We live surrounded by dashboards, analytics, and algorithms that promise to make decisions clearer. Yet the hardest choices, whether in business or in life, often happen in the space where data runs out. That’s when we turn to intuition, the quiet voice that says, “this feels right.”
Behavioral science offers a nuanced answer. As Daniel Kahneman (2002 Nobel Prize in Economic Sciences) has shown, intuition is not the opposite of rational thinking but a different mode of it. In his model, intuition reflects what he calls System 1, the brain’s fast, automatic, and emotional way of processing information.
Intuition isn’t a mysterious gift. It is the brain recognizing patterns from past experience and matching them to new situations. Like an algorithm predicting the next word in a sentence, System 1 works through association, speed, and ease. It feels effortless because it runs on habits and memories built over time.
This makes intuition powerful in familiar contexts where patterns repeat. But it can mislead us in unfamiliar or unpredictable situations.
Our biggest challenge with intuition isn’t having it, it’s how much we trust it! We are often overconfident, believing our instincts are more accurate than they are. (Most of us, for example, think we are better drivers than the average.).
In business, this overconfidence can turn intuition into a confirmation tool. We embrace it when it supports what we already believe and dismiss it when it doesn’t. Ironically, experience can make this worse: it increases our confidence faster than our accuracy.
The question isn’t whether to use intuition, but when to rely on it. Kahneman notes that intuition is most reliable in environments that are stable, where experience builds over time, and where feedback is clear and immediate.
These three ideas: Regular environment, Experience, and Feedback, are often summarized by scholars and practitioners such as Professor Olivier Sibony as the REF framework. It captures the conditions he describes as essential for what Kahneman calls valid intuition. When those conditions exist, for example in sports, surgery, or expert-level trading, intuition can be highly accurate. But in strategic or complex business decisions, where markets shift and feedback is slow, our gut can easily mislead us.
The irony of the data age is that the more numbers we crunch, the more we rely on our gut. As experienced market researchers, we know how easily a flood of data can blur the story instead of clarifying it. With quintillions of bytes produced every day, we risk paralysis by analysis. Sometimes intuition is the only tool that keeps us moving when the spreadsheet stalls.
When instinct and data point in different directions, it helps to pause rather than push through. Ask:
By naming the emotion behind the instinct, we create distance from it. Intuition becomes input, not impulse.
Good decisions rarely come from data alone or instinct alone. They come from a dialogue between the two, where intuition sparks possibilities and analysis puts them to the test.
In business, as in life, the goal isn’t to silence our gut but to recognise when it has earned our trust and when it hasn’t.
References:
Daniel Kahneman – Thinking, Fast and Slow (2011)
Amos Tversky & Daniel Kahneman – Judgment Under Uncertainty: Heuristics and Biases (1974)
Gary Klein – Sources of Power: How People Make Decisions (1999)
Olivier Sibony – You’re About to Make a Terrible Mistake! (2020)
