Do Not Blink!
Many of us have read the Malcolm Gladwell best-seller “Blink” recently and loved it. The book describes several situations in business and life where we take important decisions intuitively and instinctively rather than by deep analysis. It also then goes onto argue that intuitive gut-based decisions are more effective than decisions based on deep analysis. Gladwell is also the author of other best-sellers like “The Tipping Point”, “Wisdom of Crowds”, “Undercover Economist”.
Now lets read leading professor and author Tom Davenport’s blog “The Next Big Thing” - simply a must-read : http://discussionleader.hbsp.com/davenport/. Davenport bets big on Analytics in decision-making and trashes Gladwell like a blogger has never done before. He believes that in a business environment, there is no alternative or substitute to solid analytics based decision-making and winning companies will be those that make data-driven and information-driven decisionsSo who is right? Gladwell or Davenport?
To understand this, lets use our favorite reference framework – The CIO in a Flat-World Company and see how he/she takes these decisions.
Example 1: At a large retailer, my team is studying the potential root causes of severe out-of-stocks at the 2000+ stores across the US. Is it wrong forecasts? Is it tardy replenishment by the vendors? Is it that the buyers are not cutting purchase orders well? Is it lack of visibility into inventory at the store?... Senior leaders who have spent over 15 years in the retail business have all provide answers on gut-feel and they are all contradictory to each other since they are from different departments. My team is hence carrying out a grounds-up study based on hard data. The data-driven analysis is revealing new insights and producing very believable action plans. This exercise is personally sponsored by the CIO
Example 2: At another retailer, one of our recent solutions – Mediacart – an intelligent shopping cart tagged with RFID readers that allows advertising and promotion at the point of purchase and tracks sales,etc. very effectively – is being pursued without a business case or without any due diligence just because a VP of Marketing loves the solution and based on years of experience knows intuitively that the solution will succeed. He is probably right. The CIO loves it too but is determined to track pilot results and use data to prove a business case before jumping into a full-blown rollout. We agree with the CIO.
So in a business environment, Intuitive decision-making or analytics-based decision making is subject to the nature of the problem, the availability of the right data and the business environment, culture…. But the truly successful CIOs, lets call them Flat-World CIOs, across all our experiences subscribe to the Davenport mode of thinking. “In God we trust, for the rest please provide data”…these are famous lines inscribed in several CIO offices. The CIO, lest we all forget, is the Chief Information Officer so has to necessarily drive an information and analytics based culture and reduce any intuitive gut-feel based decision making to the minimum. Investments in sophisticated analytics across industries is touching new highs. Data-warehousing, Data extraction, Business Intelligence and Reporting are the hottest and most pursued initiatives across industries.
So based on my gut-feel, I am going to say that Davenport wins hands-down in the new Flat-World. Sorry Mr Gladwell but our flat-world CIOs know that to stay competitive one must never blink.
Comments
I agree with Davenport too on this issue because according to me, gut-feeling comes after years of experience. As we grow, study, learn, work, interact, we strengthen our gut-feeling (knowingly or unknowingly). There can be situations where the data may tell one thing but one's gut feeling may tell another but that gut feeling too comes from past experience where a certain thing must have worked.
I haven't read "Blink" and I have a gut feeling that I won't read it in future because the area of topic doesn't interest me.
Posted by: Ricky | May 17, 2007 04:04 PM
This is a very interesting clash of two schools of business thought - analytics versus intuitive working. The quest of both however is business successes. It reminds me of the two main schools of Indian Hindu philosophy - dwaita and advaita. Now, which is correct?
We all know both the college dropouts Bill Gates and Steve Jobs are hugely successful persons. They have changed humanity's destiny by taking the PC and software technology to all spheres of human activity. Now the moot question is how much did they depend on intuition and how much on analytics?
Many breakthroughs are a combination of intuition and analytics.
Posted by: Sunil S Chiplunkar | May 21, 2007 11:11 AM
Let me add a different line of thought to this debate.
1. When decisions are critical and the implications huge, we have an inclination to back it up with rigorous analysis of data. This is so because if the decision is wrong we can share the blame with the inaccuracy of the data, improper analysis etc. Eventhough we still bear the brunt, there is a psychological comfort that the blame is not squarely on us! Also, it is impossible to convince others when we are taking a decision based on gut-feel becaue everyone's 'gut-feel' is primed differently so they may not see what we see.
2. In less critical decisions, we may prefer to hear to our gut-feel because the harmful effects of a bad decision will be less.
So, what do we see? We slowly prime our intuition in such a way that our psyche fails to produce the right 'feel' when confronted with a critical decision.
Posted by: Surya Saurabh | May 30, 2007 11:15 AM
Also another key point is the ability of analytics to predict the direction and magnitude of progress in ground breaking innovation areas. Analytics is based on data which are either historical or from processes which is known. Analytics will be good to have a control on current issues, for process improvements, for evaluating the capabilities and to understand potential hotspots which may be vaugely evident. Both Gates/jobs/wiki/page wouldnt have got any data to corroborate their intuitive finding. A huge database to provide analytic solutions to substantiate a possibility will be a mammoth task for it needs extrapolation of trends in technology, demograohy, phychodemographic, economic trends etc which would once again be based on intuitive assumptions made with linited understanding about how various systems interact. So I feel analytics is good to validate a hypothesis based on intituion rather than leading the way right from the front.
Posted by: pradeep bala | June 20, 2007 08:43 AM
I have read and thought a lot about both Davenport and Gladwell. While one can always look for differences, this is not a matter of choosing one or the other way.
Both are important and one would be half-foolish if we relied on one. What makes you sense danger when riding around Bangalore in your two wheeler, or what makes Steve Jobs decide to build and sell a cell phone (iPhone) very successfully when no one in the industry thought cell phones themselves can make money are “blink” decisions. Rational decisions would have used data for sure and there is a place for that and that is why good leaders in industry look at both. Bill Gates is a rational decision maker, Steve Jobs is a “blinker”.
Sandeep Dadlani’s comments are self serving rather than intellectually introspective particularly as it relates to CIOs. I understand why he feels the need for sychophantic praise of his customer. They are also my customers. But, the facts belie his observations about CIOs. CIOs are now known in the US, at least, as the Chief Irrelevant Officer. They are being relegated to operating the plumbing of the enterprise.
Lastly, on the question of education versus “blinkers” – don’t be so sanguine. I am in awe everyday of the people who we have hired who don’t have formal degrees but who have invented better world class products right in Bangalore and taken it to market for us in the spirit of good old yankee ingenuity. That yankee ingenuity is what is used to describe the “blink” thinking and innovation of Thomas Edison, George Westinghouse, and today’s Bill Gates, Larry Ellison (Oracle), Steve Jobs, Sergei and Larry of Google (who used a 150 year old algorithm to build their product!), and many more such as the YouTubers – none of whom went or completed college.
Think hard about why it is that there are no real world class products from India? Enterprise or consumer? Why is Singapore #3 in Software compared to India which was rated at #30+ a couple of years ago in software products? Don’t count designing products at an hourly rate for a CIO. That counts just as much as using a surrogate to conceive.
Posted by: Suresh Madhavan | July 11, 2007 04:39 AM