picture.

Step three is use analytical tools. You want to employ tools like SWOT analysis. If you're not familiar with that stands for strengths, weaknesses, opportunities, and threats. You want to use these types of tools like predictive modeling and scenario planning, because these tools help in breaking down complex data into understandable insights. For example, conducting a SWOT analysis can help you identify internal and external factors that are affecting your strategy.

Step four is look for patterns and trends. This is where you start trying to uncover the intuition side of this. You want to analyze the data to identify patterns, trends, and correlations. You want to use visual aids like graphs and charts to make the data more comprehensible. Searching for patterns in customer behavior or market trends can reveal opportunities and threats that aren't immediately obvious when you look at just the numbers alone.

Step five is validate your data, ensure the accuracy and reliability of your data by cross referencing with multiple sources. Data validation is very important, and it's crucial to avoid making decisions based on incorrect or biased information.

Leveraging Intuition and Experience

Remember, data is like a good detective. It gives you clues, but you still need to solve the case and that's where intuition comes in. Your intuition is shaped by years of experience and it can provide valuable insights that the data might miss. So don't ignore it. Here are some tangible tips on how to tap into your intuition.

First, reflect on past experiences. When you're facing a decision, you want to think about similar situations that you've faced in the past and when you're reflecting on it, think about what were the outcomes of that situation. You also want to think about what did your gut feeling tell you back then. Reflecting on these experiences can help you identify patterns and instincts that have served you well in the past.

Step two is mindfulness and reflection. Take a few minutes each day to clear your mind and reflect. Practices like meditation or quiet contemplation can help you become more attuned to your intuitive feelings. A calm mind is better at picking up subtle clues and signals.

Step three is seek diverse perspectives. Discuss your decisions with a trusted colleague or a mentor. Their perspectives can trigger your intuitive insights. Sometimes hearing someone else's viewpoint can spark an intuitive understanding that you hadn't considered before on your own.

Step four is journaling. I do this one all the time. Keep a decision journal handy where you actually note down what your intuition says versus what the data says. You want to review that journal regularly so that you can start identifying patterns. Writing down your thoughts can clarify your intuitive feelings and provide a reference for future decisions.

Step five is conduct small experiments. You want to test your intuitive insights on smaller and less critical decisions so that you can build that confidence and validate your instincts. These low risk experiments can provide valuable feedback on the accuracy of your intuition. What you might find is that your intuition is more accurate in certain areas, but less accurate in other areas. Think of intuition as your inner wisdom. It's honed by your experience and it's just waiting for you to listen to it.

Combining and Balancing Data and Intuition for Decision Making

But how do you combine and balance data and intuition effectively? Here are some tips to help you find that sweet spot.

Step one, start with data. Begin your decision making process through a thorough analysis of the data. Use the techniques we discussed earlier in this video to gather and interpret the information. This provides you a solid foundation for your decisions.

Step two is consult your intuition. After reviewing the data, take a step back and consider your intuitive feelings about the decision. You can ask yourself questions like, What is my gut feeling telling me about this? Sometimes your intuition will highlight aspects that the data might overlook.

Step three is seek alignment. You want to look for areas where data and intuition are aligned. These are often strong indicators of the best course of action. When both data and intuition are pointing in the same direction, you can be more confident in your decision.

Step four is challenge discrepancies. When the data and your intuition don't agree, dig deeper. Explore why your gut feeling feels differently from what the data is telling you. This could uncover hidden factors like biases or errors in the data or in your way of thinking.

Step five, and this is really important. You want to do iterative decision making. Make your decisions iteratively by starting with smaller reversible decisions that allow you to test your hypothesis. This approach minimizes risk and provides opportunity for you to adjust based on feedback.

Step six is leverage insights from your team. Instead of making decisions like this in a vacuum, you want to involve your team in the decision making process. Your team can provide diverse perspectives and they can help balance data with intuitive insights. Collaboration often leads to more robust and well rounded decision making.

Balancing data and intuition isn't easy, but it is essential for strategic planning. By consciously integrating both data and intuition, you create a more balanced and informed decision making process. It's like having both a map and a compass. Each is critical for helping you navigate more effectively.

If you found this episode helpful, I highly recommend watching my episode called The Science Behind Motivating Employees in the Workplace. It's packed with actionable insights that can transform your approach for how you increase engagement, boost performance, and motivate each individual on your team.

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