Intuition in business

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Intuition in business

  1. 1. INTUITION IN BUSINESS THINKING OUTSIDE THE BOX Katherine Nechaeva, Ph.D. katenechaeva@gmail.comGdansk Foundation for Management Development Executive MBA class
  2. 2. Q.: What is wealth?A.: Accuracy of investments! Economicdevelopment Specific criterion search Business Right Decisions predictions Making/Taking
  3. 3. Cash or credit? Bet on or go for first down? Deal or no deal? Act or wait? “To be or not to be?”Q.: How domanagers reallysolve problems &make decisions?
  4. 4. We are deliberate and logical creatures. This simple idea underlies the philosophy of Plato and Descartes; it forms the foundation of modern economics; it drove decades of research in cognitive science.Most of businessmen/managers are used to relyexclusively on their left brain when it comesto decision-making.The left side of the brain processes logical,intellectual and factual information whichessential in problem-solving, but, first, it doesntgive managers the full picture, and second, theydon’t always have enough time to act.
  5. 5. Herbert Simon, the Nobel Prize- winning psychologist, famously compared the human mind to a pair of scissors. One blade was…"for his pioneering the brain (“the box”), he said,research into thedecision-making while the other blade was theprocess within specific environment (“outside”)economicorganizations" in which the brain was(1978) operating. If you want to understand the function of scissors, then you have to look at both blades simultaneously.
  6. 6. Left Brain Vs Right Brain:Should we go withour instinct or analysis?It turns out that wewerent designed to bejust rational creatures.Instead,the mind is alsocomposed of a messynetwork of different Which part is olderareas, many of which areinvolved with the (experienced?)production of emotions. and faster?
  7. 7. Q.: When make decisions, what we rely on?• Experience• Desire (future orientation)• Purposes• Environment (info, social, resources, etc.)• Intuition From the society’s perspective our decisions may seem reckless, but for us they are rational. It’s important to learn to read/sense your inner signals (& distinguish between them and “the labels” we tend to pin) for decision making.
  8. 8. Successful people often attribute their success to using their sixth sense, their gut feeling, and their business instincts.Intuition uses a right brain approach to generate ideas and solutions from a divergent thinking perspective. In other words it’s called "thinking outside the box". Hunches, impulses, brainstorming, creative ideas and timing are all based on Intuition. = I Just Know It!
  9. 9. Economy is not a precise science.Two American doctorsgot a Noble prize in 2002as they proved that statement.Dr. Daniel Kahneman, Princeton University, The School of Public & International Affairs.“…for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty”.Formula of Success: Understanding that classic management education is not enough + Intuition
  10. 10. Intuition is knowing without knowing how you know. (Seymor Epstein, 2009)= if it’s not truth, it’s not intuitionThe situation has provided a cue: this cue has given the expert access to information stored in memory and the information provides the answer. Intuition is nothing more and nothing less than recognition. (Herbert A. Simon, 1992)= there is no magic in it
  11. 11. ! Everyone has Intuition.!! To use Intuition as an instrument for decision-making, we have to identify its signals anddistinguish it from false friends. Which signal system is the Leading one? “If you’re 30 years old, you have slept already 10 of them!” • Salvador Dali used to fall asleep on his work desk with a silver cup in his hand. When the cup fell out, Dali woke up and, while remembering, transferred the images he got to the canvas. MENTAL CONSULTING
  12. 12. INTUITION LOGIC EMOTIONS EXPERIENCE DESIRES PURPOSES RESOURSES«I knew that!» - premonitions «Déjà vu»«Prophetic dreams» - receiving answers (Dm. Mendeleev – the Table, EliasHowe – the sewing machine, Friedrich Kekule – the structure of benzene,James Watson – the double helix structure of DNA ) ,«I’ve got a sign» - “reading” information in the fields«My palm itches» - body language .Intuition’s awakening – trusting your guts, clear understanding of the task,confidence in the right answer.
  13. 13. What kind of intuition we know?• woman’s intuition• people evaluation intuition• decision-making intuition• military leader intuition• intuitive discovering•…When we look at the experts, we tend to try to findtheir errors. (psychologists’ way of behavior)There is no intellectual debate about intuition,but there is an emotional debate.(some people have an ironic view) Right-handed persons’ generation?
  14. 14. • By Einstein: The main thing is to formulate a question correctly.• History knows a lot of examples of parallel discovering (Boyle-Marriott, Lomonosov- Lavoisier , Popov-Marconi)• We say: the idea was in the air (on the surface). We just have to catch it.• Sometimes a person gets into the information field full of ideas too early, when the society is not ready yet (Pharaoh Hexatone, Leonardo da Vinci, Nicola Tesla, etc.)
  15. 15. Before you make a step following your “Intuition”, remember of:• Logic (which always gets rid of “illogical” answers/variants & requires proofs);• Emotions (it’s important to distinguish “the inner voice” and “the voice of emotions”);• Doubts & Desires (if you don’t catch the answer right away, it’ll be followed by some doubt);• Lack of faith in yourself.
  16. 16. The simple truth of the matter is that making good decisions requires us to use both sides of the mind. For too long, weve treated human nature as an either/or situation. We are either rational or irrational. We either rely on statistics or trust our gut instincts.But while we, as managers, are working ondeveloping our right-brain skills, it’s importantalso to think of our teams and to build effective“both-brain” partnership.
  17. 17. The Fashion Model (“Innovation in Turbulent Times, HBR, June 2009)Fashion companies understand one fundamental truth about human beings, a truth overlooked by all the organizations that try to teach their left-brain accountants and analysts to be more creative: Creativity is a distinct personality trait. Many people have very little of it, accomplished though they may be in other areas, and they won’t learn it from corporate creativity programs. Other people are inordinately creative, both by nature and by long training. They are right-brain dominant. Innovation comes as naturally to them as music did to Mozart, and like Mozart, they have cultivated their skills over the years. The first lesson from fashion is this: If you don’t have highly creative people in positions of real authority, you won’t get innovation. Most companies in other industries ignore this lesson.
  18. 18. To anyone outside the fashion industry, it’s astonishing how often designers team up with talented business executives (Calvin Klein & Barry Schwartz, Marc Jacobs & Robert Duffy, YSL & Pierre Berge, etc.).Both-brain pairs have been found elsewhere:• Apple CEO Steve Jobs & COO Tim Cook;• Procter & Gamble’s chief of global design, Claudia Kotchka, & CEO A.G. Lafley;• High-tech engineer Bill Hewlett & business leader David Packard.
  19. 19. INTUITION REASONING FAST SLOW PARALLEL SERIAL AUTOMATIC CONTROLLED EFFORTLESS EFFORTFUL ASSOCIATIVE RULE-GOVERNEDSLOW LEARNER FAST LEARNER STIFF FLEXIBLE WISE CLEVER
  20. 20. Since Plato, philosophers have describedthe decision-making process as eitherrational or emotional: we carefully deliberate,or we "blink" and go with our gut feeling.But as scientists break open the mindsblack box with the latest tools of neuroscience,theyre discovering that this is not howthe mind works. Our best decisions are afinely tuned blend of both feeling and reason—and the precise mix depends on thesituation.The trick is to determine when to use the different parts of the brain, and to do this, we need to think harder (and smarter) about how we think.
  21. 21. The Algorithm:2. “Q.” formulation3. Self-adjustment (stress-management)4. Cues fixation and “A." recognition The key concept " – emotional competenceEmotional intelligence (EI) represents an ability tovalidly reason with emotions and to use emotions toenhance thought.Emotional intelligence refers to an ability to recognizethe meanings of emotion and their relationships, and toreason and problem-solve on the basis of them.
  22. 22. THANK YOU

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