In business today, being data-driven can be a major factor in whether you and the company you work for succeed or fail. Leaders depend on data to guide any decision-making process.
But we haven’t always has access to the wealth of information we have today. Before the Age of Information, people relied more on their gut, their instincts. And there are leaders today who still swear by their gut to ultimately choose a plan of action.
Because decision-making is happening faster than ever in our rapidly pivoting world, it has become apparent to ask: is one style of decision-making now more effective than the other?
In this episode, we hear from a number of experts across different fields who weigh in on the debate:
Dr. Mary Lamia, a psychologist who has spent her career studying and encouraging emotional awareness. Dr. Lamia has joined us twice on the show before, back in episodes 9 and 12, to discuss emotions and motivational styles.
Jen McDonald, the Executive Director of Client Engagement at global marketing agency VMLY&R. As a 20 year marketing veteran, she’s worked across a variety of industries and has been at the forefront of the digital and data revolution.
Kyle Loudermilk, the President and CEO of GSE Systems, which provides professional and technical engineering, staffing services, and simulation software to clients in the power and process industries.
Steve Brown, our guest in episode 20 and Director of Einstein Analytics at Salesforce, who leads a team of talented Specialists committed to driving customer success.
And Coach Dana Cavalea, our guest in episode 24 and the former Director of Strength and Conditioning and Performance Enhancement with the New York Yankees Organization. Dana helped pioneer data-driven performance optimization in baseball, and now, Dana brings those same performance optimization techniques to business leaders, entrepreneurs, and pro athletes around the world.
Relying on Data VS Relying on Gut
With data becoming so important to many successful companies today, you might expect that the people driving those organizations put greater emphasis on data to drive decisions over gut. But that’s not always the case.
As the man who brought data into the Yankees’ performance optimization approach, Dana would be a likely candidate to propone data to drive decisions and actions – but instead, he points out a common fallacy:
“Now a lot of teams are creating sports science departments and now they're going to the extreme because the players are becoming numbers and stats and data,” Dana says. “When we focus too much on the numbers, we lose the gut; We lose our human instincts because we're over analyzing numbers, and we all know we can fudge data to say whatever we want if we want to.”
Dr. Lamia echoes Dana’s sentiments, sharing how she sees an increasing reliance on data in every area of life.
“What's so interesting is that being data-driven is not just in business these days. It's also in the field of psychology. If you think about it, a lot of insurance companies are only paying for treatments that have some kind of empirical foundation. You have to prove that they work.
“It's all data-driven and that data gets skewed. Data is skewed, often, when someone is trying to prove a point or trying to prove something works.”
Data provides a foundation, but despite most organizations’ efforts to be objective as possible, data bias occurs in most decision-making processes. So depending solely on data doesn’t mean that you’ll consistently make the right decision.
At the same time, prioritizing gut and instinct will pose a similar risk.
Steven Brown tell us, “Overly relying on gut is also overly relying on your own biases that you bring to the table.”
Intrinsically, neither style of decision-making seems to be better than the other – because you need a balance of both.
Striking a Balance: The Yin & Yang of Gut & Data
“It's a bit yin and yang,” Steve explains. “One can check the other. So, over reliance on gut: You're bringing your own biases, your own preconceived notions to the table. And over-reliance on data: You're missing out on, potentially, the human aspect or the patterns that only a human can tease out.”
Although Steve works in analytics at Salesforce, his decision-making is predominately gut-driven which he feels is likely due to to his past work-experience in start-ups. However, he understands it can’t drive every facet of every decision. “I don't know that gut is more effective as a blanket statement, but it works well for me. Then I find that I look for the data to back up that decision.”
Melding the two can also help us overcome the challenges of analysis paralysis.
Jen says, “I've seen lots of clients and I've seen even people that I've worked with on my team become paralyzed with all of these data points.
“Sometimes they’re pointing you in a really clear direction, but a lot of times it sort of narrowing your field and it's not really telling you exactly which way to go, and that's where you really have to take some level of intuition and a leap of faith on what to focus on to get to the next level.”
In large organizations like Salesforce, it’s important to justify decisions with data. But when you contrast that with smaller companies and start-ups, the dynamic seems quite the opposite.
So one could argue that how you balance your decision-making mode doesn’t just vary based on the situational context, but also depending on what career stage you may be in and what role you have.
“Building more life experience provides more perspectives,” Kyle says. “So I think that has allowed me to have better insight to be gained through analyzing data. So that to the extent that there's a gut, at least it's an informed gut decision based on some type of analytics and facts.”
With maturity and experience comes perspective, which you don’t always get when you’re younger.
When we are in different places in our life, when we have more perspective, when we fill a different role personally or professionally, we can’t just continue using the same decision-making methodology we have always used.
New challenges require developing new skills and strategies.
Data and Gut Might Be Virtually Inseparable?
What if I told you that your gut actually IS data?
“What I realized is that many people who trust their gut don't understand where that comes from. They don't know the language of their intuition and why that happens the way it does,” Dr. Lamia explains. “I mean, how can you trust something when you don't know the language it's speaking to you?”
Dr. Lamia explains that our brains have the ability to evaluate situations automatically, if there's a stimulus in our environment. Our emotional system takes into account our well being and our plans and our goals, evaluating events or situations and giving them meaning.
So, the brain scans the incoming sensory information and takes a look at how it matches past situations, and that's how it comes up with an emotional response. Then we cognitively decide whether or not we're going to trust it.
What this means is that our gut is really comprised of a databank of emotions and memories.
“It's a matter of people learning how to use their emotions and their cognitions together,” Dr. Lamia says, “and memory is just such an important part of that.”
With that understanding on the language of gut that Dr. Lamia provided, it offers perspective around the dynamic between gut and data and how we can strategically use a balance of both.
You can think of it as it as a qualitative assessment versus a quantitative assessment of a situation.
Having worked in market research and having an appreciation for the craft, I've always used qualitative and quantitative learning because quant is an effective way to validate something, but the qualitative is really important to provide the context of the why and give you that emotional aspect.
Based on all these great perspectives, it really seems that neither gut-driven or data-driven decision making is better all the time – you have to balance both.
As Dr. Lamia points out, we often dismiss our gut because it’s just a feeling, but your intuition isn’t random – it’s pulling from memories and experiences; data sets that you may not consciously realize you have. “We ignore the fact that gut decisions have more data than anything we could put on paper.” And I think having this understanding makes your gut decisions easier to contextualize and consider.
But it’s your head and your heart working together that will ultimately help you arrive at the most sound decision because you will have this blend of quantitative analysis (the actual numbers and data points provided around a problem) and qualitative analysis (the memories and experiences that allow you to add context to the greater Why).
We also need to remember that data in and of itself it isn't so valuable but the analysis of the data is where either make or break good decisions.
It’s important to not be one-dimensional in our decision-making even in light of the perception that data is king particularly with artificial intelligence (or augmented intelligence) and machine learning as they are becoming a very real part of our work and personal lives.
As a result, we have to be able to quickly adapt to rapid change; learning to take a multidimensional approach to problems and use all of the tools in our Swiss Army Knife.
Relying only on numbers can bog you down, and you’ll have a lot of numbers to use. So, learning how to interpret your gut reaction to data will help you make the kind of rapid decisions that will be required in the near future of work.
Connect with Steve Brown on LinkedIn
Connect with Kyle Loudermilk on LinkedIn
Connect with Dr. Lamia at MaryLamia.com