Definition of intuition
Psychologists and decision scientists define intuition as a rapid, non-conscious, cognitive process that results in affectively charged judgment. In part, intuition represents a trainable skill which, over time, develops into what is often called “automated expertise”. It is this skill that allows domain experts such as financial traders, medical doctors, and fire fighters alike to efficiently make critical decisions in their respective professional environments. They do so by making “holistic associations” in the sense that they rely on cognitive shortcuts which match the decision environment with similar, previously experienced situations. Judgments resulting from expert intuition therefore enable managers to react quickly to a critical situation without having to assess every aspect of the decision problem at hand.
an example of intuition in use
In order to forecast sales prior to the launch of a new CD, a record label could generate statistical model predictions by looking at historical performance data of similar artists in the same music genre. However, in practice, marketing managers usually adjust such model forecasts by also taking into consideration more qualitative, contextual information such as current trends in the market, media attention, ethical considerations, and so forth. Experienced managers can hence use their intuitive expertise to subjectively extract the signal from the noise- that is, they are able to identify and interpret contextual information shedding further light on the forecasting task.
intuition in the news
In June 2013, an expert in the industry was commenting on the likely effect of large amounts of private equity investment in shipping. He said private equity executives were usually “buttoned-down, methodical” people who were very different from shipowners who worked mainly on intuition.