Scientific vs Intuition

• Business decisions are made every day on simple things like the price to charge or how much inventory to hold, as well as strategic and functional decisions.
• There are two main approaches to decision making: scientific and intuition.
• The scientific approach to decision making involves decisions based on data, evidence, and analysis.
• Examples of scientific decision making include investment appraisal techniques such as Net Present Value and Payback Period.
• Scientific decision making is embedded in many businesses today through algorithms, automation, and the use of big data to determine the dynamic price of a good or service based around a series of factors.
• The main benefits of a scientific approach to decision making are that it is evidence-based and should remove some but not all of the subjective judgment from decisions.
• The drawbacks of a scientific approach to decision making include that it still relies on humans to make assumptions and exercise judgment.
• Another potential drawback of scientific decision making is that it may ignore the crucial aspect of business experience, the learning that's taken place that enables managers to make better decisions as they become more experienced.
• Strategic decisions are usually considered long-term and involve a lot of resources
• Tactical decisions are short term and often involve day-to-day operations
• Decision making can be based on three assumptions:

  • Data
  • Experience
  • Hunch