Entrepreneurial gut feelings – bad or good?

by Magnus Penker on May 29, 2010

In a new report from McKinsey they point out that leaders will be biased by their gut feelings and due to that they have to be able to judge the impact of the gut feelings. The technique suggested is to answer following questions and adjust the decision process after the answers:

  1. The familiarity test: Have we frequently experienced identical or similar situations? This ca be very helpful, but also misleading. If we have plenty of appropriate memories to scan, our judgment is likely to be sound; chess masters can make good chess moves in as few as six seconds. But there are also several examples of bad decisions made based upon earlier experience. Just look at all rejected inventions in the past or crazy statements made like Bill Gate saying 640K will be enough memory in a PC.
  2. The feedback test: Did we get reliable feedback in past situations? If we did it will be very helpful in the future decision making, otherwise it will be a joker.
  3. The measured-emotions test: Are the emotions we have experienced in similar or related situations measured? Emotion tags are very powerful and might some time blind us from seeing the truth.
  4. The independence test: Are we likely to be influenced by any inappropriate personal interests or attachments? As an example, when a group of auditors was asked to demonstrate to a Harvard professor that their professional training enabled them to be objective in arriving at an audit opinion, regardless of the nature of the relationship they had with a company, they demonstrated the opposite.

Now, how is it with entrepreneurship and driving form paradigm shifts or disruptive technologies? It’s a tricky question. Familiarity will most likely hinder you from seeing things with new eyes, discovering new patterns and possibilities. Feedback is of course good and healthy, but the most breaking inventions have fails many times before succeeded. Most likely you will be emotionally attached, which can be good or very bad. Will you be independent, no never which also might be a problem because you really want your idea to fly. My advice is; go for your instinct but do the acid test with the McK four questions to unpack the hidden driving forces.

About Magnus Penker :

Director-level consultant defines corporate strategy, sets direction, executes growth and turnaround business plans. Read more at http://www.linkedin.com/in/magnuspenker

Leave a Comment

Previous post:

Next post: