Scientific Decision Making

• Two main approaches to decision-making in business:

  • Intuition: based on hunch, gut feel, and experience of individuals making the decision
  • Scientific approach: based on analysis, evidence, and data
• Advantages of intuition:


  • Speed in decision-making
• Advantages of scientific approach:

  • Evidence-based decision-making
  • Removes some subjective judgment from decisions
• Examples of scientific decision-making techniques:

  • Decision trees
  • Investment appraisal techniques like ARR, net present value, and payback period
  • Use of algorithms and automation in businesses, such as dynamic pricing based on big data
• Drawbacks of scientific approach:

  • Relies on human assumptions and judgment
  • No guarantee of making the correct decision, similar to intuition
  • May overlook the importance of business experience in decision-making