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January 4, 2013

How to Use Intuition

Intuition is important in arts, science, business, war and politics.

Let me give an example of its importance. A noted American general has said that if you are about 40 to 70% confident, you should act. The founder of Alibaba Group has said that in strategic decisions, intuition takes about 60% and the statistical analysis and rational evaluation take the remaining 40%.

Then, say, I am about 80% sure of my intuition. Then, in total, my confidence will be --- 80% of 60% , that is 60% x 0.8, 48%.

Then, 48% is more than good enough for General Powell. In that case, I can do without "statistical analysis and rational evaluation." That would be a very fast, cost-efficient decision-making.

  1. Analytical approach offers only small advantages, and
  2. because of that, you need a big pile of resource to exploit your analytical insights.
But many people say intuition is unreliable. Then how do we compensate this?
  1. Being humble like a blind person. Matsushita has, upon being quizzed why he had had such a perfect record of predicting trends, noted that he had observed that it is only people with good eyesight that fell, not the blind persons.
  2. Being nimble about our decisions. This idea was suggested by an NTU physicist in his interview in Straits Times this month.(Sorry, I can't track it online now.)
But are all intuitions unreliable? What kind of intuitions have better chance of being reliable?

Again, Jeffery Ma notes in "The House Advantage" that fact-based ones are likely to be reliable. The book, Alibaba: The Inside Story Behind Jack Ma and the Creation of the World's Biggest Online Marketplace contains many such examples. I have listed here many other examples too.
  1. Jack Ma : if there is a market need, it should not be too hard to succeed.
  2. Jack Ma : People who catch shrimps get rich. Those who catch whales may not fare that well.
  3.  Akio Morita : many people didn't mind carrying heavy music players, and therefore many people will be happy to buy the revolutionary walkmans.
  4. A famous shogun : if deer can go, so can horses. He then took an expected short-cut route to rout his stronger enemy forces.
  5. Einstein : Friends on 2 different trains can exchange books if their speeds are more or less the same.
  6. Deng Xiaoping : crossing the river by groping the stones.

What do they have in common?

  1. Can we get such intuitions?
  2. Can we shape the intuitions we do have, into their mould?

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