A lot of women watch Oprah. And a lot of women and few graduating classes have heard her say that you should trust your gut. She claims that she has and she tells her audiences to simply look where it got her! The “gut” she refers to is called by many names including intuition, God, and just plain old luck. But this is the wrong to approach our retirement planning decisions (a long-term time frame) and even worse for our business decisions (short-term time frame)., And if Oprah’s audience is any indication, this gut reaction is more often used by women than men.
I could suggest two words: Bernie Madoff and be done with it. But it goes much deeper than that. Mr. Madoff, now paying for the scam he perpetrated on unsuspecting investors who trusted him based mostly on their gut feelings is kind of a good example for two reasons: we often confuse confidence with competence and when it comes to hindsight, we see not only where we went wrong but how we should have known better – in other words, we should have listened to what our gut was trying to tell us.
Oprah has been suggesting that by following our gut feeling, we can be just like her and make the right business decisions. As Kiri Blakeley pointed out recently in Forbes, that problem of believing what your gut tells you to be true is paraded in front in millions of people each week on television when we think we can dance, sing or otherwise have talent. Which proves one thing: our guts telling us so doesn’t make it that way.
So why do we trust our guts to make decisions?
It is mostly due to that fact, that up until a century ago, those gut feelings were survival techniques that forced us to rethink our plans. If it didn’t feel right, you simply didn’t pursue it. But a century ago, men were making most if not all of the business decisions and were priding themselves on doing so with deductive reasoning. Deductive reasoning essentially removes the gut from the decision by compiling all of the available information and drawing a conclusion based on what was available.
Proof that we don’t use this sort of reasoning with any real success can be answered in the following question: If your doctor told you she or he didn’t know what was wrong with you (an opinion based on the information you and your tests provided) would you simply find another doctor to tell you what you wanted to hear?
So by suggesting that having a gut feeling, or intuition as many ladies prefer to call is not worth following, why do so many still do exactly this when we know that it is not the smartest thing to do when it comes to investing or in our business decisions?
Truth is, it might not be good for much at all and even worse for investing, doubly so if you are making business decisions. Christopher Chabris and Daniel Simons, authors of the new book, The Invisible Gorilla: And Other Ways Our Intuitions Deceive Us and “both psychology professors, define intuition as something we intuitively accept and believe, which then influences our decisions automatically and without reflection.”
But this intuition may be good for some things. For instance, when it comes to networking, which women need to do to grow their businesses, knowing who is worth working with and who isn’t can be based on how you feel about a person. But when it comes to believing them when money is involved, gut feeling should be set aside in favor of cold hard facts and figures. This may be why there is gender gap holding women businesses back from being as successful as men businesses.
Studies and surveys have shown that women use intuition more than men. “Women have the vision, capacity and perseverance to build thriving companies” according to a recent Wall Street Journal article written by Sharron G. Harday but the comparable revenues were 27% less. She thinks it may lie in the goals: men want to be the boss while women want a personal challenge. Men tend to have more access to capital so women pick businesses that are easier to get into but harder to grow.
In many cases, this mindset is based on the gut feeling that they might do better at something they can handle rather than take the risks needed to get much further along. Which means relying on the cold hard facts such as metrics (if you cannot measure it, it is not real!) is not something women do all that often.
Ms. Harday also suggests that to be as successful as men are, another case against relying on your gut, would be to become “trend-setters and to innovate beyond expectations”.
So should women simply throw out their gut feelings?
Not at all. But don’t rely on them. Even Oprah didn’t solely rely on her gut – in fact her financial advisor is still with her all of these billions of dollars later. It instead means using them as part of the process but when cold, hard facts present themselves, only then if you insist on trusting in your gut feelings before that information, you may find it was that intuition that keeps you from getting farther ahead.
Click here to read more from Ms. Harday or Ms. Blakeley
You can also hear more about this topic on MomsMakingaMillion radio on Friday 06.18.10
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{ 2 comments… read them below or add one }
Investing is one of the few things where you have to check your ego at the door. If not, you will get clobbered. Even the best take a hit now and then, and they work based on precise, intricate systems. So what makes you think you can just go from the gut?
If you re-read the post Devin, I suggest that you do not use your gut but instead just the cold, hard facts.