Chapter 9

Dr. McCoy, Please Report to the Flight Deck -- Intuition and Rationality in Decision Making

Rational decision making is linear and is what you do when you put your facts in order. Intuition is looking at those facts and trying to see a pattern -- and the patterns aren't always evident because the patterns aren't always linear. The two together...are an extremely powerful combination.

Joel Kurtzman

President, Joel Kurtzman Associates

Former Editor,Harvard Business Review

The television seriesStar Trekhas enjoyed somewhat surprising success and has spawned a cult of Trekkies, who view the series as akin to a passion play. While we have never viewedStar Trekas a particularly acute lens on the human condition, the interplay between two of its main characters provides an interesting depiction of the age-old tension between intuition and rationality. Mr. Spock is the personification of reason -- so much so, in fact, that he is not even human. In poignant juxtaposition to Mr. Spock is Captain Kirk, who operates from a gut level, making decisions affecting the preservation of theEnterpriseand its crew with astounding intuitive leaps. Dr. McCoy is the figurative Ego who mediates between the Superego of Spock and the Id of Kirk.

Drawing uponStar Trekenables us to delve, however briefly, into the realm of pop psychology -- which seems to be a significant asset in selling business books -- while illustrating how the opposite approaches and styles of Spock and Kirk demonstrate the apparent conflict between rationality and intuition in human deliberations.

How important is intuition in the decision-making process? Here are the opinions of some experts:

* Scott Davidson, CEO of ICI Acrylics -- "Gut feel tells you when you have enough information to make the right decision."

* Ray Marshall, Audre and Bernard Rapoport Centennial Chair in Economics and Public Affairs at the University of Texas; former Secretary, U.S. Department of Labor -- "You have to have intuition. You've got to have street smarts, gut feel, however you want to describe it. Any company that doesn't have people with that capability is going to be a sluggard in the marketplace."

* Ralph Larsen, chairman and CEO of Johnson & Johnson -- "Every time I have been burned in decision making it is because I have gone against my instincts."

* Richard Teerlink, president and CEO of Harley-Davidson -- "You may sometimes choose an alternative that is not the rational alternative, based on gut feel."

* Amy Williams, senior vice president of USF&G -- "Even when you have hard facts, intuition is really important. In the area of new products, intuition is what allows you to believe that there actually is a market for your product or service. Intuition is what gives you vision in the first place."

* C. K. Prahalad, Harvey C. Fruehauf Professor of Business Administration at the University of Michigan -- "One of the biggest impediments to effective decision making today is that all the literature and all the consultants have recommended that emotion and passion be taken out of management. They think that strategy is a purely analytical exercise."

Yet Decision Analysis, the decision-making process we are advocating, is quintessentially a rational process. But if intuition is as important as these business and government leaders indicate, how do we resolve the apparent conflict between intuition and the rational approach to decision making? Perhaps we need Dr. McCoy to mediate the debate.

Let's Analyze Intuition

Analyzing intuition may seem like an oxymoron, but some discussion of what is meant by intuition is in order. The dictionary defines intuition as "knowledge discerned directly by the mind without reasoning or analysis." Nonetheless, this definition begs some admittedly analytical questions. Where does this inherent knowledge come from? Is it the result of genetic coding? Does it originate in some random firing of neurological synapses? Is it synonymous with knowing something without knowing why we know it -- that which we call unconscious competence?

The Myers-Briggs type indicator is a popular measure of the cognitive styles widely used in management circles to foster a modicum of civility in business relationships. One of the eight variables measured by Myers-Briggs is intuition. They define "intuitives" as individuals who "perceive indirectly through the unconscious by making associations with the outside world." People who score high on the intuitive scale tend to focus on the whole as opposed to the parts, and one of their strengths is discerning patterns in seemingly isolated facts. Myers-Briggs, therefore, define intuition as conclusions reached through some sort of inspiration that depends on external stimuli. Interestingly, though, Myers-Briggs use a variable separate from intuition -- the "thinking" scale -- to measure a penchant for logic and analysis. In contrast with Webster, Myers-Briggs do not view intuition and analysis as antithetical or mutually exclusive.

A number of the people we questioned about intuition defined it as the almost unconscious application of experience and knowledge to the situation at hand. Michael Heron, former chairman of the postal service in the United Kingdom, said, "Intuition is made up of experience, training, learning, and temperament. I suppose it's called judgment." Amy Williams of USF&G equated intuition with experience and judgment when she said, "Intuition is appropriate when the facts and data you have are very subjective and you filter them through your own way of looking at the world." Van Campbell, vice chairman of Corning, said, "Intuition comes from past mistakes."

Because we're intutives on the Myers-Briggs indicator, we have arrived at our own definition of intuition, based on a combination of the ideas from Myers-Briggs and from the leaders we interviewed. Intuition is the rapid and possibly unconscious employment of experience and knowledge to create patterns from external facts. Both intuition and rationality are valuable cognitive approaches to making decisions. They are not mutually exclusive but instead can complement each other if used appropriately.

Intuition as Unconscious Competence

When Kepner and Tregoe first began their inquiry into decision-making processes, they had three hypotheses:

* Consistently good decision makers use a process that differs from that used by mediocre or poor decision makers.

* Good decision makers could describe the process they use.

* The process could be codified and taught to others.

While subsequent research revealed that the first and third hypotheses are true, Kepner and Tregoe's second hypothesis was revealed to be patently false. Good decision makers could not explain the process they used, and in fact many of them described their decision-making style as intuitive. These individuals were highly competent but largely unconscious of how or why. Consequently, Kepner and Tregoe spent several years studying these individuals in an effort to make their decision-making process conscious or knowable. The result is the Decision Analysis process.

While unconscious competence is preferable to incompetent decision making, it has a number of drawbacks:

* If decision makers cannot explain how they make decisions, they certainly cannot build the capability in others. A process such as "First I determine my gut feel about the issue, then I find some patterns in the data, and last I use a healthy dose of inspiration to pick the best course of action" does not lend itself to easy replication in others.

* People who are unconsciously competent decision makers are often viewed as indispensable by their organizations. While this status may have certain benefits for those seen as indispensable, it certainly places the organization in a vulnerable position. The health and well-being of these individuals would have to be a high-level concern for everyone in the organization. We think that the adage attributed to Harry Truman is wise advice: "Find the indispensable persons and fire the SOBs because they are not doing their jobs."

* With no other way to explain their decisions, people often rely on charisma or other cheerleading attributes to engage others in committing to the decision. "My gut tells me that it is the right thing to do" is not an explanation that makes us want to charge the hill.

Increasingly, decisions have to be sold to a host of stakeholders. If the decision maker is unconsciously competent, then an inability to explain how a decision was made makes selling the decision extremely difficult.

Intuition -- or, Critical Thinking at Warp Speed

Our definition posits that intuition is the rapid analysis of facts using knowledge and experience as filters. The definition implies that, in at least some cases, intuition entails the extremely quick and possibly unconscious use of a rational process. In these applications intuition is not only compatible with rationality, but actually employs it -- possibly at the speed of light.

Rational process is sometimes evident in what decision makers or observers call intuitive decisions. One corporate leader who might be described as an exemplary intuitive thinker is Richard Teerlink of Harley-Davidson. Harley-Davidson's rise under Teerlink's leadership from the brink of bankruptcy is the fodder for business legends. In 1982 the company had $210 million in revenue and a pretax loss of $30 million. In 1994 it earned revenues of $1.2 billion, with operating profits of $160 million, constituting one of the most noteworthy turnarounds in the annals of business.

Teerlink differentiates between those decisions requiring a rational approach, when some standards need to be met, and those requiring intuition, when no standards exist. As an example of a decision requiring intuition, he cites a situation in which he has data that say there is a market for two hundred thousand motorcycles, but to expand to meet the demand of a market of this size, new products are needed. As he explains it, "I've had someone analyze our product development program, and we came up with the acronym LEWW -- late, expensive, and won't work. Now I have a decision to make. Should I risk corporate resources and commit to an aggressive plan of 200,000 to 250,000 units when our product development system is LEWW? There is no rational reason for me to do that. Rationally, the decision is, Don't make the commitment. On a gut level there is the feeling that we are Harley-Davidson, we're going to do it, and we'll make it happen. I decide to go for the larger market, but I try to cover my bets and not overinvest up front. I am willing to be embarrassed later and say that we changed our mind. But I'm not going to allocate tons of resources now."

In making this decision, Teerlink actually employed a very rational process. He had information on market potential, and he factored in Harley-Davidson's recent history of turning opportunities into reality. He realized that the company's product development system might be an obstacle to meeting market demands, so he managed the risk by limiting and staging his investment. He even weighed the risk of public embarrassment over his decision to back off the pursuit of a stated goal, and he decided that the risk was not significant and could be managed. Teerlink drew his conclusions rapidly but, whether totally conscious of it or not, he used a rational balance between benefit and risk in making what he describes as an intuitive decision.

When viewed by others, intuition can often seem to be not only irrational, but almost psychic. In his book,Mind Hunter,John Douglas writes of his work as head of the FBI's Investigative Support Unit. Douglas -- who was the model for FBI agent Jack Crawford in the book and movieThe Silence of the Lambs-- describes his role in capturing the perpetrator of a particularly gruesome murder of a woman in the Bronx. After reviewing all the facts, which were lacking any hard evidence, he drew what appeared to be some astounding intuitive conclusions:* The attacker would be an average-looking white male between the ages of twenty-five and thirty-five.

* He would be disheveled, unemployed, and mainly nocturnal.

* He would live within a half mile of the building in which the murder occurred, with his parents or an older female relative.

* He would be a high school or college dropout, would not have a car or a driver's license, and would be a current or former patient at a mental institution.

* He would have previously attempted suicide by strangulation, and he would have a large collection of bondage pornography.

* This would have been his first serious crime.

The local police and press viewed these pronouncements as inexplicable intuitive leaps, but given Douglas's reputation, the police incorporated his assessment into their investigation. The person arrested and convicted of the crime turned out to be a thirty-year-old white, unemployed actor who lived with his father in the building where the murder occurred. He was a high school dropout with a history of suicide attempts by hanging, and he was currently attending an in-patient program at a local mental hospital.

When queried, Douglas recounted how he had drawn his conclusions. What seemed like intuition was, in reality, the rapid building of patterns of facts using a rational process.

* The crime was spontaneous, not planned, because the victim sometimes used the stairs and sometimes the elevator to reach her apartment. The attacker had no way of knowing which one the victim would use on a given day. And everything in the attack belonged to the victim; the attacker had not brought anything to the place of attack.

* If the attacker had not gone to the building to commit the crime, then he must have gone for another reason. For him to be there prior to 7 A.M., the time of the attack, he must have either lived in the building or known someone who did. The victim had not screamed or struggled, so she must have known him, at least by sight.

* Given the sexual nature of the attack, Douglas knew the attacker was in the general age range of the victim. And his experience told him that rarely was this particular type of crime cross-racial, making it likely that the attacker was white.

* This was a high-risk crime with a low-risk victim. Any organized attacker would have picked a less risky place for a sexual attack. This, combined with the spontaneous nature of the crime, led Douglas to conclude that the attacker was disorganized, at least, and probably disheveled.

* The attacker was hanging out in the building when most people were on their way to work. This told Douglas that the attacker was either unemployed or employed part-time. Since the crime demonstrated some very weird fantasies that would be difficult to hide from someone else, and since the attacker did not have enough money to live on his own, he concluded that the attacker must live with family.

As opposed to employing irrational intuition, or lack of analysis, Douglas rapidly sorted the facts into discernible patterns based on his knowledge and experience with similar crimes and then used logic and reason to draw his conclusions from those patterns. And unlike many intuitive decision makers, Douglas was able to describe his thinking process in considerable detail.

In both Teerlink's decision to develop products for an expanding market and John Douglas's crime-solving technique, the process was described as intuitive. However, both reflect a heavy reliance by the decision makers on analysis and logic to draw their conclusions, lending support to the notion that at least some applications of intuition are, in fact, a rapid rational process.

The Cognitive Pas de Deux -- Intuition and Rational Process

Even if intuition and rationality are, in some instances, different cognitive approaches, they are not only compatible, but they should complement each other. As Joel Kurtzman says, "Rational process is linear. It's when you are putting your facts in order and looking at them, weighing them, and making a decision based on the importance you assign to each fact. Intuition is looking at the same facts and trying to see a pattern. The patterns aren't always evident because they are not linear. That's where intuition is very valuable. You look at a set of variables, and suddenly it snaps into your mind that there's a pattern. The ability to recognize patterns is intuitive. Rational and intuitive thinking are not mutually exclusive. The combination of the two, when you are lucky enough to have them both, is extremely powerful and useful." The important question, then, is how can the two approaches be melded to take maximum advantage of each?

The effective integration of intuition and rationality entails moving between the two at appropriate times, just as a leader can move from taking quick action in confronting a buzzing mess to taking thoughtful action. In Situation Appraisal, for example, issues rarely present themselves in tidy, specific bundles. Instead, leaders are almost always confronted with a dog's breakfast in which issues seem cosmic and inextricably intertwined. The determination of where to begin to unwind the mess benefits front a healthy dose of intuition. In talking about his role at ICI Acrylics, Scott Davidson discusses the mess he confronted, which included a critical need to expand in Asian markets, opportunities to make investments in technology, and the suck of internal corporate issues that not only tempted him "to go to a funeral," but "to be the corpse as well."

Intuition served Davidson well in unraveling the mess when he focused on the still general opportunities for acquisitions and joint ventures in Asia and either postponed or delegated the resolution of other issues. In deciding to focus on Asia, Davidson did not employ a traceable analytical process but, instead, used his experience and knowledge to quickly determine which category of issues needed his attention most. Once intuition has determined the sector of the universe where leaders should focus their attention, the use of a rational process like Situation Appraisal enables them to discern specifically which issues or opportunities merit further consideration. When starting to deal with a buzzing mess, intuition first, then rationality, is probably wise.

Let's Do a Hunch Sometime -- Intuition and Problem Analysis

In Problem Analysis, the most objectively analytical of Kepner-Tregoe's critical thinking processes, there is a role for intuition as well. After the relevant information has been gathered, using a rigorous analytical approach to describe a problem, intuitive thinking can be very useful in identifying possible causes, whether the problem is new or recurring. Once a list of possible causes has been made, reversion to analysis in evaluating the logical fit between the possible causes and the information is in order. Intuition, again, can be useful in determining how to verify the true cause of a problem.

John Perkins, former chief engineer for British Airways, describes an instance when a pilot on a Concorde's nonpassenger run received information in flight that the aircraft's undercarriage was not locked in. The plane was landed, and it was obvious that one of the undercarriages that contain the wheels and landing gear was not locked in. The implications were very serious, because if the plane were moved and the undercarriage were to fold, a $100 million airplane would be lost. Given the potential impact of the problem and the fact that an unlocked undercarriage had never happened before, Perkins assigned his best troubleshooting engineer to the problem. The data led to a probable cause, which checked out logically, but how to verify that the probable cause was the true cause was much less clear because of the risks associated with some actions. Based on an intuitive leap that he could not explain, the engineer suggested that the aircraft be towed in a circle, which, when done, locked the problematic undercarriage.

Starboard or Port -- Intuition and Decision Analysis

Decision making, more than sorting issues or solving problems, is the arena where the tension between intuition and logic is most evident. Decisions are categorized as either intuitive or rational, and the categories are often viewed as dichotomous and mutually exclusive. For example, over the past twenty years much has been made of the distinction between the hemispheres of the brain. People are described as either left-brain thinkers, who rely on logic and rationality, or right-brain thinkers, who tend to employ intuition and creativity in making decisions -- the premise being that every person gravitates toward one or the other, not both. Parenthetically, there is obvious irony in the attempt to categorize people according to their dominant brain hemisphere, because, if the theory is valid, only left-brain thinkers would care about such an analysis. Those dominated by the right brain presumably categorize people based on gut feel, first impressions, and pheromones. We believe a balance between the left and right brain is ideal.

In effective decision making the synapses fire on both sides of the brain in a virtual pas de deux of rationality and intuition. As with Situation Appraisal, often it is intuition first, then rational process. The answer to the question "What decision should we be making?" originates with intuition, and very possibly we may think that the best option is intuitively obvious. A rational process, though, serves as a check and balance on hyperactive intuition and keeps us from making some really stupid decisions. As Robert Ecklin of Corning says, "Whenever I am confronted with a situation requiring a decision, I, like many people, form an opinion. But I find that I need to force myself to suspend gut feel and engage in a rational process. Often the process demonstrates that my initial intuition was accurate, but there have been times when the process showed that my initial gut feel would have taken me in a very wrong direction."

Hallucination or Insight? -- Intuition and Potential Problem and Potential Opportunity Analysis

Finally, any time the future is the focus of attention, intuition plays a significant role. However, if conjecture about the future is to be more than a purely psychic odyssey, intuition needs to be channeled through a process. A rational process, such as Potential Problem and Potential Opportunity Analysis, helps sort the intuitive insights that have little grounding in reality from those that represent real insights.

For example, during the course of our work with companies on their strategies, actions by competitors inevitably are identified as potential problems or potential opportunities. In order to assess them thoroughly, the strategic team needs to put itself in the place of key competitors and project what they might do in the future. The leadership teams that find this assessment of the competition to be particularly valuable are able to use their knowledge as a springboard into intuitive conjecture about the actions of competitors. These leadership teams use Potential Problem and Potential Opportunity Analysis to combine experience, information, and intuition in a way that produces meaningful insights into the motives and possible moves of competitors.

In the absence of a rational process, a discussion of future threats and opportunities often falls victim to one of two pitfalls. If unbridled intuition reigns, then the group has difficulty separating hallucinations from insights, and rarely is intuition distilled into anything actionable. If the process is so rigid as to thwart intuition, the result will be a perfunctory restatement of Common knowledge. Knowing when and how to blend a rational process with intuition enables a consideration of the future that encourages intuitive leaps yet discriminates between the fanciful and the insightful.

The Blend

The following table is designed to indicate how intuition and Kepner-Tregoe rational processes can be integrated.

The table on the integration of rational process and intuition indicates that in some steps of some processes -- for example, the description of a problem -- rational process should predominate, because that step is driven by objective facts or data. In process steps such as the assessment of risks in Decision Analysis, both intuition and rationality need to be called upon, because often neither alone is sufficient to identify possible risks. Finally, there are some process steps -- the identification of concerns in Situation Appraisal, for example -- that lend themselves to intuition almost more than to rational analysis. Overall, however, it is clear that even if rationality and intuition are different cognitive approaches to the resolution of an issue, when the two approaches are used at the appropriate place in a process, they will likely produce a resolution that is superior to that produced when either is used alone.

The long-standing tension between the proponents of the intuitive and the rational approaches will probably continue, even though they can coexist and can be used to complement each other. However, in conclusion, two additional points, while possibly obvious intuitively, merit acknowledgment. First, a dependence on the intuitive approach alone poses several problems, including difficulty in getting buy-in to decisions, the impossibility of transferring the capability to others, and the organizational risk represented by the indispensability of key decision makers. A repeatable process that makes thinking conscious and visible avoids these pitfalls. Such a process also allows us to function effectively in situations in which we lack experience.

Second, at least some thinking that has been described as intuitive is really the rapid use of rational process. In these cases there is no distinction between a rational and an intuitive approach other than the speed and possibly the visibility of the process use. Therefore, in many instances the difference between the two approaches is moot. In those instances when rationality and intuition may be different approaches, the use of a critical thinking process helps determine when each can be of maximum benefit. In fact, any debate about the merits of intuition over rationality or vice versa is usually pointless. Thank you, Dr. McCoy. You can go back to the sick bay.

Excerpted from Heads You Win: How the Best Companies Think--And How You Can Use Their Examples to Develop Critical Thinking Within Your Own Organization by Quinn Spitzer
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.

Introduction
The Primal Manager
Situation Appraisal -- Clearing the Path
Problem Solving -- The Eternal Search for ""Why""
Decision Drag in a Nanosecond World
Rx for Futurephobia
Taming Data Overload
All Together Now: Critical Thinking in Teams
Systems Thinking: Why You Can't KISS
Dr. McCoy, Please Report to the Flight Deck -- Intuition and Rationality in Decision Making
The Socratic Leader -- Askin
Table of Contents provided by Publisher. All Rights Reserved.

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Heads, You Win! How the Best Companies Think--and How You Can Use Their Examples to Develop Critical Thinking Within Your Own Organization

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