Another dimension of the analytics revolution is balancing intuition with analytical insights. Decision-makers, especially in the context of strategic judgment, often need to strike the right balance between a course of action suggested by data and a different course of action indicated by intuition. On one hand, there is a clear sense in which the distinction between intuition and data is false: Many judgments must be made about which data to use and how to interpret it in order for data to become insights in the first place. But on the other hand, as analytical insights grow in number and influence within an organization, the need to put these insights into a broader context will become even more important.
Caesars Entertainment Corporation is a case in point. Led by chairman and CEO Gary Loveman — a former Harvard Business School professor with a doctorate in economics from MIT — Caesars was offered the chance to bid on a gambling concession in Macau, China, in 2006. The asking price of the concession was $900 million. Loveman, who had established a reputation for himself by profitably using analytics to fine-tune customer segments and build effective loyalty programs, ran the numbers but couldn’t produce a valuation anywhere near $900 million. He declined to bid. The global financial crisis hit the next year — but not in Macau, which enjoyed a growth explosion. Caesars bought a golf property in Macau in 2007 for close to $600 million in the hopes of turning it into a gaming property. Unfortunately for Caesars, no more gambling concessions have been (or are likely to be) issued to foreign investors. One of Caesars’ competitors is now profiting more from its properties in Macau than from its properties in Las Vegas.
Loveman has been open about his missteps in Macau. “You had to have a kind of intuitive courage, and I am not well-suited to those kinds of decisions,” he said in 2010.i “Big mistake.