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Mar 31, 2014

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Intuition - The Key to Business Success in Tough Times

Studies show that to succeed entrepreneurs must be able to make quick decisions, learn from their mistakes and implement new ideas constantly.
Intuition - The Key to Business Success in Tough Times
  During 6 years Barbara Bird and J. Robert Baum, professors of management and entrepreneurship, tracked a group of business owners from 2002 to 2008 measuring their small business’ success through the recession. They found out that the businesses who survived the economic downturn were those able to adapt to changing business climates, pivot for headwinds, and constantly try new things. According to Barbara Bird, associate professor of management at American University’s Kogod School of Business, even more important than a solid business plan, an entrepreneur needs to dive in, make quick decisions, learn from mistakes, and continually experiment. This “street smarts”, as defined by Bird, appeared to be a better indicator of long-term success than any other factor.
“The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift.” - Albert Einstein
  However, saying that planning is not necessary would be a big mistake. Intuition can be a superior planning tool once you have high level knowledge and understanding of your business, products and market. The intuition that allows entrepreneurs to succeed is that based on expertise and preparation. To achieve try working with somebody who has expert-level experience in the business. If you are planning to start a business by yourself, work for somebody else first. Learn the industry using somebody else’s time and money instead of going in blindly on your own. Do note that to guide your business successfully, you must strive to be your company's biggest expert.

  However, some may agree with Andrew McAfee's post for th HBR,"Managerial Intuition is a Harmful Myth." According to him "we'll all be better off if we stop placing so much weight on the intuitive judgments of 'experts.'" because human experts are overconfident, inconsistent, and subject to a swarm of thoroughly documented biases, most of which they’re not even aware of. Moreover, the author of "The Power Of Intuition," Gary Klein, highlights intuition can be the source of significant errors in decision making, but also very useful for business. Intuition loses the value it gives to the choices we make in business when: We use of inaccurate, inadequate, unreliable, or incomplete information. We do not properly consider all alternatives. We have short term emotional biases or prejudices that make us overrule facts, or influence our decision. We try to use our intuition in areas where we have no experience. According to Klein, in order to make to make an intuitive decision with success you need to:
  • Listen Better - Listening to others allows you to understand the circumstances. Your team can provide you with additional information, which not only prevents you from assuming, but also helps you figure out a better strategy, as you understand the problem, the alternatives you have, and outcomes of other's strategies to address the issue.
  • Evaluate your Decision - Identify points where your feelings or beliefs may influence your decision. Are there any facts or evidence that you are not taking into account? Try to get an objective opinion from a third party. Although that person may disagree with your decision, she or he might highlight potential bias, or alternatives you did not consider.
  • Communicate Clearly - The reasoning behind our intuition can be difficult to explain to others. However, it is essential that others understand the reasoning behind your decision, otherwise your company is likely to fail in the execution of the idea. 
  • Practice Makes Perfect - Create an environment in which mistakes are tolerated. Intuitive decisions get better with practice. Therefore, people need space and time to learn to interpret their emotions. Emotions are signals of patterns of past experiences, and you need to learn what they are pointing you to.
  • Track Past Decisions - Study and document the outcomes of similar situations. It will help you improve your decision-making, while allowing you to identify patterns on how your intuition works.
  Intuitive decisions require caution, practice, but mostly preparation. They enable businesses to make better decisions faster, and to adapt quickly to changes. Moreover, it has been proven that intuition is the best indicator of long-term success of companies. Next time try to rely more on your intuition.