If going with your gut is a good idea, does indigestion affect your decision?

A recent eruption on an executives’ forum centered on the role of gut instinct in decision making, which applies to marketing as well. One camp lobbied for using detailed marketing research to make sound and measurable business decisions. The other mob insisted some things are beyond research, and that instincts about market shifts were not to be ignored. Both were right … and wrong.

Market research is wonderful. I make good money doing it for businesses around the world. But even reams of quality information may not present the whole picture. When Steve Jobs and crew developed the iPhone, there was a leap of faith concerning the readiness of the market for an entirely new mobile computing paradigm (well, not entirely new … Palm had mastered pocket devices without cellular connections for years). Research might confirm a gut instinct, but rarely stimulates them.

The fact is that gut instincts are actually informed decisions, albeit informed by evolution and casual information inflow. Someone who watched a market and suddenly had a gut-driven revelation about the market’s need was responding to his metabolism correlating perceived facts. When we were still swinging in trees, such causally informed decisions led us to food, away from predators and eventually toward enlightenment (though it has not yet improved our ability to select congressmen). Applied to business, gut instincts can guide the efforts of entire corporations to develop fantastic new technologies that enrich both the buyer and the vendor.

Or lead your company down the long rat hole of bankruptcy.

The problem herein is that a gut reaction is based on the scope of your observations. If your observations are narrow, biased or if they come from somewhere other than a market perspective, your instincts can be dangerous. The iPhone was designed around what people wanted to do while away from their desk (hence no office suite was bundled). Had Apple looked at the problem from a technology standpoint, they would have designed a completely different device. Steve Jobs’ observational information was from the average user’s external perspective, not the geek’s internal one.

Sometimes though, instincts are precise and need to be obeyed. I once built a tech support team, and I included many coworkers on the staff selection process. One candidate left me cold for reasons I could not articulate, though everyone else liked his convivial nature. Two weeks after hiring him, he was MIA as he drank away his paycheck. My gut told me not to hire him, but mob consensus swayed me to do so anyway. Yet I have no explanation about why my instincts warned me about this employee (feel free to insert your own punch line here).

When to trust your gut may be the critical question. In situations where market data is abundant and cheap, or when markets are so mature that things can be measured directly, relying on your gut is a mistake. But when markets are shifting, when new product categories are evolving, or when you are changing the rules of the game, gut instinct may be irreplaceable. Leaders should never force their gut on their teams when real information can easily and inexpensively clarify everything. They should dictate by instinct when the winds of change are blowing fiercely.

Gut instincts mean something because they are based on something. The $64 billion dollar question is “on what are they based?” Is your gut fed with meaningful observations or skewed perspectives? How can you be sure except to validate your instinct, through research or prototype field tests? Going with your gut may make you rich, but it is wise to trust your gut and verify.