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Gut-feeling Is Great, But Not Enough

July 29, 2022 by

Gut-feeling is a tremendous quality of good leaders. It enables them to make decisions when complete information is unavailable (which is nearly always). But too much of a good thing can degenerate into its contradiction. That is why leaders should become ‘knowledgeable skeptics’.

Leaders should act like scientists. That is suggested by Stefan Thomke, a Professor at Harvard Business School, and Gary W. Loveman, a former chairman and CEO of Caesars Entertainment, in a joint article for Harvard Business Review, May-June 2022. They state that managers too often base their decisions “on assumptions that have never been critically examined, much less challenged”. They “live in a feedback loop of positive reinforcement” and “overrely on intuition and personal experience in decision-making – even when the evidence contradicts them”. Instead, they should “develop a culture of curiosity, where poking holes in the industry’s wisdom became not only acceptable but celebrated”.

They propose five elements of the scientific method:

  1. Be a knowledgeable skeptic. Always question assumptions. Seek independent confirmation of facts, place more value on expertise than on authority, examine competing hypotheses.
  2. Investigate anomolies, things that are unexpected, seem strange, don’t cohere with expected outcomes.
  3. Articulate testable hypotheses that can be quantifiably confirmed or disproved. “An experiment that produces evidence contradicting a hypothesis allows us to recognize errors in our thinking and judgment, modify the hypothesis, and then retest it.” This iterative process lead to stronger hypotheses.
  4. Produce hard evidence.
  5. Probe cause and effect. Don’t confuse correlation with causation. Aks what-if questions and think about counterfactuals (Would B have occurred if not for A?).

Leaders shouldn’t forsake their gut-feeling but their decisions will be better if assumptions are challenged and tested. It won’t make decision-making processes easier, it might lead to irritation for leaders who are used to get their way, but it will lead to better results for the organization.