The role of ‘gut instinct’ in IS evaluation at the proposal stage

31 Oct

“Our knowledge of the factors which will govern the yield of an investment some years hence is usually very slight and often negligible.  If we speak frankly, we have to admit that our basis of knowledge for estimating the yield ten years hence………..amounts to little and sometimes nothing” (Keynes 2007)

According to Bannister and Remenyi (1999) there is a limit to what can be accomplished through formal rational evaluation methods when mapping the set of evaluation methodologies onto what is called investment opportunity. This limitation of complete formal rational decision making is evident when mangers/decision makers go by their instinct or “gut feeling” and other non formal methods. It is important to note that it is not just what can be represented in monetary sums that affect decisions but also political, cultural, personal, externalities and other such factors that can be difficult to comprehend by a database. These factors may be extremely difficult to rationalise in a decision and instead go by instinct. Therefore “gut instinct” should not be ignored as it is a different kind of reasoning and it takes into account how the world really is rather than just databases/monetary measures. This is otherwise known as hermeneutic approach.

However decision makers rationality/instincts is most effective when gone through step by step analyses where the existing information, personal experiences and psychological make-up is filtered before being assimilated in order to make the most appropriate decision.

Productive management decision-making requires a variety of different aspects. Rational thinking on its own is not enough. We can now see that “gut instinct” has a central part of all decision making process because without an understanding of instinct/gut feeling there would be a lack of understanding of management itself. “Gut instinct” is the ability to make intuitive leaps that may distinguish the great manger from the ordinary one and is what separates man from machine. Wheatley (1992) highlights the issue of instinct/gut feeling: “We inhabit a world that is always subjective and shaped by our interactions with it.  Our world is impossible to pin down, constantly and infinitely, more interesting than we ever imagined”. In conclusion, from the points listed above that it is clear that in order to have successful management decision making, rationality plus “gut instinct” must exist.

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3 Responses to “The role of ‘gut instinct’ in IS evaluation at the proposal stage”

  1. cmcoughlan October 31, 2012 at 11:46 pm #

    Interesting take on the subject lucid21. I certainly agree that ‘there is a limit to what can be accomplished through formal rational evaluation methods’ as noted by Bannister and Remenyi. Personally though, I’m not sure how beneficial the ‘gut instinct’ method would be either. I’m sure the head if IT in any organisation would very often have a ‘gut instinct’ about how valuable an Information System is but how exactly would he or she convince the Financial Director or CEO to invest? Surely they will not simply agree to spend the company’s hard earned profits on a mere ‘gut instinct’? As seen in the ‘Soft Software Proposal’ by Thomas Davenport, the company president was only interested in hard facts and figures which clearly showed how valuable the new Information System would be; he was not interested in the personal opinion of the Chief Information Officer without solid figures to back it up. So perhaps gut instinct will only come into play when there is also some financial figures to back it up?

    • lucid21 November 4, 2012 at 11:20 pm #

      Hi cmcoughlan! Thanks for the comment. I just want to start this off by saying I completely agree with your comment 100% that financial figures are required prior to a decision at the managerial level. However you are contradicting an argument that was never put forth in the first place. You must have misinterpreted the text as I do not believe that pure gut instinct is the ideal methodology at a managerial level, hence when I said “in order to have successful management decision making, rationality plus “gut instinct” must exist”. Rationality being as you said “hard facts and figures”. Of course a decision must be supported by financial figures common sense would tell us that. I never said “gut instinct” was a method, but it “has a central part of all decision making processes” and it shouldn’t be disregarded or denigrated. The reason gut instinct should not be ignored is because it’s a different kind of reasoning as it takes into account how the world really is rather than just databases/monetary measures. Instincts may take into account political, cultural, personal, externalities and even experiences which may be difficult to rationalise, therefore there is a “role of gut instinct in IS evaluation at the proposal stage” (the question I was answering). However again stressing that it is an additional factor to monetary measures and financial forecasts but the combination of “rationality plus gut instinct must exist” in order to have successful management as it “distinguishes the great manager from the ordinary one”.

  2. ronnoc90 November 10, 2012 at 9:31 am #

    Hi Lucid21 – great post! You clearly defined the role of gut instinct, it’s strengths, it’s weaknesses, and when it can be justified. I agree with the above sentiments, gut instinct alone is not enough but it does have a role to play, in that it is an additional factor to financial metrics etc. I posted an interesting article last night highlighting your point but posing the question how do you know when your gut is wrong. Check it out!

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