When Intuition Pays Off—and the Crowd Finally Catches Up
More than once in my career, I’ve found myself the lone voice questioning what appeared to be the conventional industry wisdom. I remember questioning Motorola’s judgment when they launched Iridium. The whole industry drank their Kool-Aid, but I wasn’t convinced the business model made sense. Not long after, they filed for Chapter 11 bankruptcy, a mere nine months after launching. It was one of the largest U.S. bankruptcies of its time.
Around the same time, our industry was promoting a technology called WiMAX as a competitor to mobile standards like LTE. Friends, suppliers, and competitors were excited about the prospect of a “WiMAX chip in every laptop”, but I didn’t believe that this more expensive technology could upset the natural upgrade path that was already underway. In the end, my skepticism was borne out, and by the mid-2010s, most WiMAX networks had either been shut down or converted to cellular technology.
More recently, in the buildup to cannabis legalization in Canada prior to 2018, I was the only person I knew who thought the numbers didn’t add up. At the time, eighteen months before legalization, there were 128 licensed competitors growing weed. These companies were all touting a dubious measure called “funded capacity” (basically a measure of how much pot they could grow when fully built out), because they had no other good news to report for the billions of dollars in capital they raised. Five minutes of napkin math told me that it would only take the two largest companies in the industry to satisfy all the demand for weed in the country once they fully built out their plant. I was left wondering who the other 126 players would be selling to. It was brutally obvious to me that this industry was headed for a brick wall; yet, all the stocks continued to climb during that era.
In each case, there were good logical reasons for me to hold my opinion, but it was my gut that told me I was right and to go against the grain.
What exactly is trusting your gut? When should you trust it? When should you let the crowd sway you, despite what the evidence says?
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What is Gut Instinct, Really?
Gut instinct isn’t magic. It’s usually your brain quietly connecting dots you don’t even realize you’ve seen before. It’s a kind of subconscious pattern recognition—something we humans are uniquely gifted at—built over years of experience and exposure, and millennia of evolution. When something feels off, or an opportunity just “clicks,” it’s often because your mind is matching what’s in front of you with a mental library of similar situations.
Psychologist Gary Klein called this the Recognition-Primed Decision Model. He studied firefighters, soldiers, and other professionals making fast, high-stakes decisions and found they didn’t consciously weigh options. Somehow, they just knew. Nobel laureate Herbert Simon summed it up well: “Intuition is nothing more and nothing less than recognition.”
So when someone says, “I just knew,” what they often mean is that their brain picked up on patterns their conscious mind hadn’t caught yet.
Does Gut Get Better With Age and Experience?
It’s tempting to think that intuition automatically improves with age. In some ways, it does. More years means more experiences, more patterns absorbed, more mental reps completed. But age alone isn’t enough and can be a double-edged sword. Experience often brings overconfidence, blind spots, and ingrained, often unconscious, biases.
Researchers like Nobel laureate Daniel Kahneman point out that gut instinct only works reliably in what they call high-validity environments, or fields where decisions are followed by quick, clear feedback. Think of a firefighter who can immediately see whether a door opened the right way, or a surgeon who knows if a cut went as planned. Their instincts get reinforced, refined, or corrected in real-time.
By contrast, in more ambiguous settings (think investing, strategy, or hiring), it might take months or years to determine whether you made the right call. That delay makes it hard for your intuition to calibrate effectively. So in those environments, relying on gut instinct alone is far riskier.
So it’s not age that sharpens your gut, but reflective experience. You only get better if you’ve been paying attention to what worked, what didn’t, and why.
Gut vs. Structured Decision-Making
It’s important not to assume a false dichotomy here. Intuition and analysis each have their place in the decision-making process. The sweet spot is knowing how to use both.
Your gut shines in fast-moving or human-centred situations: when you’re under time pressure, when you recognize a familiar scenario, or when you’re assessing intangibles like team dynamics, cultural fit, or early product-market signals. These are often situations where nuance and judgment matter more than deep analysis.
Structure, on the other hand, is critical when the stakes are high, the variables are many, or the terrain is unfamiliar. If you’re making a decision that involves significant risk or long-term impact—especially in areas where you lack direct experience—you’re better off gathering data, getting input from others, and relying less on intuition.
The best way to describe the way I’ve used this “tool” is to first let your gut surface the insight, and then use structured thinking to test it.
Intuition is the use of patterns they’ve already learned, whereas insight is the discovery of new patterns.”
– Gary Klein, The Power of Intuition: How to Use Your Gut Feelings to Make Better Decisions at Work
How to Hone a Reliable Gut
Start with humility. You need to be deliberate about learning from your own decisions. That starts with running postmortems. Was your instinct correct? Either way, why? What did you see that others didn’t? Or what blinded you? How much was luck a factor in this scenario?
Next, work on identifying your biases. Everyone has them, and they often come from past trauma, ego, or unchallenged assumptions. For example, if you once hired a founder-type personality who wowed everyone in meetings but couldn’t deliver results, you might find yourself overly skeptical of future candidates with similar energy, even when they come with a proven track record. That’s a bias, not a reasoned judgment. The better you get at spotting those mental shortcuts, the better you’ll be at minimizing their impact.
It’s also critical not to confuse confidence with clarity. Just because a decision feels certain doesn’t mean it’s sound. Confidence should follow from evidence and results, not from your planning assumptions. For instance, you might feel confident about entering a new market because the forecasts are glowing and everyone seems on board, and someone else did it somewhere else. But if your projections rest on shaky assumptions or groupthink, that confidence will bite you. Challenge your assumptions and ground your decisions in hard evidence, wherever you can.
Surround yourself with people who’ll challenge you. Your instinct sharpens when it’s stress-tested by thoughtful disagreement, not just confirmation. Avoid what I call “The Emperor’s New Clothes Syndrome,” where the higher-ups aren’t challenged by those in the lower ranks, even when they all know they’re making mistakes. To counter this, build a culture that rewards honest dissent and encourages respectful pushback. Encourage Radical Candor.
Lastly, keep exposing yourself to new experiences. The more patterns you take in, the richer your intuitive database becomes. Even better if these experiences are across industries, cultures, and contexts. Nothing sharpens instinct like being thrown into situations where the rules are different and you have to make sense of them from scratch.
What makes intuition powerful is drawing on this rich internal database of lived experience and observation. And when it’s sharpened through honest reflection, constructive challenge, and wide exposure, it becomes a vital tool for the small business owner.
If you liked this, you might find this related post about the power of the educated guess.
