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Gut Feel vs. Data Driven Decisions: Which Is Better?

“Trust your gut.”

It’s the trademark advice of mentors and grandmothers alike, and it remains a trusted mantra for many successful entrepreneurs. When making data driven decisions is preferred, though, is trusting your gut still a good idea?

Is it time for everyone to accept that “gut feel” no longer has a place in strategic business thinking?

Has data entirely usurped human intuition in guiding business decisions?

The truth may not be so simple. Before we attempt to pass judgment, though, let’s hear the cases for both gut feel and data driven decisions.

Data: From Cool Idea to Requirement  

Let’s cut to the chase. If data isn’t informing your decision-making in 2021 and beyond, you’re not keeping up. It’s hard to picture an industry that hasn’t been transformed by high-quality data—including education, where affordable data decision-making is more than possible.

Businesses in every sector are battling to win market share. In most cases, victory comes down to offering the best suited or most complete solution to your customer’s needs.

You can win battles based on product and price, but the war is won with personalized brand experiences from product discovery to the post-purchase relationship. Staking your claim in this “experience economy” is simply not possible without access to data.

It’s essential to find ways to objectively understand what your customers perceive as value, how they prefer to access that value, and exactly where and how your systems are falling behind competitors in delivering this value.

So, while Grandma may be right about most things, no amount of gut-trusting is going to help you compete with data-conscious competitors.

If you conduct your data-driven decision-making in your favorite spreadsheet tool, you’re not alone. Our research shows that 82% of business users do the same—even with access to a BI tool. Get the data here.

Gut Feel: Not So Fast

Data might be the cool new kid in the room, but if it’s so important in smart decision-making, how did people build empires before having access to it?

Gut feel is not “dead,” as people like to say. In fact, it has become a subject of considerable study by scientists worldwide who’ve come up with a more serious-sounding name for it: interoception.

While the stomach is involved in interoception, the heart, lungs, bladder, bowels, and skin are also key players. Interoception is essentially the “feelings” you experience as a result of your body’s physical responses to stimuli. For example, if you have to tell your CEO that that new sales strategy you developed based on gut feel is a dismal failure, you’ll feel nervous. Because you’re nervous, your heart rate will increase, and you’ll start to sweat, which will make you feel even more uncomfortably nervous.

It’s a bodily feedback loop that will require conscious intervention to interrupt.

Even more interesting, though, is the fact that high interoceptive ability has been shown to result in good decision-making. In one of the most publicized experiments in the field, Narayanan Kandasamy et al. measured whether or not the success of financial traders was associated with their ability to read the signals their own bodies were sending them. The results were astounding.

data driven decisions

In our opinion, the most revealing findings of this experiment were:

  • Interoceptive accuracy scores predicted trading success—those with higher interoceptive accuracy demonstrated higher profitability than those with lower accuracy.
  • More experienced traders showed a more uniform ability to accurately detect internal bodily signals; less-experienced traders showed more variability.

Essentially, if you’re able to accurately interpret the signals your body is sending you and use that information, then gut feel may indeed be as important as Grandma makes it out to be.

Cultivating a Data Driven Gut Feel

While it’s true that making decisions in the absence of data means you’re starting at a disadvantage, decisions made in a vacuum are prone to several issues:

  • Some metrics are easier to measure than others. Without fully understanding this, it’s easy to make decisions based only on data that is available, rather than a clear understanding of the situation as a whole.
  • Not paying enough attention to data quality is a surprisingly common mistake. Given the huge number of data sources available to us today, it’s all too easy for data to be misleading. Decision-makers should understand the situation well enough to spot anomalous, data-based insights and take steps to ensure the quality of the data involved.

As is true in the case of so many similar discussions, it seems that the best approach applies the wisdom of both the old and new schools of thought. Data driven decisions ensure that the picture we base decisions on is as clear and as possible. But access to information alone without employing intuition and gut feel does not make for great decisions.

For businesses just joining the data-driven revolution, one of the biggest challenges is making it faster and simpler for decision-makers to access. Fortunately, that’s now a whole lot easier. Kloudio allows even your least data-savvy staff to generate their own reports from your databases.

Kloudio can be set to refresh reports at regular intervals, and once you’ve pulled the data you need directly into Google Sheets, you can process it in seconds or feed it into your preferred BI Tools. Marry your gut feel and data driven decisions in Kloudio—create your free account to get started.

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