12:00 AM, February 13, 2018 / LAST MODIFIED: 12:22 AM, February 13, 2018


“My gut told me to say yes,” said Paul Otellini, a former chief executive officer of the world's leading semiconductor manufacturing company Intel, during his interview with the reputed magazine The Atlantic. He made this comment while reflecting on his decision on turning down Apple's proposal to develop a chip for iPhone.

It was the middle of 2006. Steve Jobs, the legendary founder of Apple, was dreaming of developing a phone and he wanted that device to be powered by an Intel processor.

Steve was quite optimistic and upbeat about the device while Paul was ambivalent. In fact, at that point, there were not many people except Steve who believed iPhone would do wonders and become one of the most commercially successful innovations in the history of mankind.

The price that Apple proposed to pay for the chip was not that lucrative, and according to Paul, it was less than Intel's forecasted cost. Apple was a bit rigid and unwilling to pay even a single penny more. Moreover, the business case of Intel was far too conservative in projecting the volume.

Had the forecasted volume been a bit closer to the reality, the decision would have been different because Intel could have then made up the revenue from the higher volume. More to the frustration of the Intel boss, it was later revealed, the estimated cost was erroneous as well.

Apparently, data available to Intel at that time wasn't provoking enough to say “Yes” to Apple. Paul conceded, “The lesson I took from that was while we like to speak with data around here, so many times in my career I've ended up making decisions with my gut, and I should have followed my gut.”

What happened later was unprecedented. The world of late has witnessed the extraordinary boom of smartphone and tablet business. On the contrary, the sales of desktop and laptop have fallen alarmingly in the last few years.

In 2011, global shipments of laptops and desktops were 365 million units and it came down to 289 million in 2015 and 269 million units the year after. The aggregated sales of smartphone and tablet rose to 1.7 billion units in 2015 and it was around 2 billion units in 2016.

Because of the continuous drop in personal computer sales, Intel business also suffered. Consequently, Intel announced in April 2016 that the company would lay off 12,000 employees within a year, which is 11 percent of its workforce.  Had Paul listened to his gut and accepted Apple's proposal, Intel history would have been written differently.

There have been many such instances when critical business decisions made based on data led to catastrophe. On the other hand, there are plenty of examples of successful entrepreneurs who are guided by their gut feeling instead of relying on data or crunching numbers. 

Steve Jobs, the former CEO of Apple, was known to be taking his major business decisions on gut instinct.

He once said, “You have to trust in something, your gut, destiny, life, Karma, whatever. This approach has never let me down and it has made all the difference in my life.”

When the desktop market was growing like anything despite all positive and favourable predictions and forecasts on desktops, Steve Jobs thought otherwise. He rather predicted smartphones and tablets would soon overtake the desktop. All the forecasts based on data eventually proved wrong. It was, in fact, Steve's decision made from his intuition that was upheld. He was quite often labelled as the “champion of intuition”.

Sir Richard Branson, founder of Virgin Group, once commented, “I rely far more on gut instinct than researching huge amounts of statistics.” 

Tim Cook, the current CEO of Apple, has an interesting view. He said, “Intuition is something that occurs in the moment, and if you are open to it, if you listen to it, it has the potential to direct or redirect you in a way that is best for you.”

A study conducted among top CEOs shows that more than 60 percent trust their gut and rely on soft factors and instinct to make key decisions.

Albert Einstein, one of the greatest scientists the world has ever seen, reiterated the significance of intuition numerous times.  One of his widely used quotes probably is, "The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honours the servant and has forgotten the gift."

Let's try to dig down what exactly intuition is all about. Is it a virtue of an individual that comes from the heaven? Famous psychologist Prof Tilman Betsch defined intuition as a thinking process whereby the input is processed automatically and without conscious awareness resulting in a feeling that can serve as a basis for judgments and decisions.

Studies suggest that it is not something one just develops overnight. Intuition or gut feeling is developed over a period. Past experience, knowledge, in-depth understanding of a situation and trends shape intuitive power. It is also quite evident that people generally have good intuition about things which are similar to what they encounter every day. However, for the things that are not known to them, intuition doesn't necessarily work on those alien cases.

To summarise, one can't depend on either data or intuition alone in taking business decisions. They are not mutually exclusive; in fact, one complements the other. Therefore, for business leaders, it is extremely important to develop the right mix of intuition and data-driven analysis.


The writer is chairman and managing director of BASF Bangladesh Ltd.

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