Data-Driven vs. Gut-Driven Decision-Making: Which is More Effective?
How data-driven you are can be a major factor in business determining success or failure. Leaders depend on data to guide any decision-making process.
But 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’s apparent to ask: is one style of decision-making now more effective than the other?
In covering this topic, I pulled from interviews I’ve conducted with guests on the Strategic Momentum Podcast. Here’s what I found out.
Relying too Much on Data is Counterproductive
While data is king at many successful companies today, you might expect that the people driving those organizations swear by data over gut.
But that’s not always the case. Some business leaders understand that you can forget the beating hearts behind the data.
Coach Dana Cavalea, a previous guest on my podcast and the former Director of Strength and Conditioning and Performance Enhancement with the New York Yankees Organization, 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. Mary Lamia, a psychologist, professor and accomplished author who has spent her career studying and encouraging emotional awareness, 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.”
So what they’re saying is that data provides a foundation, but despite most organizations’ efforts to be objective as possible, data bias occurs in most decision-making processes. Depending solely on data doesn’t mean that you’ll consistently make the right decision.
Relying too Much on Your Gut is Also Problematic
At the same time, prioritizing gut and instinct will pose a similar risk because humans are just as biased.
Steve Brown, Director of Einstein Analytics at Salesforce, and another former podcast guest, 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.
The Solution: Find the Balance of Gut & Data in Decision-Making
What this is all leading toward is that one way really isn’t 100% more effective than the other, and the best way to make decisions is by using the guidance of both.
“It's a bit yin and yang,” Steve Brown said. “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 data analytics, his decision-making is predominately gut-driven which he says is likely as a result of 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.”
The Right Gut-Data Balance Depends on Your Experiences
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.
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,” says Kyle Loudermilk, President and CEO of GSE Systems. “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. 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.
Curveball: Data and Gut Might Be Virtually Inseparable
Surprisingly obvious lesson that I also learned in these interviews is that gut and data are inherently linked.
Having a market research background, 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. And gut is really just qualitative data.
Dr. Lamia explains how the brain scans incoming sensory information and takes a look at how it matches past situations. 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 instincts a pull from an internal, qualitative 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.
How To Deal With Different Decision-Making Styles & Alleviate Conflict
While we understand there’s a balance needed between gut and data, it’s inevitable that you’ll end up working with someone who is heavy on one side or the other. When you have work with a gut-driven leader, you face the challenge of convincing them to go against her or his judgment.
Even when you have strong data that shows the leader's decision may not be the best one, you have trouble shifting her perspective.
I’ve seen this happen myself, and so did Steve Brown with a CEO he worked with: “There was no arguing with his gut, no matter what data you had. I found that incredibly frustrating to work for, because I felt even when I had the data to backup my gut that was at odds to his gut, there was no changing his mind.”
Bridging the Gap to Alleviate Inertia Takes Empathy and Communication
What can you do in this situation to help guide the organization towards the best decision? How do you influence someone to see your point of view when your decision-making styles conflict?
Steve says that, often, leaders become leaders over time because they have developed this good sense of gut – so you should try to support your position with compelling data.
Jen McDonald, the Executive Director of Client Engagement at global marketing agency VMLY&R, adds that gut-driven people appreciate stories and creativity, so your data will be more compelling if you create a narrative behind those numbers to bridge the gap between gut-based and data-based decision makers.
She also urges people to understand different perspectives: “Because sometimes what's behind their gut actually might have some analysis or experience or data behind it that might be a testable proposition.” (Confirming the earlier gut=data observation.)
By asking questions, Jen suggests, we can start to reveal the experiential data that gut-based decision makers are using and get more context on how they’re approaching a decision, even if they’re not entirely aware themselves.
No matter which decision-making approach you prefer, whether you’re gut-driven or data-driven, bridging the gap between you and your co-workers comes down to open and consistent communication.
Tips for Handling Conflicts Between Decision-Making Styles
Take a step back and gain perspective on why another person thinks the way they’re thinking. It can be especially frustrating if you lean heavily towards data, but you need to understand that some people are using their gut as data, especially successful leaders who have been around the block a few times.
Practice asking insightful questions that will help everyone understand the story behind someone’s gut-based decision.
Learn to tell the story behind data so that everyone can understand the numbers in context.
Foster better communication on both sides to share our perspectives, so you can leverage both gut and data to make the best possible decisions.
Be wary if this conflict comes up repeatedly; if you’re constantly in opposition with your team’s or superiors’ decisions, especially if they don’t align with your core values and you’ve made an effort to voice your opinion, then you might not be in the right place.