When do you make decisions based on intuition and when should you trust the data?
That’s a common question I get from people looking to understand how our business has grown over the last few years. Opinions on this definitely fall to one end of the spectrum.
On one hand, there are those who trust intuition over all. They quote Henry Ford who said if he gave people what they wanted (customer data), he would have built a faster horse. They talk about how you can find data or shape the numbers in any way. They talk about people and leadership.
And on the other hand, there are fans of big data. They say the real numbers don’t lie. They are fans of surveys, studies, and analytics. They are fearful of the charismatic leader who can drive decisions without anything to back it up.
Then there are those who say you should stay in the middle, but I don’t think that’s the case. There are times to trust your gut and there are times to rely on the numbers. The trick isn’t staying perfectly balanced. It’s knowing when to be intentionally unbalanced.
There are times to make decisions based on intuition.
When we decided to launch a monthly membership program, we priced it at $35 a month. We eventually raised it to $45 a month and I think the quality of the product will justify another price increase in the next 12 months. But when we selected this price, we just made it up out of thin air. We didn’t do a two-year price study; it just felt right.
And when we raised the price to $45, we didn’t have a ton of analytics. It just felt like the right time. And the sign-up stats showed that after the fact.
Some of the products and topics we discuss are also based on intuition. We’re working with people on the ground and our team is in constant touch with the people we serve. We keep our pulse on that so we’re able to create resources that meet people’s real needs. Yes, we do survey people and get feedback, but more times than not, our team feels like a topic is right for a product.
You can make decisions based on gut feel, but you shouldn’t do it too often.
If you depend too much on intuition, you’ll tread dangerously close to the Moses Complex. It’s t leader who comes down from the mountain with tablets of stone saying, “This is what we’re going to do.” That’s great once or twice, but if you keep coming down from the mountain, you’ll confuse people and change the game too often.
There are times to make decisions based on data.
That’s why some decisions need to be based on numbers, data, or analytics. It can’t all be a gut feel. Sometimes, you need to let the numbers guide the way.
For example, we recently looked at our customer retention rate and studied the pattern of when people tend to drop their membership. Our core product is a no-contract product, so it’s really important to know when and why people decide to quit.
Now our retention rate is REALLY good, but I still wanted to let the numbers help us improve it. So looking at the data let us know when we needed to add an automated touch point and a special gift. Now, just before some people think about canceling, they get a personal note and a gift in the mail.
Leaders should reserve the right to let intuition guide them, but don’t over rely on this. Use that same gut feel to know when it’s time to trust the numbers.
Live in the Tension
The tension between intuition and analytics is another example of how every organization needs two kinds of leaders. I call them wow people and how people
Wow people need how people.
The visionary leaders who love to talk about vision need operational executioners who love to live in reality.
And how people need wow people, lest the work they do become too routine and without any big picture vision to drive it.
Wow people love leading by intuition. How people generally trust the numbers. So if you’ve got both types of these leaders in your organization, you’ll be able to lean on both of them at different times.