Leadership

CEOs in these countries are more likely to go with their gut

A clerk closes the door before a round table talk on the shifting of lower import prices to customers due to the strong Swiss franc in Bern August 10, 2011.REUTERS/Pascal Lauener (SWITZERLAND - Tags: POLITICS BUSINESS) - RTR2PS81

Information and technology don't always replace experience and instinct. Image: REUTERS/Pascal Lauener

Emma Charlton
Senior Writer, Forum Agenda
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How do you balance data and judgement when you make a decision? Your answer may be more rooted in culture than you think.

Eight out of 10 CEOs in the US say they’ve relied on perception, rather than data, when making business decisions, according to a KPMG survey. That compares with just 5-in-10 French CEOs.

Executives in Japan, the UK and Australia also tend to prefer intuition to data-driven insights, the survey shows.

KPMG surveyed 1,300 CEOs in 11 economies between January and February this year.

Image: KPMG

Move fast and innovate

Technological advances are bringing a new complexity to strategic decisions with more data collected and available than ever before. Add to that sophisticated artificial intelligence that can make predictions about future trends and the picture becomes even more intricate.

In a world where digital technology is disrupting the traditional order and creating new opportunities, CEOs are under pressure to constantly adapt to change.

More than half (59%) said agility was extremely important, and that without fast innovation they feared going bankrupt.

A popular way of fostering innovation is building networks of innovation partners, with more than half of the organizations in the survey setting up or planning incubators for startups.

Still, the survey revealed that while information and technology can form the basis of a decision, they aren’t necessarily a replacement for innate knowledge and experience.

Knowing which numbers to trust

In the past three years, 67% of executives have favoured intuition over data-driven models. For Steven Hill, global head of innovation at KPMG, it’s like driving a racing car, where experience works in conjunction with, and ultimately overrides, the multitude of technical signals.

“You can be driven to wrong conclusions if you just follow the data blindly,” Enrique Díaz-Rato, chief executive of infrastructure company Cintra said in the survey. “We have seen exciting insights that would be powerful, provided they were representative of our overall customer base, but they weren’t.”

Many CEOs also display skepticism towards the numbers put in front of them, with more than half saying they prefer historic information to predictive analytics.

Trust is the central issue, with CEOs wanting to understand where the data has come from so they can work out for themselves how reliable it is likely to be. Information that comes directly from consumers, often via social media, is deemed more helpful than data from reports or government research.

Image: KPMG

An indication of how much the landscape has shifted in recent years can be found in attitudes towards sources of information. Forty-two percent of those surveyed said they have “very strong” trust in social media – which tends to come directly from the consumer – while just 12% said the same for open data from government agencies.

Patricia Kampling, chief executive of Alliant Energy told the survey the key is focusing on the high-quality information, rather than getting overwhelmed by the amount available.

“Nothing is more valuable than having constant communications with employees, customers and technology partners,” Kampling said. “My decision-making is a combination of data-driven information, input from many and decades of experience.”

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