Reflections on Decision-Making, AI, and the Role of Intuition

This morning, I was having a chat with my daughter and her friend and referred to my dated master's thesis

Curious, I asked ChatGPT to summarize it after a long struggle to find it from one of the many physical hard drives I have collected over the years—and the exercise made me realize just how much our understanding of decision-making has evolved.

Back then, I struggled with the idea of decision-making as a nonlinear, non-causal process, where "guts" and intuition played a role beyond pure analysis and logic. Back then I was unable to put forward my thoughts of how I felt decisions, the fundamental activity of our lives is more of a non-analytical one, specially having spent so much, getting an MBA to differentiate

However later, classes with Baba Shiv , Hayagreeva Rao Sarah Soule and Dan Klein discussions with Kishore Sengupta and Jaideep Prabhu deeply shaped my thinking, accepting intuition as an essential part of decision-making but not completely as enormous advantages analysis brings to the table, especially in the initial phases. I think as everything in this world and us human, it's a shade of grey. We need both analysis and intuition, however what's the percentage on the mix, it depends. depends on the importance and impact of the decision, the capacity of the person and... and... only intuition can tell...

Fast forward 25 years, and we now see AI-driven decision processes taking over—something I had proposed without truly foreseeing how dramatically things would shift. The big question now is: Will human consciousness—the part of us that "doesn’t know it yet"—remain beyond AI’s reach?

Would love to hear thoughts on how decision-making has changed for you over the years!

Title:

A Need to Balance Intuition and Analysis in Management Decision-Making: Can a Reengineering Move to ‘Process Focus’ Solve It? Author: Arnab Sengupta Submission Date: September 1, 2003 University of Cambridge.

1. Executive Summary

The business environment has undergone significant changes over the past few decades, shifting from simple, structured activities to complex, customer-driven processes. As companies move from department-based structures to business process-oriented models, the challenge is balancing intuition and analysis in decision-making.

• Intuition is fast, holistic, and innovative, offering quick responses to business challenges.
• Analysis is structured, logical, and predictable but slower and less adaptable.
• The study investigates whether reengineering organizations to process-focused structures can combine the strengths of both approaches.

The thesis uses a mix of literature review and primary research (interviews with senior managers) to explore this issue. The findings suggest that shifting from hierarchical to process-oriented structures can improve decision-making by combining creativity (intuition) with rigor (analysis) while reducing risks.

2. Introduction

Strategic business decisions often rely on instinct rather than structured analysis. Examples include:

• The Deloitte and Touche merger, initiated informally by senior executives.
• The Dodge Viper turnaround for Chrysler, driven by executive vision rather than analytical planning.

The study aims to:

1. Identify weaknesses in both intuition and analysis.
2. Examine how organizational structure influences decision-making.
3. Propose reengineering business processes as a potential solution.

3. Evolution of Management Theory

The thesis traces the history of management thinking:

• Scientific Management (Taylor, Fayol) – Focus on efficiency, standardization, and control.
• Human Relations Movement (Mayo, McGregor) – Recognition of social and psychological factors in management.
• Systems Theory (Katz, Kahn) – Emphasis on adaptability and environment.
• Political Models (March, Simon, Pfeffer) – Acknowledgment of organizational politics and bounded rationality.
• Modern Approaches (Porter, Hammer) – Shift towards process-oriented organizations rather than hierarchical structures.

The study introduces a fifth typology of management—Horizontal Chevron Organizations—which emphasize process over rigid hierarchies.

4. Decision-Making Theories

The study explores different decision-making models:

4.1 Rational Decision-Making

• Based on logic, structure, and analysis.
• Assumes full information availability (which is unrealistic).

4.2 Bounded Rationality (Herbert Simon)

• Decision-makers do not have complete information.
• Instead, they make “satisficing” decisions—good enough, but not necessarily optimal.

4.3 Prospect Theory (Tversky & Kahneman)

• People do not always act rationally; their decisions are influenced by biases and emotions.
• Framing effects: The way a choice is presented affects decision-making.

5. Intuition vs. Analysis in Decision-Making

5.1 Case for Intuition

• Quick responses to complex problems.
• Innovative solutions beyond structured frameworks.
• Used when time is limited or problems are ambiguous.
• Examples: Chrysler’s Dodge Viper project succeeded due to executive intuition. CEO intuition often plays a role in major acquisitions.

5.2 Case for Analysis

• Ensures logical consistency and structured evaluation.
• Reduces human biases (e.g., overconfidence, anchoring effects).
• Incremental decision-making (Lindblom) reduces risk.

5.3 The Disagreement

• Henry Mintzberg argues that planning limits creativity, while strategic thinking relies on intuition.
• Eric Bonabeau warns against over-reliance on intuition, as it can lead to biased or overconfident decisions.
• Hybrid approach: Use analysis to evaluate and refine intuitive insights.

6. Need for Innovation & Change

To stay competitive, firms need:

• Faster decision-making.
• Increased innovation.
• Better responsiveness to customer needs.

Traditional hierarchical structures limit innovation, while process-focused structures encourage it.

7. Reengineering for Process Focus

7.1 The Shift from Hierarchical to Process-Centric Organizations

• Traditional organizations are department-based, leading to fragmented decision-making.
• Michael Hammer’s reengineering suggests structuring companies around processes instead of functions.

7.2 Benefits of Process-Centric Organizations

• Holistic view of problems.
• Encourages cross-functional collaboration.
• Reduces bureaucracy and delays in decision-making.

8. Research Methodology

• Primary Research: Interviews with senior managers from: Traditional manufacturing & energy firms. Financial sector (“The City”). Intellectual Property (IP) firms. Media & creative industries.
• Focus Areas: How they use intuition vs. analysis. Whether decision-making is affected by company structure. If a process-driven structure can enhance decision-making.

9. Key Findings

9.1 Insights from Interviews

• All executives agreed that intuition is crucial for senior management.
• New economy firms (tech, media) rely more on intuition than traditional firms.
• Old economy firms (manufacturing, finance) depend heavily on analysis for justifying decisions to stakeholders.
• Process-focused companies found it easier to integrate intuition and analysis.

9.2 Core Insights

Intuition Analysis Holistic & creative Logical & structured Fast decision-making Slow, but more predictable Innovative, but risky Safe, but may lack creativity

Conclusion: The best approach is a hybrid model, where intuition guides initial ideas, and analysis refines them.

10. Conclusion & Recommendations

10.1 Recommendations

1. Shift to Process-Centric Structures Encourages holistic decision-making. Reduces departmental silos.
2. Use Synectics’ Creativity Models Formalize innovation processes. Encourage knowledge-sharing and cross-functional collaboration.
3. Further Research Required More empirical evidence needed to validate the process-driven approach.

10.2 Final Conclusion

A process-driven organizational structure can help bind intuition with analysis, leading to better decision-making. However, more research is required to refine this model. Until then, companies must balance both approaches strategically.

Final Thoughts

This thesis provides valuable insights into modern management decision-making. It highlights the limitations of both intuition and analysis while proposing process reengineering as a potential solution.

Would you like a specific section expanded further or more details on any point?