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Wednesday, Aug 02, 2006

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Intuition vs evidence

In the early stages of industrialisation, for one who had the money and the desire to start a new venture, there was not much to go upon other than intuition or hunch to decide what will work or sell. A large number of new enterprises fell by the wayside, because hunches about the marketability of their product or service proved wrong. In fact, the dotcom bubble of a few years ago was also a result of the failure of impulsive notions about technological possibilities or consumer preferences to take off in the market place.

At the same time, if one reviewed the history of industrialisation, it will be found that inspired ideas by creative minds which had simply acted upon the "inner voice" had also triumphed. Walkman, Hotmail and Google are brilliant products of ingenious persons blessed with imagination and a mind in a constant state of ferment.

In recent years, though, intuition or instinct is being rejected as the basis of business decision-making. The current trend is to assemble a mass of facts and figures, scan, sift and screen them in a systematic manner, work out a number of quantitative models, conduct extensive market surveys and research, and then come to a decision as to the acceptability of the product or service and the nature and extent of investment.

Management by facts or evidence painstakingly gathered and evaluated, has the advantage that it helps in the precise mapping of the route traversed to the final decision and in the delineation of the best and worst case scenarios in advance. As an article in the strategy+business magazine puts it, "real knowledge in the form of empirical analysis of results is the shortest path to the best business decisions". It also brings out that evidence-based management is what makes the top-performing companies what they are.

However, in my view, it is not a question of one versus the other: What works best is a productive blend of both intuition and evidence.


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