An excerpt from an awesome article by Herbert Simon:

We have seen that a major component of expertise is the ability to recognize a very large number of specific relevant cues when they are present in any situation, and then to retrieve from memory information about what to do when those particular cues are noticed.

Because of this knowledge and recognition capability, experts can respond to new situations very rapidly- and usually with considerable accuracy. Of course, on further thought, the initial reaction may not be the correct one, but it is correct in a substantial number of cases and is rarely irrelevant. Chess grandmasters, looking at the chessboard, will generally form a hypothesis about the best move within five seconds, and in four out of five cases, this initial hypothesis will be the move they ultimately prefer. Moreover, it can be shown that this ability account for a very large proportion of their chess skill. For, if required to play very rapidly, the grandmaster my not maintain a grandmaster level of play but will almost always maintain a master level, even though in rapid play there is time for almost nothing but to react to the first cues that are noticed on the board.

We usually use the word “intuition” – sometimes also “judgment” or even “creativity” – to refer to this ability of experts to respond to situations in their domains of expertise almost instantaneously and relatively accurately. The streetwise slum resident has good intuition about how to react to the situations that are often encountered in a slum environment. The manager has good intuition about how to react to the situations that are often encountered in organizations. Both skills have the same basis in knowledge and recognition capability.

If you’re interested in learning more about Herbert Simon—and you should be— I recommend reading Models of My Life.

Also see Solution by Recognition and Choice Under Uncertainty.

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Source: How Managers Express their Creativity, Autumn 1986, The McKinsey Quarterly