Intuition

1
Intuition

• Definition
• Intuition as weak decision making
• Intuition as strong decision making
• Intuition as a kind of skill
• Self-rating of intuition
• Situations that need more/less of it

2
A Definition of Intuition

• Intuition is using information and making
  judgments based on skills, rules, and/or
  knowledge without conscious awareness
• Scientific and popular literatures span bodily
  reactions, feelings, pattern matching, spiritual
  insight, and even ESP

3
An Example Ray Kroc

• Sold paper cups for Lily-Tulip, became Midwest
  sales manager
• 1937 quit to buy sales rights to multimixer that
  could make six milkshakes at once
• 1952 McDonalds ordered 8 for one restaurant in
  San Bernardino Kroc flew out to look and saw
  long lines
• Talked the brothers into letting him franchise
  their outlets
• In 1960, frustrated by his small percentage, he
  asked for a price on everything 2.7 million,
  excluding the original restaurant
• Lawyer said no. Im not a gambler and I didnt
  have that kind of money, but my funnybone
  instinct kept urging me on. So I closed my
  office door, cussed up and down, and threw things
  out the window. Then I called my lawyer back and
  said Take it!

4
Intuition Weak Decision Making

• Intuition as the lack of rational thought
• Womens intuition
• Intuitive experts do worse than models
• Schoemaker Russo pyramid

The higher the method is on the pyramid, the
more accurate, complex, and costly it tends to
be. (1993, p. 26)
5
Intuition Strong D-M

• Klein - pattern matching, recognition
• Simon - chess masters memory
• Dreyfuses - expertise as use of intuition for
  perception, action, frame, decision
• Executives are paid for judgment
• Scientists esthetic of elegance
• Analysis paralysis, MBA syndrome a foolish
  consistency is the hobgoblin of little minds

6
Skill, Rule, and Knowledge

• Kleins recognition-primed decision model starts
  with intuitive situation assessment, evoking a
  match or anomaly (skill-based)
• If there is no match, a deeper diagnosis is
  attempted based on more general if-then rules
• If that fails, experts become like novices using
  knowledge-based general reasoning and mental
  simulation of potential plans (more analytical)

7
Intuition as Part of D-M

• Myers-Briggs Cognitive Styles

8
Agors Survey Intuitive Ability

• Top managers average 6.5, middle/lower managers
  average 5.8
• Women average 0.6 higher than men
• managers of Asian background average 0.3 higher
  than managers of Caucasian background

9
Some Situations Induce Intuition

• Management is the art of making decisions with
  insufficient information
• Hammond - more cues, more redundancy, unfamiliar,
  presented as a whole, pictorial, little time
• you are expected to decide bigger issues
• success comes from distinctiveness rather than
  accuracy, e.g., macroecon. forecasts

10
Union Bank of Switzerland

• Until c.1990, top level decisions had no
  strategic planning function gut feel -- out of
  the stomach
• Now, quantification happens at the middle level
  top level still decides by gut feel
• Decisions within silos (run by the 7 Kings)
  are technically quantifiable decisions about the
  whole bank are (believed to be) not
• quantifiable, e.g., 2 silos or 1?
• Should we keep retail only
• within Switzerland?

11
Job Choice Exercise

• Where do attributes come from?
• - alternatives that differ (attribute-focused)
• - value-focused
• What level of attribute? (see table)
• Values must develop (cf. Schein)
• How to manage tradeoffs?
• When do weights matter?
• Sensitivity analysis/need for more data

12
Your Job Choice Attributes

• Financial salary, benefits, risk, (bonus)
• Job satisfaction, learning, leadership,
  autonomy, responsibility, training, (creativity,
  fit to values, challenge, creating value,
  variety, control, power)
• Context culture, type of business, size,
  working conditions, diversity, socializing,
  (coworkers, dress code, open door, loyalty,
  teamwork, similarity)
• Career promotion, stability of employer,
  (prestige, raises, exposure, market share,
  security, mentor)
• Personal location, hours, stress, travel,
  commute, living expenses, dating possibilities,
  (schedule, quality of life, flexibility, office
  size)

13
More on Job Choice Exercise

• Most (but not all) trust the intuitive model, and
  try to adjust the linear models to agree
• trust, but verify (intuition is not perfect)
• Does using intuition first bias the model?
• Weight ranges varied greatly
• Weights may be hidden in attribute ratings
• What would you do if this really mattered?
• Modeling for learning, not for choice!
• how to develop intuition

14
We Are What We Choose To Do

• It is our choices, Harry, that show what we
  truly are, far more than our abilities
• Professor Dumbledore
• J.K. Rowling, Harry Potter and the
  Chamber of Secrets, 1999, p. 333.

15
Scheins Career Anchors

• Self-perceptions of motives, skills, and values
  that you would not trade off, that solidify with
  work experience
• Technical/Functional Competence
• Managerial Competence
• Autonomy/Independence
• Security/Stability
• Service/Dedication
• Challenge
• Entrepreneurship
• Life-Style Integration

16
A Personal Mission Statement

• Just as companies create mission statements and
  the US founders wrote a Declaration of
  Independence, individuals become self-aware
  through articulation of and reflection on their
  own goals and values
• This is not something to do in a few minutes, but
  a serious project that should be reviewed from
  time to time
• The superior man seeks what is right the
  inferior one, what is profitable. - Confucius

17
Instrumental Terminal Values

• Take one of the important attributes from
  exercise 1, such as salary
• Why do I want this?
• Why?
• Try to ask yourself why? 6 times!
• When you get to things desired for their own
  sake, you have found terminal values

18
Begin With the End in Mind
from Stephen Covey, 7 Habits

• Find a quiet spot to reflect for awhile and clear
  your mind
• Imagine you are going to the funeral of a loved
  one. As you walk inside you see the flowers and
  hear the music. Family and friends are there.
  As you walk down the aisle to look in the casket,
  you come face to face with yourself.
• This is your funeral, three years from now.
• As you wait for services to begin, you look at
  the program. There are four speakers one from
  your family, one from your friends, one from your
  work or profession, and one from your church or
  community.
• What would you like each of these speakers to say
  about you and your life? Look at the people
  around you what difference would you like to
  have made?