It turns out that when it comes to CEO critical thinking, intuition is not what people think it is.
That's the subject of an article by Dr. Modesto Maidique appearing on the Harvard Business Review Blog Network. Dr. Maidique, President Emeritus of Florida International University (FIU) and Executive Director of FIU's Center for Leadership, also serves as a visiting professor at Harvard University.
Dr. Maidique shares thought-provoking research citing that when CEOs describe using "intuition" or "gut feel," they are actually using their own fundamental building blocks for decision-making. These are, in effect, their own rules of thumb (ROTs).
Intuition played a significant role in 85% of 36 major CEO decisions that the Center studied. Some were good decisions, some were not, but regardless, intuition seemed to always rule the roost.
In his writing, Dr. Maidique shares how intuition and ROTs impacted three cases:
~ Odebbrecht S.A. For Odebrecht S.A., a large ($22B) Brazilian conglomerate, considerable probing revealed that for decision-making, the company operated with four basic ROTs: decentralize operations, decentralize strategy, promote only from within and partner with your customer. These ROTs guided CEO and founder's grandson, Marcelo Odebrecht when, despite serious misgivings, he decided to support his Brazil Director's call to take over construction of the Pan American Games facilities in Rio de Janeiro from another contractor.
~ Cisneros Group Business leaders ignore their intuition at their own peril. When CEO Gustavo Cisneros of the Cisneros Group was considering a 50/50 partnership with AOL to establish AOL Latin America, he worried that Latin Americans were different from U.S. customers and would not pay a subscription to use the Internet. Gustavo sublimated his intuition and later, after nearly a billion dollars in loss, he has a new ROT: "Never make a deal if it doesn't feel right with your intuition."
~ Lenovo Bill Amelio, former President and CEO of Lenovo, had ROTs which he amended after taking on the challenge of merging Legend Computer and the IBM PC division into what we now know as Lenovo. After he ignored his own gut feeling in building a new management team, he added to his list of ROTs: "Trust your intuition."
CONCLUSION: Dr. Maidique ends his article by telling readers that discovering and continuously updating rules of thumb is an important task for every CEO.
His full article can be found at Harvard Business Review