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Everyone talks about “data” these days as key to making good business decisions. Can you share about a time when you relied on instinct alone? How did it work out for you and what’s your advice to others who rely heavily on their business instincts?
1. If You Torture the Numbers Enough, They’ll Tell You Whatever You Want
As my marketing manager likes to say, “If you torture the numbers enough, they’ll tell you whatever you want.” Raw data is powerful, but when I’ve had to make big decisions without historical data, I (A) did as much research as possible, (B) talked to experts who had knowledge I didn’t, (C) considered what I stood to lose if the gamble did not pay out and prepared to own the results no matter what.
2. Just Because Something Is Working Doesn’t Mean It Can’t Work Better
Just because something is working doesn’t mean it can’t work better. Often, data only allows you to make decisions about how you are doing and fails to tell you what might happen if you change things. Conventional wisdom tells us, “if it isn’t broken, don’t fix it.” However, I recently defied data and used my instinct to pivot from a proven business model to a new one because I sensed an even greater upside.
3. Data Is King, But Time and Resources Are Scarce
Data is the king — I agree with that. However, you do not always have time or resources to get the data you need and may be forced to rely on your business instincts alone. Data is hard to manage and getting “clean” data might not be worth the time and resources it would take to get everything perfected. Sometimes, you just have to trust your gut, as you might already know the answer.
4. Data Is Only as Good as the Person Making Sense of It
As you probably noticed during the last election cycle, the polls were all over the place. One would say Trump was winning by 10 points, but another would say Hillary was winning by 10 points. The difference comes down to how the data is interpreted or gathered. Audience, sample size, and many other variables can affect the outcome of “data.” This is just one good example on when you should use your gut.
5. When It Comes to Interviews… It’s All About Instinct
Most of your intuitions about running a business are wrong; it’s best to be data driven. But with people, you’ve had 20, 40, maybe 60 years experience evaluating who you work well with, and the qualities that make someone trustworthy. You should always trust your instincts about people.
6. It’s a Balance Between Art and Science
Design is all about instinct. Imagine trying to gather feedback about every step along the way when designing an application. I like to design the first time with just instinct and redesign with the door open to feedback. That process works for me. I would recommend that everyone seek to find a balance between what you feel and what can be proven with data.
7. You Need Both, For Different Reasons
The decision to start my latest company, Scorely, was largely an instinctive one. Data is valuable, but it only tells you so much because it’s all based on the past. After all, even the best economists and financial experts are often wrong. That said, even if you make your decisions from instinct, you definitely need data to research your market and do your financial projections.
8. Data Can Only Tell You So Much
When I started my company Mobiado, there was only one luxury mobile phone manufacturer. It had been around for two years, with losses every quarter. Data showed that this was not a successful business model. However, my gut feeling was to go a different route; by focusing more on the design and less on precious materials, the concept could be successful. Thirteen years running and we remain profitable every quarter.
– Peter Bonac, Bonac Innovation Corp.
9. When It Comes to Partnering, Using Only Data Might Be a Mistake
So many things in business are more of an art than a science. This is never as true as with finding the right company to partner with. Basing your decision on data alone might get you tied up with a partner who is dishonest, incompetent, or plainly no fun to work with. Use instinct when making important decisions that will affect your business, because in the end, you work with humans, not numbers.
– Diego Orjuela, Cables & Sensors, LLC
10. An Instinctive Leap of Faith Is the Only Way Ideas Have Ever Become Reality
Data helps narrow the margin of error to get business models and maneuvers on solid ground, but data in the abstract can only get you so far. In any decision-making process, there comes a point where you have to take a blind leap of faith to test your hypothesis despite a great deal of uncertainty. For me, every step — from launching to pivoting — involved leaps, both big and small.
CATEGORY: Entrepreneurship