LDR 736 Week 3 Leadership Decision Making Example

When to Trust the Master Welder's Gut: Intuition, Analysis and Better Leadership Decisions at a Louisiana Shipyard

[Student Name]

University of Phoenix

LDR/736: Architecture of Leadership

Week 3 Assignment

[Instructor Name]

[Date]

Bayou Coast Marine, its leaders and its decisions are composites written for a model paper.

Earlier papers on Bayou Coast Marine, the invented Houma shipyard, examined the history of leadership theory and emerging ideas such as paradoxical leadership. This week focuses on how the yard's leaders make decisions. Two recent decisions by the production superintendent, Raymond Theriot, who has worked at the yard for 35 years, illustrate a puzzle. Last spring, the yard prepared to launch a tugboat on a foggy morning. All checklists were complete, but Raymond said something felt wrong about the launch cradle and insisted on a delay. An inspection found a cracked weld on a cradle support that could have shifted during launch and damaged the hull. Six months earlier, Raymond estimated labor hours for the yard's first offshore wind service vessel, a design unlike anything the yard had built. His estimate proved 30 percent too low, and the yard lost about $2.6 million on the contract. General manager Camille Arceneaux wants to understand when to trust experienced intuition and when to insist on analysis. This paper examines research on leadership decision making.

Two Views of Intuition

For decades, research on heuristics and biases emphasized intuition's flaws, while research on naturalistic decision making emphasized experts' ability to make rapid, accurate judgments, such as firefighters sensing a floor is about to collapse.

A Failure to Disagree

Kahneman and Klein (2009), long associated with opposing views, analyzed together when intuitive expertise can be trusted. They concluded that intuition is reliable when two conditions are met: the environment provides valid cues that regularly predict outcomes, and the decision maker has had adequate opportunity to learn those cues through prolonged practice with timely feedback. When these conditions are absent, as in many forecasting tasks, intuitive confidence is not a good guide to accuracy, and experts may be confidently wrong.

Intuition in Managerial Decisions

Dane and Pratt (2007) proposed a model of intuition in management. They defined intuition as affectively charged judgments arising through rapid, nonconscious and holistic associations. Intuitive accuracy, they argued, depends on domain knowledge structures, especially complex, domain-relevant schemas built through experience, and on the nature of the task, with intuition more effective for unstructured problems in familiar domains.

Improving Decisions

Milkman et al. (2009) reviewed research on improving decision making. They described strategies such as considering the opposite, taking an outside view by comparing a decision with similar cases, using decision aids and algorithms where appropriate and changing the environment to make better choices easier. They noted that awareness of biases alone rarely improves decisions; structured techniques are needed.

Decision 1: The Launch Delay

Raymond had supervised more than 200 launches. The cues around a launch, the sound of the cradle, the alignment of supports, the behavior of the ways, are regular, and he had received immediate feedback on every launch for decades. Both of Kahneman and Klein's conditions were met. His intuition drew on rich domain schemas, as Dane and Pratt describe.

Decision 2: The Offshore Vessel Estimate

The offshore wind service vessel was new to the yard: different hull form, complex electrical systems and a new class society standard. Raymond's schemas came from tugboats and supply vessels. Feedback on estimates arrives slowly, at contract completion, often a year or more later. Neither condition was met. Raymond's confidence was high but unjustified in this domain.

The same expert was right about the launch because he had done it two hundred times, and wrong about the estimate because he had done it once.

Decision 3: A Steel Purchase Timing Decision

A third decision involved timing a large steel purchase. The chief financial officer relied on a forecast model, while a purchasing manager had a hunch that prices would rise. Steel prices are noisy and hard to predict; neither intuition nor the model had a strong track record. The yard split the purchase, a reasonable hedge in an unpredictable environment.

Why the Bid Estimate Felt Right

Raymond explained afterward that the offshore vessel looked similar to supply boats the yard had built, and that his estimate felt as solid as any other. This illustrates the risk Kahneman and Klein describe: confidence comes from fluency and familiarity, not from validity. Surface similarity to past vessels triggered schemas that did not fit the new design's electrical complexity.

Matching Methods to Decisions

The analysis suggests a classification. Decisions in familiar, feedback-rich domains, such as launches, weld quality and crane operations, can rely heavily on experts' intuition, supported by checklists. Decisions in novel or slow-feedback domains, such as bids for new vessel types, capital investments and hiring for new roles, require structured analysis and outside views. Decisions in unpredictable domains, such as commodity prices, call for hedging and humility.

Practice 1: Reference-Class Forecasting for Bids

For any bid on a vessel type the yard has built fewer than three times, estimators will compare the estimate with actual hours for similar vessels at other yards, obtained through industry data and partners, applying the outside view Milkman et al. (2009) describe.

Practice 2: Premortems for Novel Projects

Before committing to new vessel types, the leadership team will imagine that the project has failed and list reasons, surfacing risks that confident estimates overlook.

Practice 3: Protect Expert Stop Authority

The launch case shows the value of expert intuition. Senior craftsmen will retain authority to stop any launch, lift or test if something feels wrong, with no penalty for false alarms.

Practice 4: Track Estimates

Estimates will be recorded and compared with actual results, creating feedback that helps estimators learn, improving the second of Kahneman and Klein's conditions for future work.

Decision Rights and Speed

Not every decision needs a premortem. Routine production decisions remain with supervisors and craftsmen, made quickly. Structured methods are reserved for decisions that are novel, costly or slow to reveal their results, so the yard does not trade speed for analysis where speed matters.

Respecting Experience

Raymond initially resisted reference-class forecasting, seeing it as distrust. Framing the practice as a way to extend his expertise into new domains, and protecting his stop authority in familiar ones, helped him accept it.

Implications for Camille's Architecture

The three decisions also taught Camille something about her own judgment, since she had approved the bid estimate without question. Camille will build into her leadership architecture a habit of asking two questions before major decisions: is this a domain where expert intuition has been trained by feedback, and what do similar cases elsewhere tell us?

Conclusion

Research shows that intuitive expertise is reliable in regular environments with rich feedback and unreliable in novel or unpredictable ones, that intuition's accuracy depends on domain knowledge and that structured techniques improve decisions. At Bayou Coast, the same superintendent's intuition saved a launch and sank a bid for these reasons. Matching decision methods to domains, using outside views and premortems for novel work and protecting expert stop authority where intuition has been earned can improve the yard's decisions.

References

Dane, E., & Pratt, M. G. (2007). Exploring intuition and its role in managerial decision making. Academy of Management Review, 32(1), 33-54. https://doi.org/10.5465/amr.2007.23463682

Kahneman, D., & Klein, G. (2009). Conditions for intuitive expertise: A failure to disagree. American Psychologist, 64(6), 515-526. https://doi.org/10.1037/a0016755

Milkman, K. L., Chugh, D., & Bazerman, M. H. (2009). How can decision making be improved? Perspectives on Psychological Science, 4(4), 379-383. https://doi.org/10.1111/j.1745-6924.2009.01142.x