INTUITIVE INTELLIGENCE

For me, business is a ‘gut feeling’ and if it ever ceased to be so, I think I would give it up tomorrow.

It wasn’t always a success story for billionaire Richard Branson, but as he describes his past mistakes in his 1998 autobiography, Losing My Virginity, he recalls the invaluable lessons he learned about life and business. His mistakes led to innovations that would later become the experience necessary for the “gut feelings” that would lead him to greater business success.

“By ‘gut feeling’, I mean that I believe I’ve developed a natural aptitude, tempered by huge amounts of experience that tends to point me in the right direction rather than the wrong one.” (Branson, 2011)

One of the most distinctive features of money-makers is the “gut feeling.” Virtually all highly successful people talk about trusting their instincts over the complicated analysis of an idea.

In a 2012 interview, Lauren Lyster from the Daily Ticker asked Jimmy Choo co-founder Tamara Mellon, “What is the most important lesson you’ve learned in business.” Mellon said, “The most important thing is instinct, you have to trust your gut. Every time I’ve gone against my instinct it’s been a mistake.”

However, upon further investigation, the gut feeling is NOT what sets apart the successful entrepreneur from the struggling entrepreneur, but rather, the distinctive factor is the ability to monetize gut level experiences. Money makers are not merely throwing the dice on a hunch that double sixes will turn up. Both billionaires and zeroaries have the same chance of success apart from experience.  

Financial entrepreneur, Warren Buffett, heavily relies upon at least two helpful emotional brain processes: intuition and empathy. He also utilizes gut instincts with position sizing, overall market exposure, and in sensing danger. (Revee Mehta)

What is the advantage that an experienced money maker has over other, less successful entrepreneurs? It has been shown that money makers use a complex information processing system of pattern recognition that most people use for recognizing faces in a crowd or avoiding a potentially dangerous situation (Kirzner, 1985; Baron & Ensley, 2005). A money maker is like a chess grand master that can make a move on a chess board in less than 30 seconds, because he recognizes a pattern from thousands of hours of playing chess.

The probability of making an error in judgment when relying on gut feelings greatly decreases with experience, because decisions for money makers is more about recognizing opportunity than throwing the dice on a bet.