Decision-making: Data and Gut Feeling?

As it appeared in the Daily Nation on March 21st, 2017

Every day we make many decisions at the workplace and beyond. Some of the decisions are as simple as shifting the cabinet in the office to a different corner. Others are tough decisions that could have a major impact and that require a thoughtful approach. Decision-making is recognized as one of the key functions of management and very vital in leadership. The main questions are – What informs the choice we make between alternatives? and should we use data to make these decisions or should we go by our intuition or gut feeling?

I recall as a product research and development officer early in my career making a decision on just how sweet the flavoured milk needed to be. After subjecting product samples to a series of taste panelists, it was evident what percentage of sugar was just right for the target consumers. This was based on the feedback obtained. Other management decision that we make include hiring and firing, decisions on choice of business partners, pricing decisions, decisions on product discontinuation, choice between equity and debt financing among others. These decisions may be programed giving set alternatives or non programmed meaning that one has to make a choice.

In the front-line, staff make decisions too. Many have to decide how best to handle a customer. Such routine tasks need to be pre-programmed. Having fixed decision guidelines makes it easy for staff to make a clear-cut choice. Decision guidelines may also allow for flexibility depending on the specific situation.

However, some non-routine decisions are made without set guidelines and we are faced with uncertainties. No amount of training prepares us for perfect decision-making. Most times, we need to make decisions without enough time to get all the data needed or to synthesize all the information at hand. Sometimes we may be able to carry out a cost benefit analysis or we may simply make a decision based on its ethical bearing. Even when we use our gut feeling, we do not do so in a vacuum. Our instincts are determined by some prior experience and on our personal values.

Today, data to enable decision-making is readily available. When I look back, some courses in college were meant to prepare us to make better decisions using data and through team effort. I recall a very difficult spreadsheet modelling and decision analysis course and the more interesting Capstone experience in graduate school. In addition to using data, we had to bring team members to the decision table and the team was held collectively accountable. At the workplace, though we may involve others in decision making there is always the ultimate lead person who bears the responsibility for the decision made.

A former MD that I worked closely with always used to tell us that a wrong decision is better than no decision. This is because when we make wrong decisions we learn, when we make no decisions we miss the learning opportunity and delay progress. Decisions must be made! A mix of data and intuition comes to play when making most decisions. However, of uttermost importance is to have clarity of the alternatives available and to select the best alternative.

Lucy Kiruthu is a Management Consultant and Trainer connect via twitter @KiruthuLucy