‘Intuition and Leadership’ – Prof. (Dr.) Gerd Gigerenzer, Director of the Center for Adaptive Behaviour and Cognition and the Harding Center for Risk Literacy at the Max Planck Institute for Human Development (MPIB), Berlin, Germany

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The 24th leadership lecture was conducted by T. A. Pai Management Institute on 10th January 2017. The speaker for the event was Dr. Gerd Gigerenzer, Director of the Center for Adaptive Behavior and Cognition and the Harding Centre for Risk Literacy (MPIB), Max Plank Institute for Human Development, Berlin, Germany. Dr. Gururaj Kidiyoor, Director, TAPMI and Dr HS Ballal, Pro Chancellor of Manipal University were present.

Mr. Gigerenzer began the session by describing the difference between a decision by intuition and a decision by calculation. According to him, “If you have a situation where everything is known then you should use decision by calculation”. For instance, in the field of astronomy, big data has been very significant because the world is highly stable compared to our small existence. On the other hand, when “Tomorrow is not like yesterday and the future is hard to predict, therefore, we use decision by intuition”.

He left the students surprised by stating the fact that in Europe when top managers were asked about the frequency of taking ‘gut decision’, it was found that around 50% of the total decisions are made by intuition.

Intuition is not an arbitrary decision, not sixth sense or not what only women have. He mentioned how leaders cope with gut decisions by spending time, energy and intelligence in finding facts for the gut decision made because they have to take responsibility for it. Managers also employ defensive decision making which is a problem in corporations, politics, and bureaucracy. He spoke about the ‘people aspect’ of leadership heuristics and the strategies that can be deployed to be an effective leader.

Mr. Gerd Gigerenzer showcased how predictions of exchange rates over 10 years by top international banks such as Bank of America Merrill Lynch, Citigroup, HSBC, JP Morgan etc. have been wrong. This indicates that complex models and algorithms used by these institutions are inaccurate.

He concluded his lecture by stating the following four aspects of the topic:

• RISK ≠ UNCERTAINTY – Intuition is based on heuristics that can make intelligent decisions under uncertainty.

• LEADERSHIP – Good leadership is based on an adaptive toolbox of heuristics.

• ERROR CULTURE – Avoid defensive decision-making; build positive errors culture.

• LESS IS MORE – More information, time, and computation are not always better.

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