Decision-making Aussie execs put intuition before analysis

PATRICK DURKIN
16th September 2014
The Australian Financial Review
If we’ve got evidence, let’s go with the data. If all we’ve got is opinion, let’s go with mine. That’s the favourite management advice of NBN Co chairman Ziggy Switkowski.
It seems he’s not alone.
A report by the Economist Intelligence Unit confirms what many of us suspected. When it comes to big decisions, executives prefer to go with their gut instinct and intuition, rather than data and analytics.
Close to 60 per cent of executives rely on their intuition or the advice and experience of a trusted colleague rather than on data, according to the survey of 1135 C-suite and board-level executives undertaken by the EIU in May this year.
And it seems Australian executives are more willing to go with their gut more than most.
Sixty-eight per cent of Australian respondents said they relied most on either their own gut instinct (40 per cent), or that of a trusted colleague (28 per cent), compared to 58 per cent for their global peers (where 30 per cent rely on their own gut and 28 per cent on the experience of others).
Just 29 per cent of executives globally, and only 22 per cent in Australia, said they placed the biggest reliance on data and analytics in making their latest big decision.
The mining and resources sector is our worst offender, with three-quarters of executives saying their gut instinct ruled in matters of big business.
According to Malcolm Gladwell’s best selling book Blink, our snap decisions based on small amounts of high-quality information, or gut instinct, often turn out to be highly accurate.
But head of PwC’s data team John Studley warns that Australia is badly lagging the field in terms of incorporating data into our decision making.
“Coles might run a price promotion and watch the data to see whether it is working or not, or it might be a targeted marketing campaign for mortgages in a bank where they will trial something among a certain cohort of customers and measure that using their data, that is becoming the successful path to ­decision making.”
Studley says the problem is a lack of skill and experience within Australian boardrooms. Twenty-five per cent admitted they lacked the skills or expertise to make greater use of data.
“It doesn’t mean building an enormous warehouse and populating it full of every data asset you can conceive of but you have to identify the key decisions and work back to find the data you need to best inform that decision.”
The Australian Financial Review
BY PATRICK DURKIN