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How to Know When to Trust Your Gut

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Entrepreneurs live a life of constant decision making. Is that new person you just met a good fit with the company? Should you enter into a cooperative relationship with another firm? Is the financing deal in the works likely to be completed?

These judgments are complex -- they involve a large number of intersecting factors and those factors change over time.

Psychologists' research suggests that there are two modes of thought people use to make complex choices. The first involves looking carefully at the features of a set of options and making decisions in a reasoned manner.

The other way is more intuitive and involves responding to the that come up during the process of making choices, or following your gut. Often, we feel guilty about choosing from the gut, because we feel like our choices ought to be based on facts. It is valuable to know when you should go with your gut and when you should avoid it, follow these steps to reach better decisions.

Related: 3 Reasons Why You Are Failing at Problem Solving

Step 1: Ask yourself how the problem makes you feel.
When things you encounter feel familiar, that generates positive feeling. This feeling of familiarity comes from seeing that thing in the past or seeing something like it. When the various elements of a situation are easy to think about and enable you to think quickly, that generates positive feeling. When you are in a situation in which you are able to achieve your goals, that also generates positive feelings. When you have experienced something in a situation in which you were already feeling good, encountering that item again generates positive feelings.

Negative feelings are generated in the opposite situations. Unfamiliar objects, things that are hard to think about, slow laborious thinking, and items that have been associated with bad feelings or bad outcomes in the past all generate negative feelings.

Step 2: Evaluate how much you know about the topic.
When you reason carefully about decisions, then two key things happen. First, you tend to focus on a small number of features, because it can be hard to keep track of a lot of information. Second, you tend to focus on information that is easy to talk about, because the things you can talk about are generally easier to reason about than things that you have difficulty putting into words. For example, unless you are a trained artist or art historian, you probably have difficulty talking about why you like a particular work of art. These kinds of aesthetic judgments are difficult to describe in words, and so they are hard to reason about.

Putting this all together, then, when you are in a situation in which the decision involves pulling together information from a large variety of sources and where some of that information may be difficult to talk about, then your gut reaction is providing you with valuable information for making decisions. Because many situations facing entrepreneurs have this quality, it is no surprise that many key decisions are based on feelings.

Step 3: Gauge what is influencing your feelings
The biggest potential danger for making gut decisions is that the information that gives rise to feelings can be manipulated. Familiarity is a great example, sometimes, we are familiar with something because we have run into it in the past and that influences our later feelings. However, in the modern world, lots of people manipulate our experiences through advertising, sales calls, and networking events. Consequently, the powerful positive feelings that come from familiarity can be hijacked by others who want to influence our gut decisions.

Step 4: Judge if your head and your gut are aligned.
In those cases in which you feel like your feelings may have been compromised, it is useful to heed the words of my colleague Bob Duke, and my collaborator on a new NPR radio show called Two Guys on Your Head. He points out that most good decisions should both feel right and think right. That is, when you have an alignment between your gut and the reasons for a choice, you are probably making a great choice. If you find that you have a mismatch between head and gut, then it is worth asking a few other people for their advice on the choice.

Related: How to Improve Your Critical Thinking Skills and Make Better Business Decisions

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