Introduction

When we make decisions we think things through, using our brain faculties and tend to have a gut instinct about whether the decision is right. Sometimes we make a decision based on our gut instinct, rather than what the logic of our brains tell us.

One of the most important questions we might face is when we should trust “gut instincts”* a phenomenon explored by McKinsey and which I have drawn on for this article.

This McKinsey work suggests that we cannot prevent “gut instinct” from influencing our judgements. What we can do is identify situations where our gut instincts are likely to be biased and then strengthen how we make decisions, to increase the likelihood of a “good” decision being reached.

Our gut instinct or intuition accesses our accumulated experiences in a synthesized way, so that we can form judgments and take action without any logical, conscious consideration.

Think about how we react when we inadvertently see a car start to pull out of a side road unexpectedly. Our bodies are jolted alert, and we turn the steering wheel well before we have had time to think about what the appropriate reaction should be.

Think about when we’ve gone to view a property, either to buy, rent, or stay in for a 2 week holiday. We instantly take a like or dislike to it from the outside. It may look old fashioned and run down from the outside and we may know from past experience that this is a good indicator, that the inside is going to be run down too. So our “gut” or intuition, tells us that, based on previously seeing neglected properties we will not want to stay in it, even before having even ventured inside.

We have often heard of the saying that we take 7 seconds to decide whether we like someone or not when we first meet, or an interviewer takes this amount of time to decide if someone is suitable for a job, or not and then the rest of the time is spent justifying that initial “gut” decision.

We tend to attach “emotional tags” to memories of things that have happened in the past and it is these which can influence our decision-making, more than assessing the pros and cons of a situation. We start to feel something, even before we are conscious of having thought anything. So we might find ourselves saying something like “I can see that logically it makes sense, but it leaves me feeling uneasy or uncomfortable”

Given the powerful influence of positive and negative emotions on our unconscious, it is tempting to argue that we should never trust our gut instinct and we should make decisions based solely on objective, logical analysis. But this overlooks the fact that we can’t get away from the influence of our gut instincts. They influence the way we frame a situation. They influence the options we choose to analyse. They cause us to consult some people and pay less attention to others. They encourage us to collect more information in one area, but not in another. They influence the amount of time and effort we put into decisions. In other words, they infiltrate our decision-making even when we are trying to be analytical and rational.

This means that to protect decisions against bias, we first need to know when we can trust our gut feelings, confident that they are drawing on appropriate experiences and emotions.

The Four Tests for when to trust your Gut

1. The familiarity test: Have we frequently experienced identical or similar situations?

If we have plenty of appropriate memories to review, our judgment is likely to be sound; chess masters can make good chess moves in as few as six seconds. “Appropriate” is the key word here because many disastrous decisions have been based on experiences that turned out to be misleading. The way to judge appropriate familiarity is by examining the main uncertainties in a situation—do we have sufficient experience to make sound judgments about them

2. The feedback test: Did we get reliable feedback in past situations? Previous experience is useful to us only if we learned the right lessons. At the time we make a decision, our brains tag it with a positive emotion—recording it as a good judgment. For example, if we have people filtering the information we receive and protecting us from bad news, we may not get the feedback we need.

3. The measured-emotions test: Are the emotions we have experienced in similar or related situations measured? All memories come with emotional tags, but some are more highly charged than others. If a situation brings to mind highly charged emotions, these can unbalance our judgment. Knowing someone who bought property overseas and over-stretched themselves, may influence us to not want to venture Overseas, even if we have much better budgeting skills.

4. The independence test: Are we likely to be influenced by any inappropriate personal interests or attachments? If we are trying to decide between two properties, one of which is in an area near a friends’ property, (which might be more convenient to have ready-made friends on holiday), we should be cautious. Our subconscious will have more positive emotional tags for the more convenient location. It may be a great location for friends, who have different needs, but is it for you? 

Conclusion

If a situation fails even one of these four tests, we need to strengthen the decision process to reduce the risk of a bad outcome. There are usually three ways of doing this—stronger input to decision-making from challenging friends & family, additional experience and data/due diligence.

There are no universal safeguards. Additional information can challenge assumptions but will not help a decision maker who is influenced by a strong emotional experience. If we are to make better decisions, we need to be thoughtful both about why our gut instincts might let us down and what the best safeguard is in each situation. We should never ignore our gut. But we should know when to rely on it and when to safeguard against it.

* an issue explored in a dialogue between Nobel laureate Daniel Kahneman and psychologist Gary Klein titled “Strategic decisions: When can you trust your gut?” published by McKinsey Quarterly in March 2010

^{Posted by Louise Reynolds 2nd August '10}  

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