When data fails: The importance of gut decisions

Suranga Chandratillake, founder of video search engine Blinkx, has a guest post up on Venturebeat advising CEOs on making gut decisions. In today’s world much more data is available and many decisions can be made based on fact, but Chandratillake’s point is that we are in danger of fetishising data driven decision making to the detriment of business performance. When big decisions need to be made and the data isn’t great we should be prepared to rely on our gut calls. His final paragraph summarises his article well, but I recommend clicking through to read the whole thing:

The ability and confidence to make gut calls is one of the great tests of being a leader.  I meet would-be CEOs all the time who think they will apply data and process to every decision they need to make.  Beware: the real world doesn’t work this way.  Sure, start with rigor and data, but be ready to leave it behind when you need to.  Collect data, even if it doesn’t always fit perfectly. Take big calls seriously, and realize that not making a decision can be as bad as making the wrong one. And once you make a move, be ready to weather both the negativity from others and your own emotional reaction in the inevitable cases when it all goes wrong.

In the world of early stage investment we often find ourselves having to make important decisions in a data poor environment. That’s exciting when it comes to new investments, but horrible when we have to decide whether to continue to support a company that will otherwise have a hard time or close down. We work hard to get as much data as we can, both hard and soft, but there’s rarely enough to make the decision straight forward.