Beware of Basic Instinct

Is business instinct sufficient to manage tomorrow's higher velocity digital business agenda?

As momentum and urgency around the digital transformation and Industry 4.0 agendas build, it is concerning to see that recent research has found that 50% of the UK’s ‘C’ level executives rely on instinct and ‘gut feel’ to make business decisions, mainly due to the fact that access to timely, accurate data is limited. This statistic is supported by findings from the EIU, which showed that 9 out of 10 corporate executives admitted to making important decisions on the basis of inadequate information, with legacy systems and a reliance on Excel spreadsheets cited as the main culprits. With half of respondents in a survey of 3,500 business executives globally admitting that they were effectively ‘flying blind’ and had trouble making sure that day-to-day decisions supported the wider company strategy, how much of a concern should this instinctive decision making be?

The late Billy Wilder said that one should, “Trust your own instinct”, with his rationale for this being that, “Your mistakes might as well be your own, instead of someone else’s”. Historically this may have been good advice within a simpler world where experience was the key driver for decision-making confidence, but times have changed. In today’s more technologically integrated and complex business world many managers increasingly have to make end-to-end process, rather than functional, decisions and definitely don’t have the luxury of making the odd mistake here and there, so this use of ‘gut-feel’ or instinct is dangerous when it results in the introduction of error and risk. The consequences can be serious, in terms of making a serious dent into a company’s bottom-line, or worse, resulting in a decision which creates a health, safety or regulatory risk.

Another important dimension on the digital change agenda for today’s management teams is that more and more decisions need to be made collaboratively. While all the key players may be very experienced, with a wealth of anecdotes about best practice, often such views do not always align with one another. This is when heated discussions between senior managers can occur with the words “I think…” being heard. These words usually indicate subjective opinions which are not based on any facts or data, so introducing a politically neutral and highly visual decision support technology, which presents accurate facts and data in an easily understood form, can clarify the best course of action with less friction. Usually this becomes clear after thoroughly exploring a range of possible future-state scenarios and this can be supported by computer simulation. The end result for management teams faced with making high-risk, high-reward decisions is a more collaborative method of making better decisions, with less debate and stress.

As businesses gear up to become more complex, more agile and more connected, the applicability of Excel and static average data moves from ill-advised to dangerous from a decision making standpoint. As volatility increases and decision cycles reduce, the need for quick, accurate and confident decisions becomes key to success. There is still plenty of room for business instinct and charismatic leadership as firms launch on their new endless digital change journey, but in times of change these qualities only sit comfortably when they are supported by the right tools and meaningful decision support data. This important management-to-process interface will become even more important than the man-to-machine data interaction that has been extensively covered in recent Industry 4.0 white papers. As Cyber-Physical Systems develop and become increasingly intelligent and connected, the need for increased dialogue at the level above, securing senior-level management engagement with dynamic end-to-end process performance will increase.