One of the confusing issues facing leaders is how to go about making decisions: do you go with your gut or rely on the data?

Case Study #1: Disney’s Toy Story

Will anyone enjoy a fully computer-generated animated feature?

Consider this excerpt from a 1996 speech delivered by Michael Eisner, Disney’s CEO for two decades:

“Just last year, there was a lot of rumbling that we were wasting too much time on Toy Story, the first computer-generated animated feature in history. It wouldn’t work. The characters were not lifelike. People would hate it. It certainly wouldn’t be worth all the effort that we were putting into it.

I’m happy to report, contrary to the naysayers and other prognosticators, Toy Story is a full-blown hit, the highest-grossing domestic film of 1995 with more than $185 million and on a track to do as much as 150 percent of those grosses overseas. [Toy Story went on to to gross $361 million and revolutionized the animation industry.]

So, as you see, I am not a disciple of research…unless of course, it agrees with me. Otherwise, it is useless.”

Case Study #2: Google’s Shades of Blue

41 Shades of Blue. Next Best-Seller Title?

Now to the other end of the spectrum, consider the rigor implemented by Marissa Mayer (@marrisamayer), VP of Location and Local Services, employee number 20 at Google  (you may have heard of some of her creations like Gmail and Image Search):

“A designer, Jamie Divine, had picked out a blue that everyone on his team liked. But a product manager tested a different color with users and found they were more likely to click on the toolbar if it was painted a greener shade.

As trivial as color choices might seem, clicks are a key part of Google’s revenue stream, and anything that enhances clicks means more money. Mr. Divine’s team resisted the greener hue, so Ms. Mayer split the difference by choosing a shade halfway between those of the two camps.

Her decision was diplomatic, but it also amounted to relying on her gut rather than research. Since then, she said, she has asked her team to test the 41 gradations between the competing blues to see which ones consumers might prefer.”

Case Study #3: 

“Can you see there are some hills in front?”

On June 8, 1982, a night-time passenger flight from São Paulo, Brazil crashed into a hillside while descending into Fortaleza. The investigation revealed that the captain was disoriented due to bright lights from the city ahead continued the descent well below the 5,000-foot clearance limit, despite being warned twice by the altitude alert system, as well as by the co-pilot, of the terrain ahead.  Below is the transcription of the final seconds, transcribed from the voice recorder:

First Officer: Can you see there are some hills in front?
[Sound of altitude alert]
Captain: What? There’s what?
First Officer: Some hills, isn’t there?
[Sound of impact]

 

So now your question is:  Do you want to be more like Disney or Google?  Can you learn to balance data and your gut?

Before you throw in the towel on that decision, let’s approach it using what Jim Collins calls the Genius of the “And.”

The truth is you don’t have to choose just one strategy to make your big decisions. No decisions should be made based purely on data. On the other hand, you shouldn’t ignore that very important person that should be sitting at the table – the VP of Data.

To balance the two strategies:

1. Treat your “gut” as a data point: Your experience in similar situations is useful, but you need to understand it is only a single data point and needs to be hashed out against the data you have available.

One tool to gather these “data” points from your team is to have a premortem as put forward by Gary Klein, a Senior Scientist at MacroCognition: “Before a project starts, we should say, “We’re looking in a crystal ball, and this project has failed; it’s a fiasco. Now, everybody, take two minutes and write down all the reasons why you think the project failed.”" This allows the team to catalog their gut feelings on what might be an issue and begin collecting data.

2. Look to the future: Data won’t tell you what to build. Data, by its nature, is looking at the past. If you are looking at the past to see what you should be building, you are trying to drive your company while looking through the rear-view mirror. Talk to your customers, talk to your employees, watch and beat the trends. Data will tell you how to refine your products, not which one to build in the first place.

Give Data a Seat at the Table

3. Listen to  your VP of Data:  In the story of the plane crash, the captain (you) had both data (altitude alert) and other people’s gut telling him there was a problem.  It is easy to miss some warnings when we have our nose to the grindstone.  Build in your own VP of Data and alerts that will shoot up a red flag when it looks like you are moving in the wrong direction.  You may have the benefit of having a First Officer, someone else in your “cockpit” who can point out issues and help you navigate.  However, everyone can have a VP of Data – the tools, reports, and analysis that gives you insight into your business.  Make sure to give the VP of Data a voice at the table as he/she/it isn’t biased, doesn’t have an ego in play, and will always give you the facts straight.   This is a great resource to put to use in your decisions.

By inviting data to the table, you are able to balance your intuition, your experience and vision against the trends, forecasts and data that you have at your disposal.