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Nothing is more difficult, and therefore more precious, than to be able to decide.
--Napoleon Bonaparte (Maxims, 1804)
Most managers still make decisions based on intuition, despite the risks. It's true that computers have improved information gathering and display and that some routine decisions, such as credit applications and inventory ordering, can be automated. But most managerial decisions are still disturbingly immune to technological and conceptual advances.
Managers know that decision making is more critical than ever; with global competition, managers are competing against the best of the best. Recent decision research has offered insights into improving managerial decisions that were not available even a decade ago. But how can you incorporate some of those insights into the decisions that you, your colleagues, and your subordinates make?
There are four general approaches to decision making, ranging from intuitive to highly analytical.
INTUITION
Many complain about their memory, few about their judgment.
--La Rochefoucauld
Intuition is quick and easy. It's hard to dispute decisions based on intuition because the decision makers can't articulate the underlying reasoning. People just know they're right, or they have a strong feeling a about it, or they're relying on "gut feel." Of course, if such a decision turns out to be wrong, the decision maker has no defense.
Intuition can sometimes be brilliant. When based on extensive learning from past experience, it may truly reflect "automated expertise."(1) Some managers are so familiar with certain situations that they grasp the key issues instantly and nearly automatically. However, they may have great difficulty explaining their intuition. How much credibility can we give such decisions? Decision research has revealed two common flaws in intuitive decision making: random inconsistency and systematic distortion.
INCONSISTENCY--Nine radiologists were independently shown information from 96 cases of suspected stomach ulcers and asked to evaluate each case in terms of the likelihood of a malignancy.(2) A week later, after these X-ray specialists had forgotten the details of the 96 cases, they were presented with the same ones again, but in a different order. A comparison of the two sets of diagnoses showed a 23% chance that an opinion would be changed.
People often apply criteria inconsistently. They don't realize how much memory failings, mental limits, distractions, and fatigue can influence their...