If the topic is discussed more in terms of emotions and their impact on decision making, how do we apply these tests to an individual who is more rational by nature? Are there alternate mechanisms? Also, are there suggested control mechanisms to gauge performance improvement in decision making?

Very interesting article, as often when psychology is being examined in the decision-making process. I would acknowledge that time is often lacking, especially in the toughest decisions. Nevertheless, we should value the benefit of a non-gut-approved decision that turns out to be the good one, because at the end of the day it will improve our instincts. For instance if the above mentioned decision turns up to a go for an investment in Russia which eventually ended up with a very positive outcome, it would give the CEO a positive emotional tag, balancing the former negative experience he had had and maybe restoring his objectivity on this particular topic (investing-or-not in Russia). My suggestion would be therefore to apply this decision-making protocol when we have time, even (or maybe only because of time) regarding minor issues, because we will benefit from the improvement of our guts when it will come to the tough situation. To follow-up, the question would be how to choose the minor situations to be scrutinized by this gut-clearance protocol?

When artists see a Picasso painting for the first time, it is their gut feeling that allows them to differentiate an authentic from a fake. When an army general under fire immediately decides on an action plan, it is his gut that guides him. Business leaders are no different. When presented with 2 opportunities that are equally attractive, where the numbers check out and the due diligence process turns out clean, a leader must use his gut in order to decide which would be a better opportunity. It’s his qualitative judgement that draws on his past experiences that allows him to make the better choice or investment decision. Eliminating the gut, would turn decision making into a computational or mechanical process that any intelligent machine could carry out. Although an algorithm could give decision makers an indication of the best quantative decision, I strongly believe that its a leader’s qualitative input that really scores success.

McKinsey Quarterly editors invited Daniel Kahneman, Nobel laureate and professor emeritus of psychology and public affairs at Princeton University’s Woodrow Wilson School, to offer his thoughts on this essay. Here is his response.

The difference is significant. I see little reason to believe that individuals can follow advice to second-guess themselves—even if the advice is compelling and well documented. It is much easier to second-guess someone else. My skepticism about the efficacy of advice is also the reason for my enthusiasm about Gary’s idea of the premortem. The premortem is a low-cost procedure that does not require self-doubt or self-control from anyone and could plausibly be adopted by an organization and become a routine. To conclude, I would certainly include the four tests listed by Campbell and Whitehead as part of what I call an effort at quality control over decisions, but I believe this effort must involve other people as well as the actual decision maker.

The solution to this issue is ancient but still true, simplistic but powerful and that is, “In the multitude of counsellors, there is safety.”

Interesting article. Many times analytical decisions cannot be made due to time constraints or not enough information about the current situation to compare with the past or situation is unique. Then only way to arrive at the decision is by using gut instinct example a war situation. A better way is to break the complex scenario into pieces and solve like a puzzle.

As a chess player, I can see where your gut feelings would kick in when you’re in a time crunch. The more experience you have, the better those intuitive moves will come to you.

As a problem solver, I will only use my gut instincts if I’m pressed for time. Segmenting, if-then scenarios, due diligence—these are all tools that reduce the uncertainties in our decision. Without time, rationale, and the self-awareness noted in the article, I’d be simply emotionally driven by my past experiences.

As a person, I’m aware that my past emotional experiences are unique and therefore very one-dimensional in forming my gut instinct. Like a data point in a pool of samples, or the dart-throwing monkey, whether I’m on the mark would be entirely due to probability. Yet why do we sometimes prefer or reject our gut instincts? Sometimes people want ‘personal’ answers because they think their gut feeling’s astray from the trend, while thinking yours may be more valid. If that’s the case, why not just analyze the underlying cause to these emotions?

As a marketer, I’d probably be laddering away at myself to figure out what are the core values triggering my intuitive response.

Then as a student of psychology, I’d muse at the responses delivered from marketing, and see that what was intuitive was really just a self-serving decision that matched my values as a person.

After all is said and done, with varying scopes used to look at the issue of intuition, we can conclude quite succinctly. We don’t need a four-question checklist.

We just need to convince ourselves and others that “it’s not just how I feel, but also what the environment is telling us.”

Since we cannot get away from our gut insticts, wouldn’t it behoove us to strengthen these instincts, so that they do not fail us when we need them? Performing analysis on our instincts is just the opposite of what it is intended to do. There are a lot of factors that come into play in daily life as well as business but the time factor is often the most neglected. There might simply be no time to perform any analysis on our gut.

The “independence test” is based on the premise that we can evaluate whether we are likely to be influenced by incentive, conflicts of interest, and other situational variables. Yet a great deal of research (Bazerman, Loewenstein, Tenbrunsel, and many others) in the last decade suggests that while people THINK they can do that, they cannot. Such judgments tend to be self-serving in ways that people are not aware of. For example, two-thirds of doctors believe that their colleagues are influenced by pharma reps; but only 10% believe that they themselves have been.) Therefore, I believe that you are giving dubious (or at the least very risky) advice here.

I would like to support this on the basis of a phenomenon: human behavior determining an inflation rate.

In India (or anywhere else), one of the major reasons for increase in price level is behavior of the consumer. People have a gut feeling that price of a particular commodity (say onions) will rise in the coming days, and hence drive them to buy more and store. This ultimately results in price rise.

England: Soon after the World War II, there was shortage of sugar. Considering that Christmas was around the corner, prices should have increased. However, people consumed less (below the rationed amount), not allowing the price to go up!

I think that was collective rational thinking!

I always thought of gut decisions flying in the face of or being made without all of the information, analysis and time described in this model. Obviously your gut has more time and information than mine.

Is this the test?... I am off to watch a rerun of England vs USA in the World Cup... although my gut says I shouldn’t.

Dovetailing on the previous comment “...As you state, everyone has a gut instinct, but what we have found is that this can go a step further, in that those who prefer to think more analytically or structurally (left brain) may more naturally engage in the kind of analysis recommended here than those who may have a stronger sense of gut intuition (right brain)...” We do similar assessments prior to a long-view scenario session and WHEN (in the process) decisions and input are illicited is as important as HOW. Convergent thinkers will engage their gut sooner in the ‘big picture’ process versus divergent thinkers who’ll engage their gut much later in the discussion/process.

Interesting insight on the nature of decisions and how analysis can inform visceral reactions or leanings. Our company developed a left/right brain personality assessment and our research has shown that proclivities for a certain style or mode of thought may be more prone to relying on gut instinct. As you state, everyone has a gut instinct, but what we have found is that this can go a step further, in that those who prefer to think more analytically or structurally (left brain) may more naturally engage in the kind of analysis recommended here than those who may have a stronger sense of gut intuition (right brain). That’s not to say that either is right, and I think your overall point in terms of leadership is dead-on—the more data and information we can provide to augment our instincts, the better our decision should be (and the more balanced, informed, and effective our leadership).

Making decisions, not mere calculations, is all about dealing with risk and uncertainty, so “premortem” is just a fancy new word for risk analysis.

My own approach is to gather as much information and consultations as possible, given the time and cost, and then use “carefully-honed” instincts to judge the risk probabilities, my instincts and those of other respected colleagues, precisely to avoid group-think.

Think of a driver with the car-full of family coming up behind a big truck on a two-lane twisting country road. Should he overtake the big truck? Can he do it safely, before the next curve? It depends on the distances, the relative speeds, the rain, the pavement, the car, etcetera. An experienced driver will estimate all these variables reasonably, and imprudent driver may not live to tell about it.

The article suggests brilliant tests for identifying possible biases, and it infers that the most effective way of debiasing is asking questions. Questions stimulate thinking, questions make people uncomfortable with their opinions, questions are indicators of good decision making process. Asking the right questions is an art.

In addition to that my experience shows that applying six thinking hats of De Bono may provide very useful insights into the subject.

One other point worth considering would be the impact that the decision would have. This also helps in making choices when multiple possible solutions are available and executives need to decide on the solution they are going to go with.

It is interesting that if the decision maker applies these 4 filters, the decision-making is no longer instinctive, but fairly analytical.

I believe that once we start engaging in deliberate information processing, the decision is no longer based on our gut feelings. As for the test, even though it considers the role of past emotions, it doesn’t acknowledge the important role that emotions themselves (at the time of the decision) have on the type of information we attend to, how certain we feel about our decision, perceived level of effort, etcetera. As mentioned in other comments, this article could also consider the time factor.

I think even if it’s the CEO who makes the gut decision, there is always a “go-to” person who he will approach for reassurance, this I believe is human tendency, as someone pointed out, if “your” “Go-to” person is a sycophant then god help you. Thus, ratification of any decision is important as a process, even though a leader may have the power to not follow the ratified response and do as he likes at the end.

I think Malcolm Gladwell covered this pretty effectively in his book ‘Blink’.

The most salient point is actually the need to rack-up your “10,000 hours” i.e., become expert in a particular field before you can trust your gut. Once this threshold has been reached, no doubt these are 4 useful tests.

Without it, however, and as several readers have already pointed out, one falls back on traditional ‘analysis’ which brings with it the associated risk of ‘paralysis’.

As always, there’s no real substitute for putting the hours in.

Basically, such structured tests would allow leaders to fine tune their decision-making process that is highly dependent on their gut instincts. Nonetheless, I second the authors that governance should prevail. Investing in Russia, for instance, should be examined and scrutinized through a governed process of market analysis, feasibility studies, etcetera. This is not an ad-hoc, on-the-fly, or on-the-spot decision.

I tend to believe that the time element should be a major factor to decide whether a leader has to trust his guts or engage in an objectively analyzed decision making! If leaders would think for a second about the consequences of their decisions on their organizations, people and communities, then, they would absolutely fortify their guts-based decision making!

This article is interesting for what it does not discuss. The main focus of the science discussed relates primarily to the way an individual’s brain operates and the deficiencies that manifest themselves in the individual’s decision making process. From an organisational perspective, most important decision making involves more than one person. However, there is little discussion of the way group dynamics operate to vitiate decisions. Instead, the article argues that by introducing safeguards (i.e. involving others) decisions will be better. The Abilene Paradox is just one of many instructive examples of how involving others in a decision does not guarantee a good decision.

Most of this article rings true with my experience...introspectively. I’d have to agree I’ve observed these things in real time in others—much easier to identify in this case. Interestingly enough, though, how would you add more layers of complexity into this model with variables such as deontology and/or consequentialism?

Rather like the King’s fool in Shakespeare’s plays...

A brilliant article and a very interesting topic. (Really I didn’t know I am not the only one to think about this.)

I think the key idea was given in the very beginning: “...we can’t get away from the influence of our gut instincts...” I think it is totally right and thus the four tests you offered are interesting, yet will make no difference because even if we understand that, we fail them and therefore will do our best to “strengthen” the decision making as you mentioned in your article, through additional experience and data, or more dialogue and challenge that you offered, it will hardly work as they will be subconsciously influenced by our gut instincts as you correctly noticed in the beginning of your article. However governance still may be one of the ways out.

Thank you once again for the interesting topic and your ideas, I will think over this subject again and will discuss it with my colleagues.

Part of the challenge is that strong “drives” or “passions” are often symptoms of brain deficits. Inherited dopamine receptor deficits appear to be especially causal of strong drives and behaviors that are harmful, from bad investing and leadership mistakes to addictions.

Common is that all these behaviors “feel” very good and “right.” At the moment. Aging and stress also dimish both control and accuracy of feeling-driven behaviors.

We study these effects as relevant to financial-services sales and marketing and share what we learn on our blogs: Here is a recent post: http://bizbrain.tumblr.com/post/633119316/harvard-dopamine-deficits-play-important-role-in

There are some tools which can help to cope with decision problems and reduce the risk of the influence of positive and negative emotions. I use the Analytical Hierarchy Process (AHP) method and I’m very enthusiastic about it.

Gut feeling is OK, but in the sales and marketing world it must be supported through logical and analytical reasoning to convince others for your decision. Hence, as mentioned in the dialogue, a challenge to the idea must be there to validate your gut feeling.

A good and transparent decision making criteria eliminates these concerns.

Very good analysis, although I am not too sure how many CEO’s or decision makers will be so self aware, so as to do a mental check on all the four aspects—it does need a lot of practice and self containment. I also feel that how much of biases should be kept in check and how much of them should be allowed to play in a given situation and knowing the difference between these two would really help a CEO further decide well.

As for the last test suggested here, “the independent test,” well, if the decision maker is already influenced by personal interests, then he is surely not taking the decision based on his “gut.” Is he?

A good article with wrong subtitle: “Executives should trust their gut instincts—but only when four tests are met.”

After the tests mentioned in the article, one is left not with gut instincts but with scientifically analysed experience. All decisions are made on the basis of experiences. It is an unprecedented event that needs gut instincts. Those whose gut instincts lead to success become famous and others are doomed to the abyss of history.

I think that this is not absolutely about trusting gut instincts, but is about trusting yourself. I do think that this is different. When you want to change a situation even in the minds of other people you should firstly change the situation in your own mind and believe it. If I remember well, this effect is proved in psychological sciences.

Most decisions are based on personal judgement, or the gut-feeling approach. Even in situations where the CEO has been provided a lot of feed-back and anaylitical inputs, the ultimate decion is based on a gut feeling. Such situations are seldom discussed at length or put to vote in a board meeting. Depending on the power of the CEO, most boards are reduced to a situation of minimal participation or a rubber-stamping role. If this were not true, why would there be so many scams or decisions that are being debated now in the after-math of the global financial crisis? In this scenario, the validity of the four tests mentioned in the article becomes debatable. The gut-feeling approach (or tests) should be viewed more in the context of the power the CEO enjoys in the board, irrespective of the composition of the board and the presence of independent professionals in this decision-making body.

The article first moves us one step closer to our understanding of gut reactions and then brings us back to its mysteriousness in the concluding remarks.

I primarily see two problems with its approach. One, nothing de novo or truly inventive will ever be accomplished if leaders were to get into so much analysis. Analysis is fine when you are building on something that already exists. But when it comes to doing something new, leaders often have to rely on their gut-feel alone. I think the only criterion in such situations should be: How much of a setback my company or I can take if the “new” went wrong?

The second aspect that troubles me about this article is that it tries to completely replace the role of “intuition” with “intellect” or intellect-driven analysis.

I think gut-feel is yet to be fully understood and currently falls into the category of millions of other secrets that humans are trying hard to unravel.

In it’s heyday, Motorola institutionalised the “minority report”—someone or a team specifically charged with arguing against the proposal/decision under consideration. The minority report often raised areas that, when addressed, made the proposal even stronger.

If the gut feeling can be assessed in the above fashion, weighted against similiar situations, etcetera, perhaps that decision is no longer based on “gut” feeling.

The feedback test: This is the key factor. The Yes men around the decision makers are often the reason for the future or imminent failures for otherwise failsafe guts.

These tests may be highly accurate but they read awfully complex and ‘cerebral’, the first two in particular. The example given—turning one’s car sharply when we see a car start to pull out of a side turn unexpectedly, is not of ‘gut’,but of experience and knowledge deeply embedded inside us. The thinking process is so fast and automated, that we think its guts. The authors, I fear, mixed up between instinct, logic, and intuition.

Major decisions should go thru these three states: an instinctive response (based on past data and inclination); then testing the idea against new facts and logic; and finally, for ideas that didnt get clubbed dead by Stage II, using intuition, which to a large degree will be structured around the mental risk-reward map the person has in his mind. I seriously doubt that Jack Welch decided on his Internet strategy based on views he got from a solitary 25-years younger person. Any attempt to logically define and provide a test for good and not so good intuition is bound to get stuck, since logic belongs to the second stage. Remember how the cook-book with very detailed measures of all ingradients, ends with a line “add salt to taste”.

The authors go beyond the usually limited comments on decision-making to correctly explain when gut works. Gut is more appropriate for people-type decisions, such as hiring interviews, and less for strategic and marketing decisions.

In a constantly changing business environment, the #1 test (familiarity and similar situations) is not likely to occur as the situation has changed, even if the decision-maker is unaware of the change.

This is what due diligence is all about—knowing the reality of today and determining what’s changed—with customers, markets, pricing, features, applications, etcetera. It’s very unusual to not have changes that will offer opportunities for the company—but they have to do competitive intelligence to find them.

As I discuss in my book, Competitive Intelligence Advantage, decisions require input which is objective, current, accurate, relevant, and sufficient. That’s how companies stay ahead of competitors and thwart new entrants.

The article is a good analysis of rational and emotional processes that influence our gut decisions. I like the three checks. They can help avoid some of the mistakes we make when we erroneously depend on our guts.

However, what I am missing in the discussion is the role that insight plays in decision-making. Some elements of insight are probably included in our emotional reactions. However, what cannot be explained by our emotional responses only is what I refer to as the meta level synthesis that seems to be the result of experience, repetition and a deeper insight that lets people make very high quality decisions from a place that one may call the gut. (Or could it be the heart?). How does a man like Warren Buffett, for example, make so many “good decisions” in an ever-changing economic environment? He is famous for his morsels of insight, which to me reflect an understanding of economic dynamics at a very high (meta) level. The combination of his having thought through thousands of transactions, and having experienced the outcome of very many such transactions appears to have lead to insights that enable him to make very high quality decisions.

If we add the element of “common good” into such decision-making then we may actually have arrived at a decision made on the basis of wisdom.

You make decisions based upon a sensory strategy which plays out inside your neurology. Your strategy has a structure—it is just more about internal science than external analysis and it is little or nothing to do with familiarity in the quantitative sense.

Your four criteria confirm what my colleague Ray Overdorff said many years ago: Given enough information, your intuitive side or intuition (decision making) will be validated.