Entrepreneurial Decisions: Intuitive or Data-Driven?

Entrepreneurs – how do you make decisions? Intuitive calls are your strength, but how should you use the data available to make your intuitive calls even better – read on…

During one of our monthly interactions, one of the CEO’s of an emerging company asked me if we should move towards data-driven decision making? I was surprised! I presumed a lot of his decisions were data-driven considering the size of operations he was running, but alas to my surprise (not really!) he was taking a lot of intuitive calls.

As an entrepreneurial venture, he and his partner had taken a lot of intuitive calls. They had become successful with most of their decisions being right. But as they had become bigger and the stakes of the decisions now larger, this question seemed right! After all now they had something to lose!

Is shifting from intuitive decision making and data-driven decision making very different? Is it mutually exclusive? While theoretically it seems possible to objectively practice one of the two, they seem too interlaced in practice. Hence I was telling him that he should go by his nature. He is an entrepreneur, someone who studies and lives his business. He knows his business best. But because his world was smaller he never needed more information to know how the environment around him functioned. Now that his enterprise has grown larger, he needs to know the environment a bit better. For this he needs information from the external world. How much and how this information should be consumed is a matter of need and convenience, but it cannot be avoided. Will decision making change because of this – obviously yes!

Now that he is armed with a lot more insights about his function, his own company, its position within the industry, and lot of information about the market in which he operates, he is bound to make decisions differently. It is almost evident from this argument that he should use the information to strengthen his ‘gut’. In my opinion, entrepreneurs should use information to keep their ‘gut’ up to date and strong. It is then better for the ‘gut’ to take those intuitive calls. After all if pure data-driven decisions are what is needed, then we can do away with human beings, computers can do them better – isn’t it?

But combining the two to make better intuitive calls is something that a computer can never do (at least today) and that makes an entrepreneur still someone who is a prized possession for society. Hence entrepreneurs must use data but not shift totally to data-driven decision making. It is good to use data for the right purpose, rather than get carried away with the amount of data that is available today and get enticed by justifications that it can provide for decisions.

Can intelligence aid in making better intuitive calls more than pure data – definitely yes, but still the ‘gut’ is from where the decisions must flow.

Think about it!

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2 thoughts on “Entrepreneurial Decisions: Intuitive or Data-Driven?

  1. I totally agree to the point that you brought out in this article. “entrepreneurs must use data but not shift totally to data-driven decision making”. For me that is the highlight of this entire article.
    I have also engaged in discussions where entrepreneur minds bring out data and try to convince their valuable points.
    And definitely the “Gut” is all that matters at the end. I am in real need of it at this phase of my life and i seem to get a booster from this.
    Thanks Raj for this wonderful and power driven article.

    Regards,
    Pintu Champ

    1. Thanks Pintu! I am so glad you liked the thought and also got a positive boost from reading this. Good Luck with your enterprise building efforts!

      Constant consumption of data will improve your ‘gut feel’.

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