How Good Data Can Lead to Bad Decisions

Good logic and data aren’t enough to guarantee good decisions. Here’s how to spot bad reasoning and how to avoid it.

One of the most enlightening pop-psychology books I’ve ever read is The Righteous Mind by Jonathan Haidt. Jonathan describes the first rule of moral psychology as:

‘Intuitions come first, strategic reasoning second.’

Intuitions happen almost instantaneously. It’s the ‘gut feeling’. But the rational mind works more slowly, and to keep up with our intuitions, it has become well-adapted to providing post-hoc justifications or explanations for our gut instincts. This is called strategic reasoning. And once the mind finds evidence to support an intuition, it stops thinking.

How this pans out in business

See if you recognise this familiar story. A leader gets an idea. He finds logical, data-backed reasons for why his idea is the right course of action. The team frown and ask innocently, ‘Is this really the simplest way to address this particular problem?’

The founder insists, explaining how it will ‘kill several birds with one stone’. The team nod their heads in agreement and execute the idea. And the problem persists.

Okay, I admit it. The leader in this example was me. I publicly apologise to my team for all the times this happened. I’m really sorry.

But I bet a lot of people can identify with the general situation. The tell-tale signs of strategic reasoning are there: finding logical reasons to support an idea; the team’s frowns; ‘killing several birds with one stone’.

Strategic reasoning is a gut feeling in disguise

Strategic reasoning starts with the intuition and hunts for any evidence it can find to support it. Ask any marketer, and they’ll tell you that you can find data to prove anything you want. That’s the danger with strategic reasoning. It can make any intuition look ‘data-driven’.

Intuitions aren’t bad. In fact, our intuitions are often the source of our best ideas. The problem is that our minds are pre-programmed to find reasons to follow our intuitions. And this is the hidden cause of bad decisions.

How to double-check your intuitions

To test whether an intuition is more likely to end in a good or a bad idea, you need to apply deductive reasoning. Deductive reasoning doesn’t start with the idea. Instead, it starts with a clear business problem and takes logical steps from that problem to the idea. The stronger the logic, the better the idea.

1. Articulate the most important problem to solve.

There are always lots of problems. Understanding which is most important is critical for deductive reasoning.

2. Present the problem, not the solution.

Show the problem to the smartest and most informed people you know, and get their ideas on solutions before sharing your ideas.

3. Pro-actively seek out contrary arguments.

The natural tendency is to stop thinking once you have supporting evidence. But look for evidence to kill an idea. Bad ideas must die before great ideas can emerge.

4. Keep linking new ideas back to the problem.

‘If we did X, would we solve our problem?’ It’s easy for the conversation to wander onto other topics. Stay focused on the problem at hand.

Final thoughts

The most intellectually-resourceful people are often best at strategic reasoning. They are our debaters, our PR agents, and yes, our entrepreneurs. But unchecked, intuitions can lead even the brightest of us astray. Deductive reasoning is a powerful tool to help us all stay on track.