What We Know About Leading with Intuition

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0:32I'm Adi Ignatius. I'm Alison Beard, and this is the HBR IdeaCast.

0:43All right, so Alison, when it comes to making decisions, do you consider yourself data-driven or do you just kind of go with your gut? A hundred percent my gut, and I know that's a very old-school way of doing things, but when I'm deciding on an article to commission or a guest I want to have on this show or a magazine cover, I definitely think to myself, does this feel right? Do I know it's going to work in my heart of hearts? And I trust that instinct. Well, you know, I interviewed Barry Diller on this show not long ago and he says he makes every decision by his gut and if you follow any other path, you're going to make a mistake.

1:19So, I mean, to be honest, I set up kind of a false dichotomy with that question between using data and information on the one hand versus using intuition and emotion. So today we're going to talk about intuition and following your gut, but our guest, Laura Huang, doesn't make that kind of hard and fast distinction. She says that actually when we're making a decision with intuition, it is a combination of, it is informed by our previous experience, the external data that we've gathered, you know, even if we don't realize it at the time. So there is data even inside what feels site gut decisions.

1:52That does make me feel better because I think we live in this age of data and analytics. And sometimes I feel bad that I'm not looking at the spreadsheets to make my decisions. But I think that what you're saying makes sense. I am using decades of experience in journalism, as you do as well, to make those calls and what we think is good editorial content. Yeah. And look, maybe that's the secret of success for people in leadership positions, that they have an ability to rely on their gut, but that is informed by years of experience and skills and knowledge. So today we're going to talk about how that works.

2:27There is some real science here today. It's not just a wishy-washy concept. We will be speaking with Laura Huang, who's a professor and associate dean at Northeastern University. She wrote the book, You Already Know, The Science of Mastering Your Intuition. Here is our conversation.

2:47All right, so I want to ask you, you're deep in the field of studying what it means to rely on your instincts to have a gut feel for something. What made you decide even to go into that field? You know, I came from a very technical background. I was an engineer, was designing lots of new products. And what I realized very quickly on was that it was never the best product that won. There was always other factors that led to whether or not that product was being accepted, whether it was being adopted, whether it was being put to the next level of testing, all sorts of things along the way. There were all these subtle cues and factors and perceptions and even intuitions that dictated whether something went forward or not.

3:33because I came from a technical background, I thought that there was a way that we could sort of quantify that. And so a lot of my earliest research was around how do we quantify the unquantifiable, something like our intuition or our gut feel. So I know that one of the first bits of research you did was with early stage investors, you know, I guess who went with their gut. Talk about what you found in that. You know, I found that a lot of times when I was asking investors, well, how did you decide to invest in XYZ company? Or how did you decide to pass on ABC company? That's 100 % of the people I spoke with, they would talk about the data, the financials, the hard sort of factors, but they would also talk about their gut feel.

4:19They would start to say things like, yeah, and then I just had this feeling. I just knew that I had to invest in this person, or I had this feeling that there was something that was off about this idea. And so, you know, there was an element of that that was blended throughout any of the decisions that that they were making. I even had one investor, actually, when I was interviewing him, he said, I said, How do you make your decisions? And he said, Oh, I just, I rub my tummy. I just rub my belly. And so, you know, that that that kind of illustrates in in some way that that factor, right, that we we have this gut feel around the decisions that we make.

4:53Now, obviously, don't try that at home. Yes. But okay, so you're getting a sense of the role of the gut feel in making some of these decisions. It's generally estimated that 75 % of let's say VC investments never return a profit to their investors. Does that mean that three quarters of these gut decisions are failures? So you're correct in the sense that when investors are making decisions, there's absolutely this portfolio strategy, right? That you can have 29 complete losses as long as you have one investment that's returning a 30x or larger return. And so the reason why the gut feel was so interesting and was such a factor for these investors was that when I looked at the overall, you know, sort of the overall decisions, when investors used their data, the financials and so on and so forth, that on the aggregate, their 30 might be a little bit, you know, on the plus side.

5:51But when their gut feel kicked in, that's when they were able to identify that extraordinary unicorn, right? That one that was going to be a 300x return or identifying the one that was going to be the complete dog and a complete loss. So said another way, right, if you think about baseball averages, if you use your gut feel, you're going to be hitting those home runs. you might not have the highest batting average, but you're going to hit much more of those home runs. And that's sort of what they were going for. I'm interested in the methodology. You know, people's accounts of what they've done, what they've accomplished, sort of improve over time with the retelling.

6:28So if somebody makes what turned out to be the right decision, they may well say, you know, I have this gut feel, even if they actually went through, I don't know, a more conventional process. How do you factor that out, what people say versus maybe what actually happened? Yeah, absolutely. Right. So if you're going to study something like gut feel and intuition and trying to quantify what that is, the methodology is extremely important. So what I had to do is I had to really triangulate. I had to use a variety of different methods to really make sure that what I was studying was actually gut feel.

6:58So there was sort of three big buckets that I would triangulate. The first was just interviews, thousands of interviews with individuals around what is their gut feel? What do they consider their gut feel? How do they make decisions? Trying to take apart what that gut feel is. Sometimes I didn't even use the words gut feel. And I just asked them, how did you make this decision? Trying to categorize and understand that. So then what I did was sort of a content analysis of all of that. I would look at qualitatively, what kind of things are they saying? Cluster analysis, all of that. The second set of what I did was a bunch of field experiments where I would take, for example, business plans or pitches, and I would change a specific part of data, right?

7:43So I would say in one instance, it's the exact same company, but for one company, it's a$300 million market. For the other company, it's a$3 million market. I would experimentally test, give these investments to investors and say, like, what are your opinions of this? Would you invest? How much would you invest? And so on and so forth, so that I could compare different things. And so in one case, I would have a investor or entrepreneur who had a really strong, elicited a very strong gut feel. And in one instance, someone who elicited a very weak gut feel. And I would take the same quotes that I used from the first sort of set of studies and embed those in there so I knew that they were in fact gut feel.

8:24And then the third set was just archival data where I collected pitches dating back to 2009, right? So everything from TechCrunch, Y Combinator, a variety of different angel investment networks. I've tested since 2009 to the present day, what were the gut feel that people had about them back when they were first starting? How strongly did they end up performing, which went bankrupt, which are now huge, massive IPO'd kind of startups, all that kind of thing. So lots of things went into this. So some decisions are made truly, you know, by gut feel, some aren't. What's the value in breaking this all down?

9:02The first is that we misunderstand what gut feel actually is. Some of us tend to think that it's like almost this mythical kind of superpower that we just tap into and that we just magically know, right? And other people are like, oh, no, no, it's something that's really biased and you have to collect more data to sort of understand. So we all have a lay view of what gut feel actually is. And so the more that we can actually understand what gut feel actually is, the more we're able to train it and hone it and harness it so that it's something that becomes a tool. It's something that becomes a compass for us to make our decisions and know that when we're making those decisions that they're going to be the accurate, trusted ones.

9:49The question is often, what is gut feel? But it shouldn't be. The question should be who is gut feel because gut feel is you, right? And so when we understand that you could have a gut feel about something and I could have a gut feel about the exact same decision and they would be very, very different intuitions and very, very different gut feels, but we would both be right because of who we are and how we're bringing it forward. That starts to also muddle it a little bit. And so in my research career, I've constantly been trying to bring it back to the quantitative, bring it back to the science so that we can still have this very important concept that we understand both scientifically as well as personally.

10:35Does your research in some ways contrast with Daniel Kahneman's ideas in thinking fast and slow? I mean, this is super simplified, but doesn't he have less confidence in our intuition and judgment than maybe you're finding? Yeah, so that second category, right, what Danny Kahneman writes about is absolutely these sort of shortcuts that our brains are taking, that we have these sort of mental models that allow us to process information more quickly. And that's absolutely part of what my research speaks to. But what I find in this sort of quantification process, what I find is that our gut feel is actually data plus experiences.

11:16So it's this culminating factor. It takes into account all of our expertise and our experiences and our background and our culture, even our trauma, all of our personal experiences added to the data that we're being presented with or that we see. And it's this aggregate factor that allows us to make these decisions. One of the reasons gut feel is so hard to define is because we've confused the different pieces of it, that there's actually a process and an outcome. And the process is what I call the intuiting process. It's this process that allows us to be integrating all of these different factors, this data, our personal experiences.

12:03And then at the end of the process, there is an outcome. There is a gut feel outcome. Sometimes we short circuit that process. And when we short circuit that process, we arrive at an answer that might not be reliable. But when we disentangle the fact that there is this intuiting process, which could be months or years, or sometimes it could be seconds, right? The timing of that can be very fast or slow. And then there's a gut feel outcome at the end. When we understand both those pieces and both those components, we can actually be tapping into it. We can be honing it, harnessing it, and training it to our benefit.

12:42And just to be clear, you're saying that the gut feel based on, as you say, data on one's experience that you're honing along the way or throughout your career, that basically, you know, the gut feel is going to lead to a successful result, what, more frequently than not? I mean, are you advocating for relying on your gut if you do it in the right way because you will get better outcomes? When you use your gut feel for the right types of questions and the right types of problems, and you understand what is sort of happening in this process, your gut feel will be correct 100 % of the time. If you're using it for things that are probabilistically deterministic, and you are jumping to some kind of conclusion, what I argue is that that's not actually your gut feel.

13:35You think it is. It might be based on emotion. It might be based on something that you're sensing, but it's not actually that gut feel that we can trust and rely on where your gut feel is not lying to you. Your gut feel doesn't lie. This is not something that's linear, right? People can say, well, how do I use my gut feel? What are the five steps that I need to take? I can't say to them, okay, step one, do this. Step two, do this. Step three, do this. Step four, do this. And that's why it's very difficult sometimes for us to understand scientifically, because we read things linearly. We try and understand things linearly.

14:12And yet the real power of gut feel is the fact that it's not linear. It's bringing together things that we might have remembered from when we were five years old, things that we learned when we were in our university days, and a piece of data that we encountered yesterday. We don't process it linearly, even though there is a process and an outcome. Is the problem that you're trying to address partly that people aren't always comfortable with a decision that they know is their gut, right? It's not pure data, let's say, and that as a result, you're getting policy paralysis, decision-making paralysis.

14:50I mean, is that one of the key problems you're trying to address here? Absolutely. The action piece of it, the not wanting to take action. I've seen decisions that have been made where we take the step, we do the thing, and then what do we all do? We post hoc rationalize to find the data to support what it is we wanted to do anyways, right? And so what some of my research tries to aim to do is to illustrate that one of the things that your gut feel allows you to do is take action. You use your gut feel, you make the decision and then you take all of the subsequent steps to make the decision you made the right one.

15:28That's part of the entire process. That's where it's not completely linear. It's very circular. So I would suspect that when we make a decision and we say, you know, everyone's telling us don't do this, but we do that. After we do that thing, we're still supporting it. We're still bringing in other things to make the right decision. Even when the investor makes the decision to invest in a certain startup, they're still mentoring that an entrepreneur. They're still connecting that person to making introductions for them, providing them with other resources. You don't just sort of make that decision and say, OK, now let's see if it turned out to be the right one or not.

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17:20So let me give you an example from my career, and you can tell me if this is relevant or not. So when I became editor-in-chief of Harvard Business Review 16 years ago, one question was, do we modernize the cover? So the cover used to be an old-fashioned academic journal-type cover with sort of the table of contents on the cover. Before I came to HBR, we brought in a consulting company, spent a lot of money on consulting, and they said, don't touch the cover. The HBR cover with everything listed is as iconic as Time Magazine's Red Border. And, you know, touch that at your peril. Now, my gut feel, I don't know, maybe it's my intuition, just said that that research didn't make sense.

18:01Particularly as we were moving into more of a digital age, you know, for a variety of reasons. That just didn't make sense, particularly in the way we were trying to grow. And so we did change the cover. It worked out. Everything you could measure improved. Right. Maybe we just got lucky. When you hear that story, how would you analyze that in terms of your research? Okay, so the first part, you know, the maybe we just got lucky piece of it. That's something that I hear a lot because we don't have the counterfactual, right? We don't know what would have happened. We don't have that A-B test. However, based on even just your description of it, there's a number of components in my research that show that, in fact, you did have a gut feel, you relied upon it, and it did not lead you astray.

18:43It led you to something that turned out to be very, very successful. So the first piece of it is that if you go back to even Bayesian statistics, you have priors and you have prompts. And your prompt was this individual telling you, don't change the cover. It's as timeless as the red border on Time magazine, right? But that actually brought you to what I call sort of this level of focused abstraction, right? You saw that there was a mismatch between what the data, what these individuals were telling you, and what all of your prior experiences. You knew things around customer preferences. You knew things about current trends.

19:25You knew things about the brand. And all of that was aggregated into this feeling where you were like, no, I have this gut feel that we should change the cover. What I talk about in this is that there are three manifestations of our gut feel. We will feel these categories differently. But generally, the first is called eureka, which is like we have these eureka moments. Like, aha, right? Like, I've been trying to solve this problem. And finally, I have the solution. The second is what's called a spidey sense, right? Which is like something doesn't feel right about what I'm hearing. And then the third is what's called a jolt, which is that you receive some sort of information or piece of information and it changes.

20:11It shifts the entire way that you see things. It shifts what your priors were. And we all feel these differently, right? So your eureka moments, your spidey sense, there are ways in which we feel it emotionally, right? So your eureka moments might be like, oh, you get a feeling of excitement, but somebody else might feel it as anxiety. We all feel it physically differently. It embodies us differently. You might feel it in your neck. Somebody else might feel it in their shoulder and so on and so forth. But when you're telling me this story, I can pretty much almost surmise that you experienced something where you were combining your priors, this prompt, and there was something both in that personified, embodied, emotional, and cognitive combination that you recognize as being accurate and as your gut feel.

21:00So for people who are trying to adopt this, right, as a way to make better decisions, I mean, one could imagine a gut decision that's just, I sort of like this more than this. I like blue. I don't like red, which seems sort of random and maybe biased versus the more considered, you know make sure your gut feel is informed by as you say the data experience your sense even if you're not thinking about it concretely of the market of potential so if somebody's trying to learn how to do this right how do they make sure these gut decisions that you say when they're done right you know it could be a hundred percent success rate that it's sort of the real deal and not just a kind of random you know i mean i think one of the things that you're alluding to is this notion that sometimes people are like well how do i know that it's my gut feel right because sometimes people are like, isn't our gut feel just our emotions?

21:52Like if I'm feeling really excited about something or I'm feeling really anxious about something, how do I know that, you know, how do I sort of navigate that? And, you know, one of the things that I think about sometimes is like, you know, emotions are sort of like children, right? Emotions are like children. You don't want them driving your car because they're going to crash it, right? But you don't shove them in the trunk because they might die. You want them in the back seats where they can be seen and they can be heard and they can be attended to, but they're not in control of anything, right?

22:24And I sort of love this metaphor because it gets at this question that you're asking, right? When we're trying to recognize our gut feel, we're not supposed to suppress it. We're not suppressing our emotions. We're not shoving them in the trunk. We also don't want them driving the car, but we're supposed to give them the right seat. Emotions are part of the process. And this is where we often, people often get mixed up. Gut feel is much more layered. It's much more nuanced. It's our lived experiences. It's our subconscious pattern recognition. It's our memory. And yes, it's also our emotions all rolled into this internal executive summary.

23:02And gut feel doesn't shout, right? It whispers. So I talk about in my work, like, we need to get better at listening to what whispers and not what screams. There's so much out there that's screaming at us, right? Not just literally screaming at us, like literally loud, like ambulances and dishwashers and vacuum machines. But there are things that are loud, like algorithms, getting suggested the next YouTube video to watch, social media, social pressure, all these things. And so we want to make sure that we're listening to what whispers and what's not shouting. So how do we do this? Okay. So we want to make sure that we let our emotions ride along, but not run the show.

23:46So one of the things that I tell people to do is like when you're uncertain, just ask yourself, like, am I acting from clarity? Or am I acting from something that I haven't named yet? Right? So if I were completely calm, would I still make the same decision? And if the answer is yes, it's probably your gut feel. But if the answer is no, it might be your emotion trying to take that front seat. Something else you can do is sort of give it a little bit of time, right? Give it like 24 hours, right? If you feel something, a sense of urgency pushing you towards a decision, give it 24 hours. If it's truly your gut, that clarity will remain.

24:26But if it was just emotion, that urgency will fade and you'll sort of know that it was something else. And so your decision around the cover, I would guess that if somebody had asked you and said, are you acting from a place of clarity? Are you acting from sort of pressure to change the cover? If you were completely calm, you would probably have made the same decision. All right. So let me give you another example. So I interviewed Barry Diller recently on this podcast and, you know, very successful entertainment, internet entrepreneur. He's all about intuition and gut. I mean, he's almost the opposite of, I don't know, what they teach in business school.

25:06And so, he says that he makes decisions in a very intuitive way, right? He will spur debate. He will encourage a cacophony, right, in the discussion. And he says he listens for what he calls the truth of things, right? Things will ring true and you can act on that. So he gave an example that he spent a billion dollars to buy Expedia right around 9-11. They had a chance to cancel the deal after 9-11 when Expedia literally had zero business. And someone around the table said, if there's life, there's travel. And he's like, okay, that rings true. We got to do this. Yeah. Is that an example of everything you're talking about?

25:48If there's life, there's travel. That is that focused abstraction. That's like getting to that level, right? What you're sort of describing is like listening for that moment of truth. And that moment of truth, you can either force it and sort of try and look out for it, or it's something that comes to you. And so that's where it's sometimes tricky. That's why sometimes people struggle with gut feel. But that focused abstraction, that point at which you get there, that's that sort of catalyst. And you're like, oh, my gosh, I'm having that eureka moment. Or, ah, this is what my spidey sense was telling me.