Strategic decision-making: hunch, science, tankers and speedboats

A fantastic discussion on BBCR4 Bottom Line last week (22 Feb) on the nature of decision-making in business. The superb Stephanie Flanders was joined in the studio by Dominic Taylor, chief executive of payment services company PayPoint; Rita Clifton, chairman of branding consultancy Interbrand; Sir Michael Rake, chairman of BT Group. They talked about the role of intuition in making important decisions. Is there still room in modern business for the good old-fashioned hunch, or do decisions these days always need to be backed up by solid analysis?

My notes from the discussion are provided below. The programme’s discussion is highly recommended for all advanced business students…

Clifton:
Some people feel more comfortable with handling data before making decisions
Shareholders expect a Board to rationalise decisions
Helps management justify their actions too! (protection from shareholders)
But, data can be massaged and manipulated to help make the case
If you really have a strong hunch, then you can find the data you need to support your case!
When a new CEO enters a business, that it the right time to note down hunches/ideas of what needs changing
The longer you stay in a business, the more the hunch/gut instinct of a CEO is diminished

Rake:
Danger of analysis paralysis - end up going around in circles.
Too many good ideas are killed through too much analysis
Businesses often wished they had made a decision earlier - missed opportunities
CEOs need courage to trust their judgement
Getting an idea to market:
(1) the idea (intuition)
(2) idea has to stack-up (analysis)
(3) timing (needs to be right for the market
The larger a business, the more difficult it is to innovate quickly
Decision-making needs to be agile enough to enable a business to close down an idea (i.e. accept it won’t work)

Taylor:
Every business decision has to have some analysis, even if limited
Scale of the decision influences amount of analysis
Small businesses are often little speed-boats (fast decision-making) compared with larger businesses (oil tankers)
How much analysis is needed to enable new viable ideas to reach a market
The challenge is to get intuitive concepts tested early on - e.g. use test sites, pilot locations