Over the past few years there has been a growing interest from our clients for programmes which cover the tools and techniques to improve decision-making skills, particularly across Finance functions.
This interesting article from McKinsey Quarterly, from 2010, explores the power and perils of intuition in decision making. In the form of an interview two scholars representing opposing schools of thought share opinions around appropriate channelling of intuition.
Some of the key messages within the article which we found particularly relevant are:
- Intuition can be useful in high validity situations. These are decision situations where there is a certain structure and a reasonable level of predictability about the outcome. Surgery and fire-fighting might be two examples of high validity situations, however most corporate decisions don’t tend to fall in this category.
- Decision makers need to have some form of impartial feedback on their judgements to help strengthen them over time.
- A pre-mortem can help identify upfront the risks facing a project and ways that it can go wrong. This is a form of risk brainstorming with a much lower risk for project critics than classical post-mortem. Applying this approach means a project can be optimised in a low cost but high pay off way.
- Leaders should encourage challenge and differences of opinion by being curious about alternative opinions rather than critical. This helps reduce the level of error correlation where people tend to anchor around some of the early ideas raised in meetings.
If you are interested in the area of decision analysis and how your organisation can improve decision quality, join our virtual taster programme on Decision Support on Friday 14th October from 2.30pm – 4.00pm (BST) – to reserve your place, simply get in touch via firstname.lastname@example.org.