Exploring Intuition and its Role in Managerial Decision Making

Advanced Analytic Techniques


Exploring Intuition And Its Role In Managerial Decision Making
Erik Dane, Michael G. Pratt. University of Illinois at Urbana-Champaign
This paper, as the title states, tackles how intuition plays a role in the decision-making process for managers and how the ability to use intuition can impact managers at different levels. 
The authors make note of prior research within the introduction that indicates how intuition has played a critical role in differentiating successful top executives and board members from lower-level managers and dysfunctional boards (Dane & Pratt, 2007).   Dane and Pratt identify the different types of thinking regarding intuition and how some researchers suggest intuition is about outcomes, or that intuition is a process, while others combine the two without differentiation (Dane & Pratt, 2007).
The paper identifies over 15 different definitions for intuition and ultimately decide on the following definition to be used within the context of the paper: “affectively charged judgments that arise through rapid, nonconscious, and holistic associations” (Dane & Pratt, 2007 p.40).   The authors discuss factors that can influence intuition decision making such as types of learning, environmental uncertainty, practice, and domain knowledge.  The authors indicate that implicit learning potentially results in increased effectiveness of intuitive decision making for managers.
The implications, the authors suggest, note that intuitive thinking can be effective for managers within their industries.  Managers should foster environments that can enhance implicit learning due to the suggested research ties between implicit learning and enhanced intuition through developing nonconscious processes.  Some downfalls noted by the authors occur when managers move positions. Particularly when managers switch industries and their environment changes and expert knowledge decreases, potentially resulting in less effective intuitive decision making. The question arises of how different does context have to be in order to negate the relevance of cognitive schemas (Dane & Pratt, 2007)?  Therefore, organizations should be wary of new managers using intuition for decision making if they do not have experience in the industry/occupation (Dane & Pratt, 2007).
Critique:
I feel the paper was interesting in exploring the different types of research around intuition, to include the abundance of differing definitions.  However, the paper was just a literature review and seemingly not offering much in terms of their own research.  I think it could have benefited greatly from some type of empirical study of mid and potentially top-level managers utilizing intuition-based decision making.
Dane, E., Pratt, M. (2007). Exploring Intuition And Its Role in Managerial Decision Making. Academy of Management Review. Vol. 32, No. 1; 33-54. Retrieved from http://homepages.se.edu/cvonbergen/files/2012/12/EXPLORING-INTUITION-AND-ITS-ROLE-IN-MANAGERIAL-DECISION-MAKING1.pdf

I’ll speak at « International Competitive/Market Intelligence Conference 2016: 19-22 April »

International Competitive/Market Intelligence Conference 2016:

Shaping the Future Through Competitive and Market Intelligence

It’s my pleasure to invite you to Europe’s leading competitive and
market intelligence conference!
The motto of this year’s conference is: “Shaping the future
through market and compe­titive intel­ligence”. We were plea­santly
surprised by a huge influx of high-quality sub­missions for our call
for spea­kers. Insight­ful, inno­vative, state-of-the-art. It was diffi­cult
to select only a few. See our agenda for an over­view and a compre­hensive description of all ses­sions! Are you ready to
check out the latest vendor of­ferings? Expect inno­vative software
and services provi­ding superior value for your organi­sation.

What’s in it for you?

“Connect” stands for various possi­bili­ties to
connect with your peers and share ex­perien­ces. Breaks, social events, our wall of fame, a job
board, and the networking sessions are all designed to enhance the networ­king oppor­tuni­ties.
Last year we intro­duced the “Uncon­fe­rence” ses­sion – a simple yet compel­ling format:
Par­tici­pants decide on special topics they want
to discuss in small for informal groups.

“Learn” is all about our sessions. Knowledge
sharing
is the name of the game. Corporate practi­tioners will share their experi­ence in
state-of-the-art case studies. Pas­sionate
CI/MI experts will challenge your mind­sets
with ins­piring impulse speeches and ex­perienced
CI prac­titio­ners will pro­vide in-depth
under­standing of key CI methods and tech­niques.
Finally our scientific track offers a unique
per­spec­tive in academic research.

“Grow” your knowledge, grow your network and
finally develop your career! As Amir Fleishmann,
one of last year’s par­tici­pants, stated: “ICI’s
International Compe­ti­tive Intel­ligence Confe­rence
is truly the center of com­peti­tive and market
intel­ligence in Europe”.

Rainer Michaeli

Director
Institute for Competitive Intelligence

Only Half of Companies Actually Use the Competitive Intelligence They Collect

Only Half of Companies Actually Use the Competitive Intelligence They Collect

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For more than 30 years, most large corporations worldwide have adopted competitive intelligence (CI) as a way to expedite good decisions. And yet for almost every company that uses CI in their decision-making, there’s another that disregards CI’s mix of industry analysis, rival positions, and market insight to their detriment.

We recently conducted a survey of CI managers and analysts who’ve been through our training program to see how much their findings influenced major company decisions, and why. We received 236 responses from 21 industries in U.S. and European corporations, from CI-trained analysts in marketing, business development, strategy, R&D, finance, and other fields. They had an average of 6.3 years of experiencing in using CI frameworks and tools, and 62% were from companies with over $1 billion in annual sales revenues.

We found that 55% of our respondents said that their input on major management decisions made enough difference to improve the decision. But 45% said their CI analysis did not.

Why did some analysts have their input incorporated, while others didn’t? Our survey suggested several key reasons.

First, many executives decide on a course of action and then use CI to ratify their choice. When asked, “What percent of your reports do you feel are just ‘confirmatory’ for an executive who already made a decision?” a full one-third of our respondents claimed “high” or “very high.” In these cases, the analysis may just be an obligation to be checked off a list.

We also ran several simple OLS regression models and tested more than two dozen variables to see if they affected which companies actually allowed their CI analyses to influence their decisions. At the end, we found four variables turned out to be highly significant in explaining the difference in impact.

1. The analyst was assigned a “sign-off” authority over major decisions. The single most effective way to ensure intelligence is used in any given decision is to give the analyst a say in moving it forward. In practical terms this means the analyst – not just the PowerPoint deck – becomes part of discussions leading to the decision. That is the one area where “intelligent organizations” differ most from others.

2. Management was open to perspectives that were different from the internal consensus. Management that was more open to different perspective was also more likely to ask the analyst for the “big picture” rather than just the data.

3. The analyst’s report called for proactive action more than reaction. Most companies are reactive by nature, and a lot of intelligence is about reacting to competitors’ moves. However, the decisions that matter more may well be those that are proactive. When the analyst provided proactive recommendations, the analysis had more of an impact.

4. The analyst was involved in product launches. We don’t know why analysts in this area felt particularly impactful, but we do know that competitive intelligence is highly popular in tactical areas, and that product launches are an area where companies are most worried about competitors’ responses; successful product launches depend on correctly gauging the response of other players in the market. These include, naturally, customers and competitors, but also the less obvious responses by distribution channels, regulatory authorities, and influencing agents. Lack of insightful anticipation of these reactions — which is where competition analysts have the greatest expertise — leads to many more failures than there should be. Perhaps the analysts involved with product launches are thus given more of a mandate than analysts involved in other kinds of activities.

None of these steps involves spending millions on the intelligence or hiring legions of analysts. And overall, these four variables explained a respectable 40% of the variability in having an impact on decisions. In terms of magnitude of the effect, the simple “sign off” requirement from management was clearly the leading contributor to explaining variability of impact.

For these decisions – the ones that were improved by competitive intelligence — CI analysts reported many applications of their insights. While product launches were over-represented, our respondents told us about a wide array of applications for their analyses. They were evenly distributed between pursuing opportunities (46%) and reducing risks (44%), and ran the gamut from product pricing and features, capex investments, manufacturing processes, market expansion, joint ventures, M&A, and more.

For example, in the pharmaceutical industry, respondents said that use of competitive intelligence had either saved or generated millions through discontinuing ineffective drug development efforts, walking away from bad deals and/or licensing opportunities, or accelerating new drug development based on what competitors were doing. For example, as one told us, “We accelerated our orphan disease program, based on accurate prediction of rival expected entry.”

A common theme across industries was the smart reallocation of resources. One analyst told us that their company had stopped development on a project that was consuming lots of local resources after the analysis indicated it wouldn’t be effective. They then re-applied those resources to an area with true growth potential — that area is now starting to take off. In a different company, an analysis led to the cancellation of an extremely high-risk R&D program.

This is not to discount the importance of ratifying a current course of action. In one of our favorite answers to our open-response question, an analyst described how CI had “identified only a single competitor, while determining others did not have the business case to continue a pursuit.” But it’s clear to us from this and other surveys we’ve done that the companies that get the most out of CI use it for a wide array of purposes – and actually let it shape their decisions.

Operational Decision Elaboration Method as a Foresight Method: a Corporate Approach

The corporate intelligence field does not have the same characteristics, or the same stakes, than the political or the military intelligence one. But rightly, its characteristics allow to us tactical analysis to forecast what would happen. Competitors, companies, have known technologies, capacities, finances, resources and pre-defined markets. In these conditions, they have a limited number of “options”. “Operational decision elaboration method” uses tactical intelligence to determine what an “adversary” is able to do when confronted to another “party”: what are its equipments, troops, intentions, organizational and operational behaviors. Thus, a military strategist has constraints, imperatives, objectives, limited means and variables that will create an uncertainty for the fulfillment of the mission. This is where intelligence plays a role. The article would stress how this method allow to forecast companies decisions, as their variables and options are less diversified than in the military field. This method would not allow to forecast precisely every decision but limit the number of factors to monitor: the consequence is a better ability to orientate corporate intelligence means, themselves more limited than in the military field. In this case, analysis takes an even more important place.

Operational Decision Elaboration Method as a Foresight Method: a Corporate Approach

Le Rafale dans les médias indiens

Dassault Aviation est entré en discussion exclusive avec le ministère de la Défense indien pour conclure la vente de Rafales en janvier 2012. Depuis, les négociations se poursuivent pas à pas vers la conclusion d’un contrat définitif, désormais annoncé par les médias pour mars 2015 – sans tenir compte d’un éventuel report de la décision, cette date ayant déjà été plusieurs fois décalée [1] . Les médias indiens suivent de près cette affaire car il s’agit d’un contrat clé, non seulement pour l’avionneur français, mais également pour la Défense indienne dans son ensemble.

Le Rafale dans les médias indiens

India’s Industrial Sector: Faltering Growth?

Disruptive Thinkers: The Disruptive Poets Society

“How The Dead Poets Society Advocated Disruptive Thinkers, Why DoD Shouldn’t Encourage More Disruptive Thinkers, and 10 Principles for Those That do Think Disruptively.”