The Expert Intuition

The Expert Intuition

The ongoing debate between the personalized vs. institutionalized family business model has still been unable to determine whether the success resides in the analytic management or within the intuitive leadership. The example from the Barceló Group helps us to see these two not as separated or antagonistic qualities, but rather as an adaptive process that lies upon a single phenomenon that Daniel Kahneman has denominated as “expert intuition”.

What is today known as one of the world’s favorite and most exclusive holiday destinations, in the year 1982 was a dense tropical forest, with no other access but the small airplanes that where landing on a an improvised landing field in the nearby town. It was Punta Cana region before Gabriel Barceló (one of two siblings who at that time were running the fast growing tourist group in Mallorca, Spain), saw the potential it had.

Coming out from the 70’s, marked by two mayor oil crises that have seriously affected the tourism in Europe and other parts of the world, the 80’s kicked off with a growing enthusiasm and optimism. With the statistics and the figures strongly rising beyond the period prior to the first oil crisis, it seemed clear that the new decade was offering some great perspective of growth. At least Gabriel Barceló had that same intuition before boarding on the flight to Puerto Rico as a member of small group of Mallorca’s company representatives that were invited by the chamber of commerce invitation to visit the island, get to know the market and analyze the opportunities to invest there.

What Gabriel Barceló saw in Puerto Rico was a disappointment. Everything was already built and all the prime locations were taken. He confessed his sense of disappointment to his local partner, a tour operator with whom his family business have previously been working in the past and in return he received the invitation to fly the next day with him to the east end of Dominican Republic. Next morning they were inside the 4×4 slowly making their way through the muddy road leading their way through the dense forest. When they reached the area that his guide wanted to show him, he had a vision. Perhaps it was similar to the one that Bugsy Malone had when driving through the Nevada desert starting to imagine a big shiny casino empire that Las Vegas turned in today.

What Gabriel Barceló saw there and with the land acquisition conditions explained to him by his local partner, it was enough for him to sit on the first plane back to Mallorca to brief the rest of the executive board on this “Incredible opportunity”.

The executive board was formed by trustful and experienced professionals with many years working in the field. They were trained experts with the highest criteria one could have in their respective area of expertise. From finance to logistic and marketing, in that meeting roam Barceló was among some of the best professionals to answer any question.

But more than the meeting, this turned in to squash match. With Gabriel Barceló holding the racquet on one side and on the other side, five executive forming the wall to bounce the ball Gabriel Barceló was throwing in. He was talking about how close the area was to the markets of USA and Canada and the “Wall” would come back with the figures showing the uncertainty of investment in Dominican Republic. He would throw the ball on the plan of the airport that was to be built in the following years and the “Wall” would bounce back with the risk assessment data. He would than throw another one with great weather and climate all year long and the “wall” would simply bounce back with another excel chart on the low hotel capacity the area had at that time…. And so on until the final verdict came. The executive board members unanimously voted against the project proposal.

After hearing their comments and reasons Gabriel Barceló decided to give it a green light anyway. He had a great respect for the professional expertise each one of the executives possessed. If it was otherwise, they wouldn’t have been seating there. However there was one crucial thing: none of them has been where he has been to see what he has seen.

The answers that were bouncing back from the wall, where not a waste of time or energy. Not at all. They were crucial to the expert intuition process, mentioned earlier in this article.

The Badaló example offers an insight into intuitive decision making process that guides the owner’s vision and orients the strategy according to the criteria not always based on the analytic evidences. However this doesn’t mean that the analytic evidences are not being taken into account. Although the executives’ opinions were contrary to his own they have been crucial for him to balance the threats and opportunities. In this case, the executive’s vision is expert and professional, but on the other hand it is segmented. It lacks the “Big picture” that the owner has by being on the spot and seeing the opportunities it offers.

From the analytic point of view it seemed quite easy to make the calculations of what the possible lost in the case the project went wrong. Most of the parameters where already there and the executives had access to them. But, how could one make the calculations of the eventual lost in the case that the company finally had not invested in Punta Cana?

Today the Barceló Group has 3 hotels in Punta Cana and the area itself has more bed capacity than the entire Puerto Rico. One of the 2 company’s corporate centers is also there.

To illustrate further what they might have felt in the case they finally haven’t adventured into Punta Cana, here is one example of the lack of expert intuition.

One year after Larry Page and Sergey Brin founded Google they wanted to sell it. Their one million dollar sale offer reached one hedge found, but it was rejected as being “to high”. Today, 15 years later the Google shares stand on the stock paramount of 550 US$ and it value is estimated to more than 350 billion US$. The hedge found did not see the potential in it. They only saw the numbers,… but the numbers don’t paint the Big picture. The expert intuition does.

This article is an extract from the case study “La intuición expert” that contains original ilustrations and analyses. The case study can be purchased at Archipiélago or Kindle Amazon