According to Daniel Kahneman, human beings have fractional thinking – System 1 and System 2; where System 1 is the gut, intuitive thinking, and System 2 is analytical, problem-solving and reflective decision making. Overall, both aid our judgement, where for some situations system 1 (fast thinking) provides the foundation for System 2 (slow thinking). But in many conditions, these work independently – for example, first impressions are formed solely by fast thinking. However, best decisions are made when both these methods are running simultaneously.
Hence, leaders swear by thinking fast and slow because it provides multiple business advantages such as:
Error Minimisation: Leaders encourage employees to indulge in fast and slow thinking because it reduces errors. If a person applies any of the two independently, there is a higher chance of tilted decisions. For example, when a person thinks too fast, it leads to cognitive biases, leading to erroneous results. For example, A project demands the regional sales of X product. But an employee registers only ‘sale’, conducts a quick search and quotes global sales while providing no figure for region-wide sales.
Enhanced Productivity: When a person effectively balances both slow and fast thinking, productivity rises sharply. This promotes wise thinkers who analyse situations rather than rely on quick judgments. For example, in a team, two employees do not get along and indulge in ruthless competition. A leader, who applies fast and slow thinking, will adopt a sound strategy to form better relations between the two, such as joint mediations or a combined project. But alternatively, in a quick response, if a leader fires the underperformer, it will be a loss to the team.
Rational Decisions: Decision-making is the basis of management and hence, needs to be made rationally. For example, a team needs to vote for a leader. Some employees, instead of carefully assessing the candidates, might make an unreasonable judgement based on superficial qualities. This will lead to the selection of a wrong candidate, which could be avoided through balanced evaluation based on multiple factors, including appearance, attitude, career trajectory, team spirit, etc.
Quick, Calculated Response: Hasty decision making or slow thinking can both result in a disaster independently. Hence, employees need to be quick but also calculated in their responses. Assume a scenario where a client is angry, and the employee reciprocates with the same emotion or worse. In such situations, the employees should be prompt yet calculated with their replies, calm the client and ensure error rectification.
Better Negotiation: For leaders, negotiation is an everyday task. One of the most important factors that can help a leader win a negotiation is how well he/she understands the opponent. The principles of thinking fast and slow help one to better understand the opponent and ultimately win an argument.
Thinking fast and slow advocates a healthy balance of the gut and factual thinking.
