Is There a Metric for a Gut Feeling?

It’s hard to disagree that everyday life is a set of choices and decisions. This is the basis for the next steps and actions. We are trying our best to make smarter decisions and act rationally, but in reality it’s often a battle between rational and emotional. Thanks to behavior economics we know that we are constantly biased and even serious decisions might be affected by our mood or what we had for lunch. (Kahneman, D. (2011). Thinking, fast and slow. )

While taking decisions in our private life may be less harmful, decision making in business might have much bigger impact. Let’s take an example of investing in creating a product or service.

Nowadays, the professional decision making process is pretty well organized. Companies are trying to avoid biases by using various criteria and metrics in order to rely on dry numbers and data. The research is claimed to be an important first step in the process. Before taking decision about investing companies want to understand risks, trends, a target audiences, market situation and etc. They are making sure that three bastions of success are presented: desirability, feasibility and viability. And that is the rational part.

But reality is tricky and always different from the textbooks. Another fun fact — decision makers of any level are still humans! Which means that despite all the metrics and research outcomes the final decision still should be made by someone in charge. And here we are coming back to the battle of rational and emotional.

I’ve heard it couple of times from the decision makers:

“Yes we do rely on data, but we also have a gut feeling, that it’s a good idea to invest in this product/team/service.”

or

“Yes, I totally understand our customers, I’m working here for decades. I feel like we need the following features…”

or even

“Our managers gathered together in a special meeting, brainstormed a lot and then decided to create this amazing product.”

Metrics versus gut feeling. Until what extent does it make sense to trust intuition? Could it be right? If I’m an expert in my field, is my opinion valuable enough to rely on?

I have a good news and a bad news here. The good news is, according to Daniel Kahneman, the more experience you have, the better your intuitive decisions are. You could train your gut feeling and make better decisions then the others.

The bad news is that there are way too many variables, your experience might be not covering 100% of knowledge and you’re a still biased. Many other things could affect your choices, for example, company politics or possible annual bonus for closing a deal and etc.

Well, then how to deal with it? Are we all doomed? How to make sure that you will create a product that will fly? The startups fail rate is 90% (Link), and I believe that cognitive biases of decision makers are contributing to this number.

Let’s see how the gut feeling works. Imagine, that you need to decide if you want to invest in creating a product. You have all your metrics and analysis done, still you need to give a green light. And you’re asking your guts. You’re trying to understand all the pros and cons yourself. You probably could even do it, since it’s your area of expertise. So you’re trying to imagine yourself as a future customer and see if you want this product or not. If you are ready to pay for it or not.

What you are doing is user research and product testing in your mind. Even if the user research is not valued yet in your organization it’s just happening naturally.

What I want to point out is that if your motivation to invest correlates with the future users’ motivation to buy and use the product, then why not start with the damn user research first?

Takeaways

If you’re about to invest in creating a product or service, where you feel like your expertise gives you the right to ignore the data, then try to reflect on your thinking. And if you put yourself in the shoes of the end customer, ask yourself: Am I trying to understand my customer myself? Yes? Then maybe I should hire professional researchers to make sure I don’t burn the budget I’m responsible for?

If you’re a researcher and your research outcomes are being ignored or only used to make presentations pretty, then use the same arguments with your bosses to change the situation.

Did you have similar or different experience or maybe you know better solution to this issue? Feel free to share ↓.