Here is an excerpt from an article written by Modesto A. Maidique for Harvard Business Review‘s “The Conversation” series. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.

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“Gut,” replied Carnival CEO, Micky Arison, when I quizzed him, while interviewing him for a research project on CEO decision making, on how he arrived at the most important and fruitful decision of his career: the $5.45 B acquisition of Princess Cruises. I must have seemed somewhat puzzled for Mr. Arison emphatically clarified, “I trust my gut.”

Arison’s assertion, in various forms, was repeated over and over as I continued my interviews of twenty leading CEOs about two major decisions in their careers: one that turned out well and one that did not. Whether the decision they were discussing had been successful or not, in virtually every case, the CEOs said they mostly relied on “gut feel” or “intuition” to make those decisions.

If intuition is the muse in CEO decision-making, does it, however, make for better decisions? Quants say we use intuition because of our cognitive limitations. It is a strategy of last resort, employed when we can’t use expected utility theory (optimal weighting and computing of all relevant factors). Professor Gerd Gigerenzer, director of one of the famed Max Planck Institutes, disagrees. He believes in certain circumstances, heuristics (implicit rules of thumb, the building blocks of intuition) can actually lead to better choices. Others believe the role of intuition may just be random.

To begin to settle the debate, I included a follow up question in our interviews. I asked CEOs to estimate how knowledgeable they were in the area in which they had made the decision. Not surprisingly, their success rate was several times higher for decisions made in the fields where they had expert knowledge. If intuition is indeed the handmaiden of experience, it stands to reason that those decision-makers who have passed Herb Simon’s 10,000-hour experience threshold would have higher quality intuition. It turns out, then, that it is not simply a question of whether a decision-maker should trust his or her “gut” or not. It depends, and experience is one differentiator.

Take Micky Arison, widely considered the world’s top expert in the cruise ship business. He knows his own company inside and out and it accounts for half of the world’s cruise ship business.

Similarly, when I asked Micron CEO Steve Appleton a question regarding his knowledge of the memory business when he acquired the Texas Instruments’ memory division, he felt he knew as much about the memory business as anyone in the world. When Ray Stata made a “bet the farm” decision by funding Analog Devices Semiconductor and personally guaranteeing the investment, he was already a pre-eminent visionary in the world of electronics.

In each of these cases, intuition worked. All three were experts in their field; all three decisions were wildly successful. When these three superb decision-makers delved into an area outside their expertise or where they were not yet experts, however, their “intuition” failed them: Arison’s launch, early in his career, of a new cruise line, Appleton’s venture into graphics, and Stata’s commitment to a venture capital fund for Analog Devices all turned out to be failures.

Successful and consistent deployment of intuition, however, requires more than just domain knowledge. It also requires deep introspection, “an intense journey into yourself.”

If you are going to understand the biases, emotions, and offsets of your decision-making compass which may effectually trump your domain knowledge and result in poor judgments, you must learn to “observe all men, but yourself most.”

[Maidique then cites an excellent example provided by a decision made by Warren Buffett, what he later characterized as his “$200-billion blunder.” To read the complete article, please click here.]

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The effectiveness of intuition, then, is relative. At its best, the key to effective, intuitive decisions is best conveyed in two wise sayings: “Know your business” and “Know yourself.” The sweet spot for business decisions is when both domain knowledge and self knowledge are high; when you have the knowledge to shrewdly interpret the facts and the wisdom to steer clear of the biases and destructive emotions that can hinder success.

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Modesto A. Maidique is Visiting Professor at the Harvard Business School. He is President Emeritus and Executive Director of the Center for Leadership at Florida International University in Miami. His current research is in the areas of decision-making, leadership, and executive developme