Intuition and competitive intelligence

[Varsha Chitale]

In the real world, it is impossible to have perfect information on the competitive environment, although that is what everyone would ideally like to have.

In order to stay ahead of the game, senior managers are required to take fast decisions. They do the best they can based on whatever inputs they have available to them at the time. They augment the CI available to them with their own intuition and gut feel. In fact, it would not be entirely wrong to say that very often decision makers actually start with some intuitive hunches they have and then use CI inputs to ratify their hunch.

Nothing wrong with that, I feel. Intuition is a very powerful phenomenon that comes out of subconscious activity in our brain. Our brain, it is said, is the most powerful computer. It stashes away and analyses information and experiences that we don’t even recognise we have.

But how reliable is intuition? It works very well in some cases, but is not always on spot. The brain will only process whatever is inputted in it. If there aren’t enough relevant inputs, the analysis cannot be reliable. If one has had a lot of prior experience with similar decisions in the past, the gut feel is likely to be more reliable; so even a small amount of hard data to support the decision may be enough for the decision maker. On the other hand, if there is little prior experience, it is probably better to do thorough research before taking the leap.

So how does one hit the right balance between hard evidence and intuition in each case? I found some pointers in a recent article in the McKinsey Quarterly – “How to test your decision-making instincts” very pertinent.

Essentially the article lays down four tests to judge the reliability of your intuition in a situation.

• The familiarity test – whether you have been in a similar situation before
• The feedback test – whether you were able to see the result of your actions in the similar situation before
• The measured emotions test – whether your emotional reactions in the earlier situation were strong or weak
• The independence test – whether you have any other (personal) interest in the decision to be taken

What does this mean for CI practitioners? They are often not the decision makers, and are not privy to the “educated” intuition of the seasoned decision maker. They still need to provide actionable intelligence based on imperfect information. And this is the key challenge for them!