by Dan Oswald
As a business leader, it’s likely you’re continually looking for ways to make better decisions. If so, you might want to take a look at the book Thinking Fast and Slow by Nobel Prize-winning economist Daniel Kahneman.
Kahneman’s book is an interesting look into how people think and make decisions and the biases that affect us as we do. Psychologists, in studying how we think, have theorized that our mind has two systems that control different types of thinking—System 1 and System 2.
Kahneman says System 1 operates automatically and quickly, with little or no effort and no sense of voluntary control. Some examples include detecting that one object is more distant than another, detecting hostility in a voice, or driving a car on an empty road. We do these things quickly without intentional thought.
System 2 allocates attention to the mental activities that demand it, including complex computations. System 2 is the conscious, reasoning self that has beliefs, makes choices, and decides what to think about and do. The highly diverse operations of System 2 require attention and are disrupted when attention is drawn away. Some examples of System 2 include filling out a tax form, maintaining a walking pace that is faster than normal for you, and counting the occurrences of the letter “a” in a page of text.
We use both systems every day at work. Some decisions are automatic and done without any real thought yet are astonishingly accurate. Other decisions take more time and effort. Both can be affected by preconceived notions and other biases. Take the famous Myler-Luller Illusion:
A quick glance and System 1 in your mind tells you that the top line is longer than the bottom line. It’s obvious. But if you’re familiar with the illusion or you decide to measure the lines, using System 2, you’ll know that the two lines are exactly the same length.
According to Kahneman, if you’re now asked about the length of the two lines, you will say what you “know,” which is that the two lines are exactly the same length, but you can’t change how you “see” the lines. The top line will always look longer than the bottom line. You have chosen to believe the two lines are the same length, but you can’t change your impression that one is longer than the other. The two systems in your mind aren’t always on the same page.
How we think individually and as a group obviously affects the decisions we make. As noted in the title of Kahneman’s book, System 1 thinking is fast and automatic. But as proven with the Myler-Luller Illusion, it’s not always reliable. Sometimes System 2 thinking is required when faced with more complex problems. But System 2 takes longer to draw conclusions and can yield an incorrect result. Balancing your instincts—your “gut”—in decision making with thorough, well-vetted processes is important and something that none of us ever masters.
In a recent interview, Kahneman offered some practical advice for organizations trying to make better decisions and avoid biases. He suggested that before making major decisions, the team should conduct a pre-mortem. To do this, he says the team should imagine it’s a year or two later and the deal has gone bad. In the pre-mortem, the team would have to come up with reasons that happened. According to Kahneman, doing so gives people an opportunity to share concerns they might otherwise be hesitant to share. This exercise isn’t likely to change the decision, but it could help spot real issues before they arise.
Decision making is critical to our success. Gaining a better understanding of how the mind works and the biases we bring to our decision making will improve the outcomes we achieve.