Business decision making usually falls into one of two camps: gut instinct or data-driven analysis. Some leaders are entirely intuitive – quick, decisive, and often effective. Others won’t make a cup of tea without a spreadsheet to back them up. There’s strengths and weaknesses in both. The trick is knowing when to trust your gut and when to demand numbers.

Instinct is fast. It’s the result of years of experience, allowing you to synthesise countless inputs – some of which you may not even be consciously aware of. It’s particularly useful in new or uncertain situations where no relevant data exists.

But instinct is also flawed. It’s riddled with biases and heuristics that often lead to bad conclusions. Our brains love patterns, even when none exist. Recency bias, selective memory, mistaking confidence for accuracy… Just because something feels right doesn’t mean it is right.

Data is more objective. It shows patterns, eliminates some of the noise, and forces accountability. Your decisions are supported by actual evidence, not just a feeling in your bones.

But data has limits. It’s backward looking by nature; it tells you what has happened, not what will happen. It’s also useless if you’re heading into the unknown. If you’re making a truly innovative or disruptive decision, there’s likely no data to guide you. In addition to this, bad data (or bad interpretation of good data) can be just as misleading as bad instincts. 

Another thing to consider is your time to act – it’s going to take time to collate data and run analysis, if you also need to conduct research to gather the data this is going to significantly slow you down. Are you going to lose competitive advantage in that time?

What’s the Right Approach?

Awareness is key. Good decision makers understand the strengths and weaknesses of both instinct and data. If you’re trying to drive efficiency, analytics are probably more useful. If you’re trying to innovate, gut feel is almost certainly going to get you further. More importantly, ask the right questions:

• If relying on instinct: Am I letting biases cloud my judgment? What assumptions am I making?
• If relying on data: Where did this data come from? What isn’t it telling me? Am I chasing false precision?

How do I apply this?

• Use a decision filter – before making a big decision, stop and assess: is this a situation where data exists and can help? Or am I in a place where instinct needs to take the lead?
• Make sure you’re challenged – surround yourself with people who think differently. If you’re an instinctive decision maker, have someone who challenges you with data and vice versa. If your team are all fairly similar, nominate someone to play the role of contrarian.
• Test and learn – treat decisions as experiments where possible. Use instinct to form a hypothesis, then look at data (or gather it) to validate it.
• Know your biases – learn about cognitive biases that commonly affect decision making. The more aware you are of how your brain tricks you, the more you can adjust.
• Don’t let data be a crutch – if you’re waiting for perfect data before making a decision, you’ll always be reacting rather than leading. Accept that some decisions require a leap of faith. 

The best decisions come from a balance—using instinct to form hypotheses and data to test them. Blindly trusting either one is a mistake. Recognising that even your own thinking isn’t always as sharp as it seems is just as important.

If you’ve found this interesting and want to read more from subject experts…

The Mind Is Flat – Nick Chater: excellent exploration of the illusion of mental depth

The Tiger That Isn’t – Andrew Dilnot & Michael Blastland: an eye opening view of the difficulties in data gathering/measurement and how statistics can be manipulated

Thinking, Fast and Slow – Daniel Kahneman: a classic on how our brains use two systems for thinking and how biases creep in

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 nathan@nbstrategy.co.uk.