The great debate: analytics vs. instinct

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Malcolm Gladwell, author of Outliers and Blink, and Tom Davenport, Babson College professor and author of Competing on Analytics, engaged this morning in a debate on a live Webcast onsite at The Premier Business Leadership Series at Caesars Palace, Las Vegas. The theme of the debate is analytics vs. instinct: which works best for strategic decision-making.

I’ll share a few highlights here, captured from our position among the production crew in the control room. (You can view the archive here):

Gladwell’s worry with analytics, though he does value them, is that there is a tendency for people to use them in areas where they don’t belong, and often say that there’s no room for gut instinct. But that doesn’t mean he’s squarely in the “gut instinct” camp. Gladwell says that intuition is most useful in the context of a great deal of expertise, and that expertise is most often grounded in data.

Davenport still countered, however, by stating that analytical decisions have been proven in academic studies as more likely to be correct. Davenport elaborated on the types of decisions or situations that are appropriate for an analytic approach:

  1. When the time demand of the decision at hand is appropriate: you have to have time to gather data, which you can’t do in a rapid-fire situation.
  2. For particularly important problems. It’s overkill to use analytics to decide what flavor of ice cream you want to buy.
  3. When you think the past is a good guide to the future. If for some reason you think it isn’t, analytics are not a very good tool.
  4. If you have to repeat a decision frequently, as in insurance underwriting, you can get accuracy and speed by automating your approach.

Even so, Gladwell challenges that there are applications where analytics simply should not be the exclusive approach. Davenport believes that analytics support better answers to problems. But in the final round, Gladwell offers a one-two punch: Financial. Crisis. Gladwell says that if ever there was an industry in the throes of analytics it was Wall Street last year, where analytics permitted a level of confidence that wasn’t warranted. It was a situation that could have benefitted from someone with some common sense who may have observed that something was very wrong, and they need to depart from what the models were saying.

All in all, a fair fight. But this writer lands in Gladwell’s corner, because how many times has a pediatrician told a mother, when faced with those “mystery” symptoms, to trust herself to know when her child is really sick.

Is it all about the data? What does your gut tell you?

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Kelly Levoyer

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