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Name: Aditya Singh

ID No: 2017H1490342P
BSP ASSIGNMENT
Academy of Management Review,
2007, Vol 32, Pg. No: 33-58

EXPLORING INTUITION AND ITS ROLE IN MANAGERIAL


DECISION MAKING
Erik Dane
Michael G Pratt

Summary:

There are many roles that a manager plays while working in any
organization. One of the important roles for a manager to play is in decision-
making. It includes brain storming, planning, and communicating the decision to
other employees. The technique of decision-making is dynamic as more
advanced tools and programs are being developed to come out with a successful
decision. There are many ways of thought process associated in decision-making.
Broadly they are classified into rational and irrational components. Rational
component of decision-making is associated when a manager has a set of
information, facts and figures with him/her and the decision is taken after
consciously analyzing the data. Moreover, there are also some intuitive and
judgmental processes which managers use as their technique for decision
making. Such decision-making processes come under irrational set of thinking.
There is no specific criteria which can prove that one is better than other but
there is a considerable difference in the working of the two components. In the
analytical or logical processes, managers set the goal and objectives, they specify
the alternatives to reach the goal and calculate the best possible route on various
factors. In judgmental or intuitive processes, the need of a response for decision-
making is less, so a sequential way of working is not possible and so this process
is more rapid than the former. The difference can be explained by the game of
chess, which is said to be a game of intellectual capability of a person. In a game
of professionals playing chess, the time taken for each player to make a move is
considerable and the decision they make is logical and is supported by some
reason. But if the same professional is made to play with 10 players at a time,
now the taken by the professional will be quick and thus the decision-making
will be rapid. Even in such circumstances, the professional will be able to make a
good move every time with a glance of few seconds regarding the position of the
game. All these moves are taken based on intuition or some judgment that might
have evoked within the professional. This example has direct correlation with a
manager’s job where managers never have enough time to devote in making
decisions on a particular domain. In planning, goal setting, leading or controlling,
the managers have to play a significant role, which involves decision-making.
Time, resources and other factors often restrain them. So not every decision can
be analyzed, calculated or quantified. The primary source of this intuition-based
decision-making is directly related to one’s physiological factors where people
carry certain beliefs about pattern, facts, concepts, and techniques in their mind
about the situation. Secondary source is experience, education and study. It is
difficult to find an efficient manager who solely depends on just one component
for decision-making. It can be said that more often the problem demands a
mixture or balance of intuition and reasoning based skills from managers to be
solved.

Implications on Indian Organization


There was a business scenario in 2010s, where Tata Steel Singapore (NatSteel
Group) had applied for a loan from HDFC Bank. The amount was considerable
and the HDFC bank officials were brainstorming about taking a firm decision on
passing this loan since at that time China was dumping its products into the
market and the steel industry was not seen as an investment opportunity. There
was also risk associated with the issuing of the loan amount in this sector and so
the HDFC bank was skeptical in this matter. This issue went to Aditya Puri, the
Managing Director of HDFC bank. He then called a meeting of managers and the
meeting ended in just few minutes. The decision finally taken was to approve the
loan to Tata Steel. Apparently, it was stated that Aditya Puri had just asked one
question to the other employees, which was “ Do you think the Tata’s would not
be able to pay the loan back?” and thus loan was approved since no one had a
strong point to contradict this statement. So this final decision was based on
intuition as well as on logical thinking. Since the decision was taken in quick time
and on certain beliefs or thoughts, it can be said that the decision taken was on
the basis of intuition, partly. There are other factors, which contribute to logical
reasoning component of decision-making as well such as the brand value of Tata
Steel, amount of the loan, etc. So it can be concluded that for a manager to take a
decision, there should be a proper balance about the intuition and logical
components, since it saves time and waiting for complete information about the
situation would just lead to delaying of the decision. So the use of judgmental and
analytical processes in expert decision-making deserves a high priority in the
agenda of management in any organization.