Analysis Paralysis

Big data comes at the price of intuition, strategist says

 

The increasing bias towards rational, scientific evidence could come at the cost of intuition, a London Business expert warns. 

In the new book, Fast/Forward: Make Your Company Fit for the Future, Julian Birkinshaw, Professor and Chair of Strategy and Entrepreneurship at London Business School, looks at the reason for analysis paralysis and the effect of this pathology on business’ ability to develop a leading edge in an age where information is ubiquitous.

Birkinshaw says: “Information overload at the individual level leads to distractedness, confusion, and poor decision-making. At a corporate level, we end up with analysis paralysis, endless debate, and a bias toward rational, scientific evidence at the expense of intuition or gut feel.

“They lessen the quality and speed of decision-making, delay action and engender a sterile operating environment. As a result, many companies end up standing still, even as the world around them is speeding up,” Professor Birkinshaw says.

So what is the alternative?

According to Professor Birkinshaw, businesses need to adopt a Fast/Forward approach to business, where they emphasise decisive action ahead of detailed analysis, and they are comfortable relying on emotional conviction alongside rational judgments.

“Consider Amazon’s phenomenal growth,” says Professor Birkinshaw, “from online bookseller to new economy powerhouse, it defies all the established rules about firms focusing on their core competencies. Jeff Bezos, the company’s cerebral founder, is a great believer in systematic analysis, but at the same time, he is known for his harrowing leaps of faith.”

“Success in a fast-changing business world is about implementing a fast/forward approach. They are open-minded, and they have operating cultures that promote action and experimentation. Their leaders know when to listen to the data and when to be decisive.”

Fast/Forward is published by Stanford Business Books today (5 April)