We use and trust our intuition to guide us in making some of our most significant life decisions. Decisions like whom to date or commit to, where to work and live, which home to buy, whether to have children — these decisions are rarely made by entering data on a spreadsheet. We justify and rationalize them before and after the fact. While many would argue that we often make the wrong choices, we’ve still got a 50 per cent chance of being happy with them just by going with our gut.
We use our intuition to make business decisions, too. It’s just not fashionable to admit to it. Many venture capital firms, whose job it is to take calculated risks on the success or failure of a start-up, will freely admit that the most important factor in their decision is not how good the idea is, but how much faith they have in the founding team. Their burning question is, do we think these guys have what it takes to pull this off ? In a world where our expertise and professionalism are supposedly measured in how many right answers we have, it’s not been prudent to admit that we don’t always know for sure — so we fake objectivity and pretend that we really do know.
Even the most experienced and successful venture capitalists, armed with data about a potential market and projected revenues, lament the deal that they failed to see the potential of. In 2008 you could have bought a 10 per cent stake in Airbnb for $150,000. On 26 June of that year, Airbnb’s CEO, Brian Chesky, offered this deal to seven prominent Silicon Valley VCs. Five of them rejected the opportunity; the other two didn’t reply. Eight years later, that 10 per cent would have been worth $2.5 billion. The idea was deemed ‘a long shot’. ‘The potential market opportunity did not seem large enough.’ One VC firm recognized that travel was a top ecommerce category but said that, ‘for some reason, we’ve not been able to get excited about travel related businesses’.
It’s still possible to be wrong despite having hard data and domain knowledge. Not even experts with skin in the game always know for sure. It’s easy to see why they (and we) sometimes use data as justification for subjectivity; and it’s easy to imagine the difficulty of advocating a particular business decision because it feels like the right thing to do.
Intuition plays a part in developing any kind of skill or expertise. The Dreyfus Skill Acquisition Model illustrated here maps our journey as we acquire a given skill. At each of the first three stages, from novice to proficiency, we fall back on our analytical thinking skills. It’s only in the last two stages, when we develop expertise and mastery, that we begin to rely on the power of our intuition to guide decisions.
We hone our intuition with practice.
Bernadette Jiwa is a recognized international authority on the role of story in business, innovation and marketing. She advises, consults and speaks to entrepreneurs and business leaders who want to build meaningful brands. Her work with global brands helps them to intentionally create products, services and marketing that make them to matter to their customers. Bernadette’s blog, The Story of Telling, was voted Australia’s Best Business Blog in 2012, Smart Company named it one of Australia’s 20 Best Business Blogs in 2014. She was also named as one of the Top 100 Branding Experts to Follow on Twitter. Bernadette spoke about ‘The Secret to Spreading Ideas’ at TEDxPerth. She is the author of five bestselling books on marketing and brand storytelling. Her last book Meaningful featured on Inc. Magazine’s list of The Best Business Books of 2015. For more information, visitthestoryoftelling.com.
Adapted from Hunch: Turn Your Everyday Insights into the Next Big Thing by Bernadette Jiwa, in agreement with Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright © Bernadette Jiwa, 2017.
Originally published at medium.com