Sunday, May 14, 2023

[Book Review] Why Human Intuition and Judgment Still Matter In Decision-Making

Source:  John Wiley & Sons, Inc.

Marketers make many business-related decisions every working day. Some are routine and not all that consequential. Others, however, are high-stakes decisions that can significantly impact their company's future success.

Thanks to the explosion of online communication and commerce, marketers now have access to an immense volume of data regarding customers, potential buyers, and the performance of marketing programs.

The benefits of using data and analytics to support marketing decisions have been proclaimed so frequently over the past several years that "data-driven marketing" has essentially become synonymous with good marketing. As a result, many marketers now question the legitimacy of using intuition to make marketing decisions.

A new book - Decisions Over Decimals:  Striking the Balance between Intuition and Information (John Wiley & Sons, 2023) - written by Christopher Frank, Paul Magnone, and Oded Netzer persuasively argues that human intuition and judgment are still vital components of good decision-making.

The authors bring academic rigor and real-world business experience to Decisions Over Decimals. Christopher Frank is the Vice President of Global Marketplace Insights at American Express, and Paul Magnone is the Head of Global Strategic Alliances at Google. Both are Adjunct Professors at the Columbia Business School. Oded Netzer is the Vice President for Research and the Arthur J. Samberg Professor of Business at the Columbia Business School.

Frank, Magnone, and Netzer have developed an integrated approach to decision-making they call Quantitative Intuition (QI) (TM), and Decisions Over Decimals describes the QI decision-making framework.

What's In the Book

The basic message of Decision Over Decimals is that business leaders can make better and more timely decisions by combining quantitative analysis with human judgment and intuition. The authors write:

"Numbers alone can never provide a perfect solution or answer . . . No amount of purely quantitative information will provide certainty and the answers needed to run an organization, grow a business, or lead a team. Combining quantitative information with intuition - human judgment developed through experience and close observation - is indispensable."

The Quantitative Intuition decision-making framework contains three major components - precision questioning, contextual analysis, and synthesis. Decisions Over Decimals is divided into three major parts that generally reflect the structure of the QI framework.

The first part of the book (Chapters 1-3) covers assessing the situation that prompts the need for a decision, framing the problem or issue that needs to be solved or addressed, and "working backward" to identify the data and analysis you need to make a sound decision.

The second part (Chapters 4-5) discusses contextual analysis, which includes assessing the quality of the data used to support the decision and putting the data into the relevant business context.

Part three of the book (Chapters 6-10) focuses on synthesis, which refers to the process of transforming data analysis into insights that will support sound decisions. This part also discusses how to manage the "decision moment," use storytelling to communicate decisions more effectively, lead the decision-making process, and develop and nurture a QI culture.

The authors conclude Decisions Over Decimals by describing their view of the future of data-driven decision-making.

My Take

Decisions Over Decimals isn't specifically about making marketing-related decisions, but it will be valuable for any marketer who is responsible for, or involved in, making decisions that can have a significant business impact.

The techniques described in the book will be particularly valuable for marketers who must make important decisions when the available data is incomplete or inconclusive, or when the outcome of the decision is otherwise uncertain.

Frank, Magnone, and Netzer dispel the myth that data and quantitative analysis alone will consistently identify optimal decisions. The authors convincingly argue that, no matter how much data are available, they never provide a comprehensive picture of the context in which a decision needs to be made. Therefore, intuition and human judgment are still vital to effective decision-making.

The message of Decision Over Decimals is especially timely given the rapid advances in artificial intelligence we are currently witnessing. I've been experimenting with ChatGPT and a few other generative AI applications for the past several weeks, and what these applications are capable of is truly amazing.

As companies incorporate AI into their business operations (including marketing), business and marketing leaders will be tempted to use the output of AI-enabled mathematical models to make more complex and high-stakes decisions.

And, as AI applications and their underlying models become increasingly powerful, it will become harder for leaders to remember that even the most sophisticated AI tools have limitations that can lead to bad or sometimes catastrophic decisions.

Decisions Over Decimals reminds us that human intuition and judgment should always play an important role in business and marketing decisions, and it lays out a decision-making process that will enable business and marketing leaders to gain the benefits of both data and human intuition.

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