Fact-Based vs. Intuition-Based Decision Making: How to Strike the Right Balance

Fact-Based vs. Intuition-Based Decision Making: How to Strike the Right Balance
We know from leadership simulation assessment data that effective companies make effective decisions — especially when the stakes are high. While fact-based vs. intuition-based decision making each has its own merits and drawbacks, the ability to understand and leverage both approaches effectively can be the key to making good decisions.  Let’s look at the advantages and disadvantages of each approach.

Fact-Based Decision Making Defined
In our decision-making training program, we define fact-based decision making as a process that relies on facts, data analysis, and a comparison of pros and cons to make decisions.  Companies and leaders with this decision-making approach often formally collect and record data and rationally debate the various pros and cons.

Top Advantages of Fact-Based Decision Making
With the right decision-making processes and sources of information, data-driven decision making has three clear advantages:

• Objectivity
  When grounded in data, decisions are less likely to be affected by personal biases, workplace politics, or emotions.
• Transparency
  When shared appropriately, data can make the decision, the decision-making process, and the rationale behind the decision more apparent.
• Predictability
  When based on relevant and accurate historical trends, data-driven decisions are often more predictable.

Top Disadvantages of Fact-Based Decision Making
When used incorrectly, data-driven decision making has three clear disadvantages:

• Time-Consuming
  When time is of the essence, the amount of data required to make a fact-based decision has the potential to slow down important decisions.
• Inflexibility
  When data is over relied upon, rigidity can encourage decision-makers to overlook better, more innovative, or unconventional solutions.
• Data Limitations
  When the quality of the decision is heavily dependent on the quality of data, inaccurate, incomplete, or biased data can lead to flawed conclusions.

Intuition-Based Decision Making Defined
In our strategic decision-making simulation, we define intuition-based decision making as decisions that are driven by gut feelings, instincts, heuristics, and firsthand experiences. This approach is often seen in situations where data is scarce, or time is of the essence. A recent Ohio State University study found that 50.3% respondents agreed with the statement “I trust my gut to tell me what’s true and what’s not.”  Firefighters, nurses, and pilots are known for using their experience and intuition to manage navigate time pressure and uncertainty.

Top Advantages of Intuition-Based Decision Making
With the right level of discussion and socialization, intuition-driven decision making has three clear advantages:

• Speed
  When time is a critical factor. intuitive decisions can be made without the need to gather more data.
• Creativity
  When outside-the-box solutions are required, intuition can foster creative approaches that purely data-driven methods might overlook.
• Experience-Based Wisdom
  When decision makers have enough accumulated knowledge and experience, they can often make decisions without having to sort through vast amounts of unnecessary data.

Top Disadvantages of Intuition-Based Decision Making
When used inappropriately, intuition-driven decision making has three clear disadvantages:

• Subjectivity and Bias
  When decision-makers are prone to personal biases and emotions, subjectivity can lead to inconsistent and unpredictable outcomes.
• Lack of Transparency
  When the rationale behind intuitive decisions is not socialized or justified, key stakeholders may mistrust or not fully commit to the outcomes.

How to Optimize Decision Making
To optimize decision-making, leaders should strive to create a decision-making culture that balances fact- and intuition-based approaches depending upon the types of decisions to be made.

1. Use a Situational Decision-Making Model
   For each decision, start by agreeing on a framework that will leverage the strengths of each method while mitigating their respective weaknesses. Rely on data when it is required to improve the credibility and reliability of choices.  And when data is unavailable or insufficient, debate and socialize people’s unconscious intelligence to navigate uncertain, complex, and urgent situations.
2. Make the Decision Process Iterative
   When possible, create a postmortem process where decisions are reviewed and refined based on both data and intuition to encourages reflection, learn, and adaptation.
3. Encourage Collaborative Decision-Making
   Foster a culture of constructive debate where data and intuition openly inform each other. Try to combine analytical skills with intuitive expertise to generate more holistic and effective decisions.

The Bottom Line
We know from organizational culture assessment data that intuition and rationality are not necessarily diametrically opposed to each other.  For most leaders, effective decision-making requires a situational approach to leadership that integrates both fact-based and intuition-based decision-making methods depending on the complexity of the decision and relevant experience of the decision makers. The key is to agree upon the approach that makes the most sense with your key stakeholders before you try to make the decision.

To learn more about fact-based vs. intuition-based decision making, download Top 5 Decision-Making Mistakes to Avoid at All Costs