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How Daniel Kahneman’s Two Systems Changed My Thinking about Business.

This is the first of two articles about the Two Systems. The next, on HOW to use the Two Systems in your business life, will follow.

In his book, Thinking, Fast and Slow, the psychologist and economist Daniel Kahneman outlines the conclusions from his decades of study into the nature of thought, choice, and judgement. It’s a fascinating book, packed full of insights into the ways in which we think, and the reasons why we think in those ways.

One of the most interesting – and one of the most famous – ideas from the book is the idea of the ‘two systems’ of thought. These are the major processes of thought that we have, and together they contribute the two speeds of the book’s title, fast and slow.

The first system, ‘System 1’ is fast; it’s instinctive, emotional, and reactive. The second, ‘System 2’, is more logical, slower, more deliberative and forward-thinking.

It’s a book of big ideas, grappling with big names in psychology like Sigmund Freud. However, to spare you the labour – and given that I am in the business that I am – I want to discuss these ideas in their applications for your life and work.

Let’s take a look at Kahneman’s two systems. But remember – ‘System 2’ might be hard, but it may well be where the greatest progress comes for your business.

What are the Two Systems?

Kahneman’s book is based on the idea technically known as ‘dual process theory’, a notion in psychology that suggests that humans have two different mental processes. One is associative – or, for Kahneman ‘intuitive’ – and the other is reasoning.

Neither is better than or preferable to the other. Rather, we slip in and out of each whether we like it or not. In fact, the difference between these two systems occurs in fairly mundane tasks: to find the answer to 2+2= requires a different system to finding the answer to 17×24.

System 2, however, is slower – and, crucially, it is harder. It requires effort and conscious calculation – something that System 1 doesn’t require at all. And, given this, it is System 1 that tends to guide our choices, our judgements, and our actions. This, mind you, is for better and for worse.

System 1: Thinking Fast.

System 1 is all about association: it is automatic, regular, unconscious, and largely emotional. It is fast, sure, but it is fast precisely because it is automatic and easy.

Consider that your brain uses some thousand calories a day, just to function. In this way, it is continuously looking for efficiencies and short cuts. Fast thinking, along with habit, is exactly one of these short cuts.

When you are thinking fast, you are reacting intuitively to stimuli. You’re responding to things that happen in a way that doesn’t really engage your conscious, reasoning mind.

Yet, this, in a way, is more you than System 2 – because, in pure quantity, it is responsible for so many more of your decisions.

System 2: Thinking Slow.

The second of the two systems is the one that requires effort. It requires attention and deliberate thought. It’s what powers your strategic thinking, your problem solving, your long-term planning.

Don’t mistake it for the thing that makes your big decisions, however. Because big decisions can be made by System 1 too (too often, in fact!). But System 2 is the process that takes consideration of the pros and cons. It’s what understands both sides of an argument. It’s what makes you pay attention to one detail in a crowd.

However, given that this requires effort, it tires easily. And, therefore, we tend to find any opportunity to avoid it. It challenges us – and, instinctively, we don’t like challenge.

But with avoiding it, we go back into the reactive mode, back into System 1. We focus on the emails that come into our inbox or the immediate tasks that need to be dealt with quickly. And, inevitably, the strategic thinking that requires our slow and calculating consideration gets ignored.

The Two Systems in Your Business Life.

Far too many people work in their business rather than on it. We’re too concerned with getting through the day – with all the little things that need to be done – that we don’t stop to consider the business from outside.

Where is it going? What do you want from it? How could it be made more efficient? These are the questions that get left by the wayside.

It’s no surprise that these are the questions that require System 2. They are the questions that require a bit of proactiveness – and that are quite high risk. These are precisely the types of task you should do in the Protected Time slots I spoke about in my other articles.

However, these questions don’t answer themselves. And you aren’t really going to fall into System 2 thinking without meaning to. Rather, what you will spend your day doing is the instinctive, reactive, intuitive stuff that brings easy wins.

Let the lesson of this article be that you need to commit to System 2 thinking if you want your business to go the way you want it to. Be mindful of these two different systems working during your day. Notice how you get drawn into or have a habit of staying in System 1.

In my next article, find out how to apply this knowledge and make change happen.