I was recently told the story of when Landmark Group acquired Carluccio's in 2010. It is claimed that when Micky Jagtiani told his team to offer £90 million (Dh512m), they were surprised by the suddenness with which he had produced this number and asked whether he had secretly been working with external advisers on the valuation. He replied confidently, explaining that he "just knew" this was the right price. In essence, he was saying, "All you have to do is trust your instincts."
Hearing this story made me wonder, "Why does relying on instinct serve some leaders well, while it does not reap the same results for all?"
Behavioural theorists recognise that some of Sigmund Freud's ideas on the unconscious mind are correct and that much decision-making is based on factors of which leaders are not really aware. But these hunches do not come randomly out of space; they are formed by experience, knowledge and personality.
This is why relying on gut instinct generates variances in accuracy.
Accumulated insights from knowledge and experience determine degrees of accuracy. So it is vitally important that leaders have constant, varied and fresh sources of information input. The volume of robust information consumed prepares leaders to be ready to make great decisions.
Research tells us that the other input is experience. The more experience leaders have the better their "instinct" becomes.
On the other hand, instinct or intuition alone can sometimes cause leaders to make bad decisions. Intuition works best when a gut sense can be used to build on other kinds of data or inputs. What we are really saying is that leaders who have vast prior experience and familiarity with facts, information, people, and/or skills get better results from their instinct.
The third factor influencing leaders' instinct is personality. The Myers-Briggs personality inventory highlights this dichotomy in individuals between sensing and intuition. They describe how new information is understood and interpreted.
Leaders who gravitate to sensing are more likely to trust information that is present, tangible and concrete. That is, information that is full of details and facts.
On the other hand, leaders who prefer intuition tend to trust information that can be discovered by seeking a wider context or pattern. They tend to trust those flashes of insight that seem to bubble up from the unconscious mind.
Instinctive leadership is often described as or thought to be the same as common sense, which is sound judgement based on simple perceptions of the situation and/or facts. Like leadership instinct, common sense stems from the accumulated knowledge and experience that most people already have.
Each input creates an impression, and common sense is the integrating of the knowledge and experience into a single impression. The brain is trying to make sense of things in common between disparate impressions.
A leader's instinct is the divider, as there are many things a leader cannot predict using data. For one, choosing the vision of the company. Because there are so many options and data points, there comes a moment when the leader must trust the gut. Leading requires the ability to go beyond the data and to make a smart guess.
Intuition can provide leaders with useful and often amazing insights, but it can also dangerously mislead them. To succeed as an instinctual leader, be sure to have the breadth and depth of knowledge and experience that creates life wisdom.
Tommy Weir is an authority on fast-growth and emerging-market leadership, an adviser and the author of The CEO Shift. He is also the managing director of the Emerging Markets Leadership Center
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