Birds, whales, dolphins, and practically every migrating animal on earth has it: A sixth sense called magnetoreception which they use to plot their long journeys.
A 6th sense is the ability to tell instinctively that something is not right in your business or that a proposed deal just doesn’t ring true. It’s also the feeling that an opportunity is calling your name.
Human’s version of it is called “a gut feeling” “6th Sense” “Intuition” or a “nagging voice” in the back of our minds. Following it or failure to do so is often the difference between success and failure when launching or running a business.
Knowing that 20% of businesses fail in the first year and 50% during the first five years, according to Stats, how much of this is true?
Perhaps a good place to start is data and its role in predictive analytics towards making future business decisions, gut feeling or not.
One writer for the Harvard Business School Online says in an article, “Though intuition can be a helpful tool, it would be a mistake to base all decisions around a mere gut feeling. While intuition can provide a hunch or spark that starts you down a particular path, it’s through data that you verify, understand, and quantify.”
Data is a crucial aspect of business strategy with which to identify new business opportunities, better understand their customers, improve marketing and sales, improve operational efficiency, and boost profits.
Analysts for the International Institute for Analytics estimate that businesses using big data will see a collective $430 billion in productivity benefits over their non-data-reliant competitors by the close of 2020.
According to New Vantage data, 55% of surveyed businesses spend over $50 million on big data and AI initiatives, and 21% are spending over $500 mn on them.
So what is this 6th sense in business?
Instinct, intuition, and a gut feeling all basically say the same thing and get the same reaction from doubters: “You must be crazy”, or “It won’t work” and “Don’t quit your day job”.
It’s a good thing Walt Disney, Elon Musk, Steve Jobs, Henry Ford, Boeing’s Bill Allen, and Uber’s Travis Kalanick, among other greats, only listened to their gut feeling and not to others.
Jobs was an outspoken believer in intuition famous for saying his number one rule of business was “to trust your heart and your gut.”
But there is a caveat.
In the Journal of Organizational Behavior and Human Decision Processes, a study found that intuition is effective when making a decision in an area where the decision-maker has in-depth knowledge.
Micahel Pratt, an expert in organizational psychology and a researcher on the study above said: “Intuition is like nitroglycerine — it is best used only in certain circumstances” and warned that one must be careful using their gut in an industry they aren’t entirely familiar with
Intuitive leaders may weigh empirical data and consult with peers and colleagues, but in the end, they rely on their sense of smell and gut feeling to guide their decision-making process.
A good forecaster uses a combination of a natural curiosity about the world, data, having an opinion, and instinct to choose a course and correcting it as necessary.
All we can do is make educated guesses based on what history teaches us, and integrate what we have learned in the process. Good leaders know when to follow their instincts.
Businesses’ other 5 senses
Let’s look at the 5 essential senses businesses need to succeed.
1. Tasting success
Successful entrepreneurs love the taste of success more than they dislike failures. Some of the best-known businesses are built by people who have failed over and over again, but never lost that craving for success.
Before co-founding LinkedIn and becoming an investor in companies like PayPal and Airbnb, Reid Hoffman created an online dating and social networking platform SocialNet. The fact that you’ve never heard of it says it all – it failed.
2. Seeing opportunities
As Mark Zuckerberg once said: “In a world that’s changing so quickly, the biggest risk you can take is not taking any risk.”
In a survey that analyzed the main factors behind company failure, 13% of respondents admitted that missing the opportunity to enter the market at the right time was the primary reason for failure.
Chad Hurley, Steve Chen, and Jawed Karim once created a video-based dating service that allowed people to upload videos describing their ideal partner and browse for potential matches. After spotting the opportunity to become a more efficient host of online videos, they pivoted, ditched the dating aspect, and launched YouTube.
3. Listening to customers’ needs
Stats show that 14% of companies fail because they ignore their customers. Most often, they make things people don’t want, ignore requests and recommendations, or simply fail to provide good customer service.
Bill Gates once said: “[Customers] can’t always tell you what they want, but they can always tell you what’s wrong.”
Nokia once dominated the mobile phone market but failed to adapt to the consumer’s changing wants and needs. When people went crazy for smartphones, the company still tried to convince them to buy push-button phones.
4. Smelling trouble
Entrepreneurs must trust their gut feeling, and back out when they smell trouble in areas such as where the company spends its money, what products get launched, and what people get hired.
Rupert Murdoch, the executive chairman of 21st Century Fox, invested $121 million in Theranos, the technology startup that promised to revolutionize healthcare. The company turned out to be a scam, and everyone who invested in the company lost their money.
5. A personal touch
Staying faithful to your unique vision can build a brand that stands out.
In today’s saturated market, being unique is more important than getting everyone to like you or your ideas.
A study that surveyed 2,631 entrepreneurs who’ve built companies generating at least $1 million in annual revenue, revealed that 61% of them believe that a clear vision is the most important factor for a business to succeed.