The power of intuition: the Quant versus the Qual human. Column by Ingo Plöger, CEAL

We finished 2020, the year that taught us that we cannot get predictions right.

Now we are, humbly and less pretentiously, trying to anticipate how long will the pandemic last, and how fast our populations will receive the vaccine.

Anything else learned this year?

Artificial Intelligence and Machine Learning boosted human intelligence in the past decade. The use of ML and Big Data analytics in our lives, has made us more and more “Quant”, that is, decision-making is more rational and less intuitive.

The more we increase efficiency with new management technologies, reduce problem-solving time, and cut human interventions, the more “Quant” we become.

With this, we built an inverse relationship, whereby, as the degree of rationality increases the freedom of management decreases. The use of algorithms in avionics provides a good example. We assume that incidents and accidents are predominantly human-induced, since humans are not always rational, especially when forced to decide fast in complex situations. The greater the speed and complexity of a process, the smaller the space for human intervention. This evolution was possible because of the exponential increase in our ability to process data.

However, life is not just about this. Life changes permanently and, at times, social networks magnify the perception of change even more.

But it is not the consumer who changed! It is life that changed, and the consumer, being incredibly adaptable, altered its choices and attitudes consequently.

The phases of the pandemic showed us several of these changes.

The initial fear instilled paralysis. We retreated to survive in the face of tremendous uncertainty about the future. In addition, the more humanity confronted the advance of the virus, the more it realized its real danger.

Then, the succession of dreadful problems like long shut-downs, the trade war between the USA and China, and the show of generalized global weakness at combating the pandemic, brought about the fear of illness and unemployment.

Under those conditions, suddenly the all-rational “Quant” ceased to exist. “Qual” took over our mindset. Opinions and guesses were back in the discussions. They were as valid as truth in global planning. – If only we had used earlier the Behavioral Economics theories of Nobel laureates Herbert Simon, and Daniel Kahneman, we would have been more accurate in our predictions in the first place.–

For decades “Quant” prevailed over “Qual” as if there was no other way. We believed in efficiency and lost effectiveness.

The “Qual” of humans directs us by intuition to perceive right and wrong, but we disregarded “Qual” for a long time believing that numbers should drive us. In the process, we lost the notion of direction.

All of the sudden in our Hemisphere everything began revolving around Environmental, Social, Governance (ESG). The perception is that consumers want it, but what many have not realized is that, in fact, life wants it. We cannot believe any longer that we can do things just as we did before the pandemic. It does not work. We came out of the pandemic less global and more digital; some came out richer, but most became poorer.

The return of “Qual” requires the courage to believe in the power of intuition. The old idea of a ‘good nose for business’ is back. Business Intelligence dashboards can point out alternatives, but if you do not know the art of flying your own business, you will go wrong.

Going back to life’s essentials, the pandemic showed us that consumers are driven by the realities of life and not the other way around. To understand life in other different dimensions we will have to return to the art of entrepreneurship. Today it is better to be an entrepreneur than a manager.

The “Qual” will give us the meaning of things, while the “Quant” will give the best way to do things.

Putting “Qual” in front of us will avoid the problem of seeing without observing, hearing without listening, and perceiving without feeling. It is, in sum, to let intuition be what it has always been in humans: an inner voice for right and wrong. It is time to empower intuition.

May the Holidays inspire us to do more good, for everyone!

 

Edited by Santiago Gutierrez

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