Bruce D. Henderson

Business thinking starts with an intuitive choice of assumptions. Its progress as analysis is intertwined with intuition. The final choice is always intuitive. If that were not true, all problems of almost any kind would be solved by mathematicians with nonquantitative data.

The final choice in all business decision is, of course, intuitive. It must be. Otherwise it is not a decision, just a conclusion, a printout.

The tradeoff of subjective nonquantifiable values is by definition a subjective and intuitive choice. Intuition can be awesome in its value at times. It is known as good judgment in everyday affairs. Intuition is in fact the subconscious integration of all the experiences, conditioning and knowledge of a lifetime, including the emotional and cultural biases of that lifetime.

But intuition alone is never enough. Alone it can be disastrously wrong. Analysis too can be disastrously wrong. Analysis depends upon keeping the required data to manageable proportions. It also means keeping the nonquantifiable data to a minimum. Thus analysis by its very nature requires initial oversimplification and intuitive choice of starting assumptions with exclusion of certain data. All of these choices are intuitive. A mistake in any one can be fatal to the analysis.

…When the results of analysis and intuition coincide, there is little gained except confidence. When the analysis reaches conclusions that are counterintuitive, then more rigorous analysis and reexamination of underlying assumptions are always called for. The expansion of the frame of reference and the increased rigor of analysis may be fruitful.

…Intuition disguised as status, seniority and rank is the underlying normative mode of all business decisions. It could not be otherwise. Too many choices must be made too often. Data is expensive to collect, often of uncertain quality or relevance. Analysis is laborious and often far too expensive even though imprecise or superficial.

…The first definition of a problem is inescapably intuitive. It must be in order to be recognized as a problem at all. The final decision is intuitive. It must be or there is no choice and therefore no need for decision.

Between those two points of beginning and ending, the rigorous process must take place. The sequence is analysis, problem redefinition, reanalysis and then even more rigorous problem redefinition, etc. until the law of diminishing returns dictates a halt intuitively.

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