Decision-Making In Negotiations

Confession time: As a leader, I often get asked if I'm more intuitive or calculative in my decision-making. The truth is, it's a bit of both. Recently, we were in the middle of expanding our vendor partnerships at Falabella, and an opportunity came up with a key supplier. The catch? We had only 72 hours to decide before a competitor could swoop in. My gut told me this partnership was the right move—it aligned with our long-term goals, and the supplier's reputation was solid. But I couldn’t just go off instinct. I called an emergency meeting with my team. We reviewed everything—from the supplier’s past performance to our budget forecasts and potential market shifts. I knew we had to move fast, but I wanted to make sure every angle was covered. In the end, the numbers confirmed what my instinct was already telling me—I made the call to sign the deal. Looking back, it wasn’t just about moving quickly—it was about being decisive with the right balance of instinct and analysis. In moments like this, I make sure to keep a few things in mind: > First, while my decisions are based on facts, I never forget the human side—how my choices impact my team, my partners, and the people around me. > Second, I’m constantly aware that leadership is as much about people as it is about strategy. > Finally, it's important to act swiftly but thoughtfully, blending instinct with calculated risks. What about you? Do you lean more toward intuition or calculation when making decisions?

On Deciding Fast People often assume that when someone decides quickly, they are being careless. I do not see it that way. In my own work, I have learned that speed can come from two very different places. One is pressure. The other is experience. Psychologists talk about two modes of thinking. System 1 is fast and intuitive. System 2 is slow and deliberate. What many forget is that System 1 becomes dependable only after years of exposure, repetition, and feedback. When you have spent years making decisions, carrying consequences, and learning from mistakes, something changes in how your mind works. You start to see patterns without forcing it. You notice signals that others overlook. You sense when something is off even before you can explain why. It feels like instinct, but it is really the result of long practice and honest feedback. Researchers call this expert intuition. It is not magic. It is pattern recognition built over time. It is your mind compressing years of experience into a quiet signal that feels immediate. That kind of speed is earned. But I have also seen the other kind of fast decision. The one driven by emotion, ego, or fatigue. The one made because the room is tense or the clock is loud. That kind of speed is dangerous. It is also what happens when cognitive load is high. When your mind is carrying too many tasks, too many risks, or too many emotions, your working memory shrinks. You lose the ability to evaluate. Multitasking makes you default to shortcuts that have not been earned. Over time, I found that you can train yourself to make better fast decisions. You do it by reviewing your choices and asking what you missed. You expose yourself to more situations so your pattern library grows. You build a habit of reflection so your instincts stay sharp and honest. In the end, instinct becomes useful only when it has been shaped by years of paying attention and years of correcting yourself. Practice makes you better. #ESAmentor #Decisions

Should You Trust Your Gut When Hiring? The Science Behind Intuition I spent all of last week interviewing candidates for a senior sales leadership role at a fintech firm. After the final interview, the hiring manager turned to me and said: "I can't put my finger on it, but something feels off about that candidate." That comment sparked an interesting chat about the role of intuition in hiring decisions. How much should we trust that gut feeling? Your intuition isn't random – it's your brain processing thousands of data points from past experiences. When you get that feeling about a candidate, your brain is noticing tiny signals that match patterns from previous hires who succeeded or failed. But here's the catch: intuition can be incredibly useful OR dangerously misleading. I've seen gut feelings help hiring managers spot fantastic talent that looked ordinary on paper. I've also watched those same feelings lead to terrible hires based on nothing more than unconscious bias. The most successful hiring managers I work with use a balanced approach: 1. They listen to their intuition as a starting point 2. They back it up with structured assessment and evidence 3. They question their gut reactions, especially negative ones For our retained clients, we offer psychometric testing as another layer of assessment. These tools help quantify personality traits, working styles and cognitive abilities that might support or challenge your gut feeling. And it works. I've seen countless cases where these tests flagged concerns that intuition missed, or confirmed strengths that the interview process already highlighted. The research backs this up. Studies show that decisions made with a combination of analytical thinking and informed intuition outperform purely data-driven or purely intuitive approaches. So next time you're interviewing a candidate and get that feeling – don't ignore it, but don't rely solely on it either. Ask yourself: "What specific behaviours am I reacting to?" Then test your intuition against objective criteria. The best hires happen when we use our gut feeling as a compass, not as the entire map. #Recruitment #HiringTips #TalentAcquisition

Data or Gut Feelings. Whenever I’ve made strategic decisions while neglecting my gut feelings, I have felt a tinge of regret. Leaders are often urged to make data-driven decisions in this age of abundant data. Data is significant; it offers valuable insights by revealing past trends and providing predictive analytics, yet I believe it has limitations. Data alone will not always account for individual circumstances, unexpected challenges, or the essential human elements crucial to effective leadership. On the other hand, intuition - rooted in experience, judgment, and the ability to recognise patterns - can be incredibly powerful, especially in uncertain or quickly changing environments. Still, we must acknowledge that biases and narrow perspectives can sway intuition. Today’s leaders face the interesting challenge of blending analytical skills with intuitive wisdom rather than choosing one over the other. For example, while data may highlight an emerging market trend, intuition empowers leaders to assess whether the timing, cultural relevance, or team readiness aligns with taking action. A potent way to bridge this gap is by asking lots of critical questions during decision-making: Cultivating a habit of evaluating choices from numerical and descriptive angles ensures a more robust approach. The essence of future leadership lies in mastering the art of merging analytics with intuition. We can achieve this by fostering critical thinking to evaluate data accuracy, employing scenario planning, evaluating multiple alternatives to juxtapose gut feelings with measurable insights, and building diverse team thinking to challenge assumptions. Practical steps, such as conducting post-mortems to reflect on decision-making processes, help bring this balance to life. When data and intuition unite, leaders can make much more impactful decisions. So, I vote for a harmonious combination.

𝐆𝐮𝐭 𝐅𝐞𝐞𝐥𝐢𝐧𝐠 𝐯𝐬. 𝐃𝐚𝐭𝐚: 𝐖𝐡𝐲 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬𝐞𝐬 𝐍𝐞𝐞𝐝 𝐭𝐨 𝐌𝐚𝐫𝐫𝐲 𝐁𝐨𝐭𝐡 A few years ago, a retail chain was confident a premium product line would succeed based on "gut feeling." The category head had decades of experience. The team trusted their instincts. Initial excitement was high. But three months in, the numbers told a different story: 📉 Low repeat purchases 📉 Poor regional performance in Tier 2 cities 📉 Inventory piling up What went wrong? They had ignored two key data signals: The product’s price point exceeded the average basket size in target regions. Customer sentiment data (from social listening) showed aspirational interest, but not buying intent. The pivot came only after the analytics team intervened. A/B tests, pricing experiments, and geotargeted campaigns followed. Eventually, the line found success in a different market segment altogether. The lesson? Intuition is invaluable—it sparks ideas, moves quickly, and often comes from deep expertise. But data brings discipline. It helps validate, adjust, and scale with confidence. In fast-moving markets, relying on just one can either stall innovation or invite expensive mistakes. 👉 The real magic happens when instinct and insights work together. 🔄 Over to you: 𝑯𝒐𝒘 𝒅𝒐 𝒚𝒐𝒖 𝒃𝒂𝒍𝒂𝒏𝒄𝒆 𝒈𝒖𝒕 𝒇𝒆𝒆𝒍𝒊𝒏𝒈 𝒘𝒊𝒕𝒉 𝒅𝒂𝒕𝒂 𝒊𝒏 𝒚𝒐𝒖𝒓 𝒅𝒆𝒄𝒊𝒔𝒊𝒐𝒏𝒔? 𝑨𝒏𝒚 𝒆𝒙𝒂𝒎𝒑𝒍𝒆 𝒘𝒉𝒆𝒓𝒆 𝒐𝒏𝒆 𝒔𝒂𝒗𝒆𝒅 𝒚𝒐𝒖 𝒇𝒓𝒐𝒎 𝒕𝒉𝒆 𝒐𝒕𝒉𝒆𝒓? #DataDrivenDecisionMaking #DataAnalytics #DataVsInstinct #BusinessStrategy

Was Kahneman wrong when it comes to using data in strategy? 🧠Kahneman, in Thinking, Fast and Slow, taught us that our minds are negatively affected by biases. He says, fast thinking, and intuitive shortcuts lead to predictable errors. His advice, therefore, is to slow down, analyse carefully, and avoid being overconfident. ⚡Gigerenzer, in The Intelligence of Intuition, looked at how we make decisions and saw something else entirely. He suggests that heuristics (mental shortcuts, or rules of thumb) are not flaws but features that evolved to allow us to make good decisions in situations of uncertainty. He tells us not to fight intuition, but to tame it, to learn when it works and when it doesn’t. As a scientist, I used to wholeheartedly believe that data-driven decision-making is the best approach to any problem, including strategy. Collect good data, use the right formula and the correct answer will result. But then I realised, if that were true, big companies with huge resources and capabilities to gather data wouldn’t ever fail. But they do. This nagging doubt has always been in the back of my mind. And I kind of understood that it has to do with uncertainty. But Gigerenzer showed me a different way of thinking about our human intuition. Precisely because strategy lives in the world of uncertainty, where data is incomplete, time is short, and cause and effect are unclear. In that world, analysis starts to fail. Kahneman’s world is one of known risks, measurable probabilities, stable relationships and repeatable patterns. Perfect for finance, process optimisation or quality control. When the rules are clear, analysis wins. Gigerenzer’s world is one of true uncertainty, novel markets, disruptive technologies and ambiguity. Here, too much analysis can paralyse. Here, heuristics, the ability to simplify and act, can outperform complex models. Gigerenzer speaks about adaptive rationality, which really means using the right simplicity in the right situation. Intuition tends to outperform analysis, particularly when you face novel, fast-changing conditions (disruption, innovation… I’m looking at you AI) and you’re overloaded with information. But you need accumulated experience from similar situations. Analysis shines in stable, rule-based environments when cause and effect are understood, and everything is measurable and repeatable. That’s where models and forecasts deliver real value. But when the system itself is shifting, excessive analysis can mislead, giving the illusion of certainty where none exists. 💡Great strategists know when to switch between data and intuition. Kahneman helps us see where intuition fails. Gigerenzer helps us see when it works. That’s why I believe strategy will always remain a human art, not an analytical one, reducible to algorithms or statistics. ------------------- 👋 Hi, I’m Kerstin. I help organisations create strategies under uncertainty by balancing analysis with human judgment. #Strategy

There's a dangerous false dichotomy creeping into business conversations. We need to scotch it. It's nicely illustrated in this quote from Daniel Pink in his December 3 2024 newsletter. When explaining why he's adding charts to his list of recommendations, Pink says, "Our first entry demonstrates why we should supplant our intuition with facts." I hear this advice regularly as if when making a decision, one should EITHER use facts OR intuition. There's rarely a time when we only use facts without intuition and vice versa. This question of facts/analysis versus intuition/experience was duked out in 2009 by two intellectual giants in decision-making. In the corner of analysis is Nobel Laureate Daniel Kahneman. And in the other corner is the father of naturalistic decision-making, Gary Klein. I think we all know what we mean by facts and analysis. But let me clear up what intuition is. Intuition is simply the patterns of experiences we build up over time. For example, if you have done hundreds of negotiations, you will have developed a set of patterns that guide your judgment on things like what your counterpart will do next, or if they ask for something, your experience shows they ask for this for a reason. So, here's what they conclude in their joint paper, "Conditions for Intuitive Expertise: A Failure to Disagree." Intuition can be highly effective, but only under specific conditions. It requires a stable, predictable environment (what psychologists call high validity) and ample learning opportunities with feedback. For instance, firefighting and medicine offer relatively high-validity contexts where intuitive expertise can thrive. Analysis (e.g., using algorithms or formal decision-making tools) often outperforms intuition in low-validity environments (e.g., predicting stock prices or long-term geopolitical events). Algorithms are consistent and less prone to biases that arise from subjective judgment. Pink's chart lists people's estimations about minority and majority groups. Since we rarely are asked to guess, these estimations are perfect for data and analysis. BTW, Americans overestimate the size of minority groups and underestimate the size of majority groups. The truth is, decision-making is rarely about picking one tool over another. It's about understanding when to rely on intuition, when to lean on analysis, and how to combine them effectively. The false dichotomy between facts and intuition oversimplifies the complexity of judgment--and we can make better decisions when we embrace the strengths of both. Kahneman, Daniel and Gary Klein. "Conditions for Intuitive Expertise: A Failure to Disagree." American Psychologist, vol. 64, no. 6, 2009, pp. 515-26, PsycARTICLES, doi:https://lnkd.in/gvpZJ_kJ.

A friend who built a billion dollar company told me he thinks every decision is really a gut decision that we rationalize afterwards. When I was younger I'd have found that very surprising. I was relentlessly scientific about everything. I assumed every problem had an irreducible right answer if you just thought about it carefully enough, and I spent years hunting for it. As I got older, I realized that many exceptional people don't work that way at all - they seemingly shoot from the hip, and still hit most of the time. Noah Smith just published an interesting piece on why with AI superintelligence has effectively arrived - but the world looks strangely unchanged. One explanation he explores is that intelligence has an optimality bound: more intelligence less like making a tower taller, and more like making a ball rounder. While there are some things, like coding and math, that have smooth, verifiable solution spaces that enable AI to supersede human ability, this isn't true for most of what matters. We live in a chaotic and unpredictable world; and while we can get to a reasonable assumption of what's going on, at some point the cost of learning more outweighs the benefits. And it's possible that 'human level intelligence' is already pretty much at peak for making educated guesses of what to do in an uncertain and not-completely-knowable problem space. This doesn't mean that rational thinking and a rigorous process doesn't have value. But for complex decisions, a rigorous process has to be input into what is ultimately a gut decision. My general approach to many major decisions was inspired by Daniel Kahneman, in Thinking Fast & Slow, who wrote about how he designed the Israeli army's interview system in the 50s. The original system was a gut call after an unstructured 20 minute interview, which had poor predictive power. He replaced it with six traits, scored one at a time, which took it from useless to moderately useful. Then, to appease the interviewers who hated being turned into robots, he let them close their eyes at the end and give one intuitive score. Interestingly, he found that the gut call *after* going through the rigorous interview process was just as predictive as the whole scoring system. Structure didn't replace intuition - it made intuition work. This is my default mode today. Run a fast but rational process to gather information and assess pros and cons, then make a gut call. Past a certain point, trying to get more information stops buying you accuracy and starts buying you false precision, and can make your decision making worse, not better. Whether you're interviewing a candidate, making a major strategic choice, deciding on which vendor to pick - run a rigorous process, but then trust your gut and go with the vibes.

Years ago, one of the most senior executives at my former financial institution asked me to evaluate a major plan he was eager to move forward with. I did the analysis, looked at every variable, and ran every scenario. When I presented my findings, he cut right to it: “Do you think this will work?” I told him I didn’t feel it would. He immediately chastised me: “I don’t give a shit about your feelings. What does the data say?” As if data can predict any future with certainty. He went ahead with his plan anyway. It was a disaster. And my intuition—dismissed out of hand—turned out to be right. That experience confirmed in me something I’ve seen echoed by some of the world’s most successful leaders: real decision-making isn’t purely analytical. Even at the most data-driven companies (like Amazon!), analysis has limits. It can inform, illuminate, and quantify. But it cannot see around corners, sense emerging dynamics, or connect dots that aren’t easily measured. That’s where intuition comes in—and it isn’t just one thing. For a Fast Company article I wrote a few years back, I discovered we humans have three different kinds of intuition: (1) Through experience, we develop pattern-recognition intuition: the quiet signal that emerges when our accumulated knowledge recognizes something the data can’t yet prove. (2) Insight intuition, the kind that surfaces when the analytical mind stalls and a solution (when we're in the shower or out for a walk) suddenly pops into our minds. (3) Holistic intuition—the deeper sense of what’s right that draws on more than logic alone, almost as if it’s tapping into a kind of universal intelligence. It’s the feeling Howard Schultz described when he couldn’t yet justify Starbucks’ big strategic moves on paper, but knew the experience he wanted customers to have. The spreadsheets didn’t point to it—but something larger did. Both Bezos and Steve Jobs relied heavily on their feelings, especially after they thought a problem through. The truth is, intuition isn’t the opposite of data. It’s the completion of it. If you don't believe me, ask yourself how things have worked out in situations when you chose to override yours. PS: Plenty of evidence the heart is involved with this, not just our guts.

"Why are we moving forward when the data says it won't work?" Because sometimes the data is lying. And sometimes your gut is. In strategic decisions, you can't avoid using intuition. Uncertainty is too high. Complexity is too dense. Speed matters too much. You WILL rely on gut instinct whether you admit it or not. The question isn't whether to trust your gut. It's knowing when your gut is worth trusting. Your gut feeling is pattern recognition. When executives say "I just have a feeling," what they mean is: their brain has processed thousands of similar situations and is signaling something without conscious awareness. That's powerful. When it’s right. Expert intuition—the kind that's accurate—comes from deep domain experience in stable environments where you've gotten feedback on your calls. A CFO's instinct about cash flow issues. A product leader's sense that a feature will flop. These are pattern libraries built over years. But here's where it gets dangerous: Strategic decisions are often 𝘯𝘰𝘷𝘦𝘭. New markets. Unprecedented disruptions. Contexts where old patterns don't apply. Your gut doesn't know it's wrong—it just applies the closest match it has. This is why confident executives make terrible bets. The feeling of certainty is the same whether you're recognizing a true pattern or forcing a bad analogy. The Gut-Check Framework Before you override the data (or your instinct), run this: → Domain expertise: Do I have deep, repeated experience in THIS kind of decision? → Pattern stability: Is this environment similar enough for my past patterns to apply? → Feedback quality: Have I gotten clear, fast feedback on similar calls before? → Novelty check: What's genuinely new here that my experience can't account for? If you score high on the first three and low on the fourth → your gut is likely reliable. Listen to it. If novelty is high or your expertise is thin → your gut is guessing. Verify rigorously. Use scenarios. Stress test assumptions. Run premortems. The smart move isn't "trust your gut OR trust the data." It's using intuition to generate options, then subjecting them to rigorous challenge before you commit. Your gut should be consulted, not obeyed. The executives who consistently make good strategic calls aren't the ones with the "best instincts." They're the ones who know 𝘸𝘩𝘦𝘯 𝘵𝘩𝘦𝘪𝘳 𝘪𝘯𝘴𝘵𝘪𝘯𝘤𝘵𝘴 𝘢𝘳𝘦 𝘵𝘳𝘶𝘴𝘵𝘸𝘰𝘳𝘵𝘩𝘺 and when they're just... hoping. — Follow for periodic doses of Dilbert—where the jokes are 2D but the dysfunction leaps off the page.