Survey Says: CEOs Trust Their Guts More than Data to Make Decisions

Published: November 30, 2006

by Timothy Prickett Morgan

Here is what it means to be human. After companies have spent untold trillions of dollars creating computer systems to process business transactions and give them the data that can help business leaders make better decisions, chief executive officers polled recently say that gut feelings are more influential than hard numbers about their own business or those of competitors.

That conclusion is drawn from a poll of 252 CEOs of companies based in the United States performed by PRWeek, a magazine dedicated to PR professionals, Burson-Marsteller, one of the big public relations firms, and Millard Brown, a market research firm that presumably is comfortable with statistics. This is the sixth annual CEO Survey, and it shows that American CEOs rely on their intuition more than they do on quantitative information when they make their decisions. About 62 percent of those CEOs polled said that "gut feelings were highly influential in guiding their business strategies," while only 44 percent cited internal metrics and financial information as being highly influential; only 41 percent said that competitive analysis was influential.

About three quarters of CEOs did agree on what they worried about as they took action: 79 percent cited customer reactions as key, while 74 percent said long-term financial performance and 73 percent said the company reputation were among their top priorities.

"Business decision-making is a multi-dimensional process that incorporates instinct, information and foresight," explained Mark Penn, president and CEO at Burson-Marsteller. "The intuition cited by these CEOs is likely fueled by research, sharpened by years of experience and industry know-how as well as a deep awareness of stakeholder attitudes and behaviors." Then again, maybe they just like not having to do math, and maybe they don't trust the systems in the data center that they keep feeding money. Whatever it is, such statistics have to be a little disheartening to MIS managers and chief information officers, who have systems that do more than process transactions--systems that should be at the heart of business decisions.

The good news is that among companies with $10 million or more in sales, CEOs rely on their executive teams for guidance (about 55 percent said so), but CEOs at smaller companies are a lot less likely to let their teams deal with emerging issues (only 19 percent said they did among companies with under $10 million in sales). The survey also showed that 61 percent of CEOs said that they regarded motivating employees as key, and on average, all of the CEOs polled spent 42 percent of their time with employees, not customers or golfing buddies.