Decision-making in small businesses is often caught between the instinctive and the fact-based. Many businesses require a gamble or two to successfully grow and meet their potential, but how much risk is too much? And should those making the big decisions seek more data before taking action?
As this infographic demonstrates, intuitive decision-making can be effective up to 90% of the time. However, companies which are driven by data are 5% more productive and 6% more profitable than their competitors. Of course, so-called ‘rational processing’ is still the product of an emotional response to a situation - you are still deciding how to process the information you have. And this could be a reassuring thought for those who are reluctant to let facts and figures rather than gut instinct rule their decisions.
Margarita Tartakovsky writes about the potential danger of listening to your gut, and argues that instinct is too vague a feeling to be trusted. We can apply this worry to decisions made in small businesses - taking a gamble with money or new employees could possibly be trouble for the company. Angela Jia Kim, however, suggests using rationale when you can feel your gut instinct kicking-in in order to make it less ambiguous - this can take the the form of questions such as “Do I feel good around this person or choice?” and “Am I listening to my lessons learned from the past?”
The managing director of paid search agency Net Media Planet, Sri Sharma, argues that “data is only insight, not an answer”. It may seem sometimes that there is so much data that making a decision quickly, or at all, is no longer possible - a phenomenon psychologists call analysis paralysis. Bernard Marr points out however that data-driven decisions require strategy, and recommends that rather than “starting with what data you could or should access, start by working out what your business is looking to achieve”. Keeping goals in mind while considering data enables you to avoid becoming overwhelmed by information, and still make a snappy decision with the benefit of extra insight.
Having data to hand is one thing, but being able to actually interpret it and use it to your benefit is another. Whoever is in charge of data analysis should ensure that they present their findings in a clear and understandable way, so that the people in charge of the decision-making have all of the facts at their disposal. Although the data has been analysed and presented logically, it’s important to include the science of instinct here too. Somatic markers in the brain are thought to send cues when something feels wrong, so you should remember to balance the science of analysis with the science of the mind.
When it comes to making the best decisions for a small business, you should consider the advantages to both gut instinct and data. Ensure that you have data applicable to the situation, analysed correctly and distributed effectively to the relevant people in the company, but also pay attention to your gut - that instinct is built from and has been honed by your past experiences, so it’s certainly worth including in the decision-making process.
By Irma Hunkeler, head of content, BlueGlass