In the study of entrepreneurial decision making, it’s very helpful to understand and recognize your personal decision-making style. In this book, we’ll talk about how you can understand your personal preferences for decision making, and what you may do to enhance your decision-making style.

We will begin with a discussion on rationality. The rational decision maker is data driven. They make decisions based on logical analysis. They don’t rely on their gut, or would prefer not to, particularly if it contradicts what they’re finding in the facts.

Separate from rationality is intuition, of making decisions based on feelings and emotions. You may, in this case, avoid the facts. You may avoid the logical analysis if it contrasts with what your gut tells you.

When you ponder these two styles, consider whether you are rational or intuitive when it comes to significant decisions.

When you think about rational versus intuitive, I encourage you to put them into context and to think about past actions. Think about a career choice, a significant purchase, or your personal relationships. Were you rational or intuitive there? That’s probably a good indicator of your preferred style, when you look at it historically and what you’ve done and why you’ve done it, and what role the rational or the intuitive played in that.

Are successful entrepreneurs rational or intuitive decision makers?

The short answer is “both”. What we see with successful entrepreneurs is that most are rational and intuitive decision makers. In that way, when we look at the various elements of the startup venture, you can work to be rational, but you’re never going to have all the data. You’re never going to have all of the facts or answers of what to do. Inversely, you’re not always operating in the dark. You’re not always operating without information and without resources. So, you don’t have to be entirely intuitive about everything. The challenge is that you have to recognize where you are, or where your preferences tend to be, and what you can do to augment that, and to raise your competency in both.

You can make decisions that are highly rational and highly intuitive. We’ll talk about those in a few different contexts.

Concept development is certainly one; it should involve market research and a lot of gut feelings as well. It’s that early ideation phase of what is the product? What’s the benefit that you want to bring forth? It takes a lot of intuition.

Soon after that, there’s the element of market analysis. Does anybody care? Is there a customer out there? Is it competitive with what’s already in the market? And that’s where we can integrate our analytical efforts.

You also need to understand where the market is headed, where your competitors are headed. And that takes you back to intuition. What do you think the feature set of your competitor is going to be six months from now?

We also want to recognize that customer discovery requires rational and intuitive decision making. Customers are difficult to understand, and their needs and wants change over time. There’s the expectation that you’re going to do research. But you’re also going to do your own customer discovery and analysis, and apply your intuition.

Product design and prototyping requires vision and quantitative data. Communicate with team members, advisors, and other people who can challenge your thoughts, who can make suggestions, and who can help you evolve your ideas to better understand what your product should be. You also want to recognize the value of generating alternatives, of testing assumptions, gathering data, understanding what works and what doesn’t work, and why people prefer certain things. Will they pay for that feature? And what will they pay?

You’re always integrating the rational and the intuitive. Keep asking yourself, what information is missing? What can I add?

Fundraising tends to be quantitative. Investors ask, what are your revenues and expenses? How much funding do you need to raise, at what point, at what time, on what terms, and at what valuation? You cannot go to an investor with only your gut feeling. Nor should you do it to yourself. Fundraising is very numbers driven. But there’s always a degree of intuition that’s factored into how you do your estimates, what your expectations are, what your key assumptions are.