I had a conversation with a coworker recently. We were talking about why we sometimes make decisions intuitively and why, other times, we evaluate the context, with all its risks and benefits. We talked about how and when we make more coherent decisions and concluded that a decision, however small it may be, can explain why in our right mind we sometimes make mistakes and other times we hit the mark, finding success or even leading ourselves and our companies to innovative leadership.

Deciding if we support an idea or not, if we invest in a new product or service, if we hire people, whom we hire, etc. All these decisions have an impact on our organizations and on those who work with us. How can we make good decisions?

Thinking, fast and slow

I couldn’t help but think of this conversation when I came across Daniel Kahneman’s theory of thinking. His book, Thinking, Fast and Slow, explains many of the issues my colleague and I were talking about.

In his book, Kahneman provides an in-depth analysis of how people make decisions. According to the author, we make decisions—however tiny they may be—in two ways: thinking fast or thinking slow. Kahneman believes that basically, we have two different systems that govern the way we think. The fast thinking system, which he calls System 1, and the slow thinking system, System 2.

System 1 is autopilot. This is the intuitive way of making decisions, the one you “feel” from the first moment that the problem you’re facing comes up. It’s the system of first impressions, feelings, quick judgements. In some ways, we could even call it a system of “not thinking”.

System 2 is the analytical, critical way of making decisions. When we don’t stop thinking about something, we are using System 2. Decisions made with System 2, therefore, are more conscientious.

Even if we don’t know it, humans spend the majority of our time on autopilot (System 1).

“…Systems 1 and 2 are both active whenever we are awake. System 1 runs automatically and System 2 is normally in comfortable low-effort mode, in which only a fraction of its capacity is engaged. 

System 1 continuously generates suggestions for System 2: impressions, intuitions, intentions, and feelings. If endorsed by System 2, impressions and intuitions turn into beliefs, and impulses turn into voluntary actions. 

When all goes smoothly, which is most of the time, System 2 adopts the suggestions of System 1 with little or no modification. 

You generally believe your impressions and act on your desires, and that is fine — usually. When System 1 runs into difficulty, it calls on System 2 to support more detailed and specific processing that may solve the problem of the moment. 

System 2 is mobilized when a question arises for which System 1 does not offer an answer”.

Don’t misunderstand this. There is nothing wrong with System 1. In fact, it tends to be fairly on the mark. It allows us to economise our attention and be able to do multiple things at the same time. We couldn’t live without our System 1 operating automatically and effortlessly most of the day. The problem is that System 1 has limited information and acts quickly on it, forming ideas, thoughts, and beliefs. System 1 is full of first impressions and sometimes this is the reason why we jump directly to conclusions without going through System 2, which is reconsideration, problem solving, and analysis. With System 1, we create coherent stories based on limited and sometimes erroneous information. Therefore, the conclusions we come to can be false or biased.

Systems of thinking and innovative leadership

Innovative leadership requires that you also be right when it comes to deciding. As such, making better decisions happens when you learn to identify what system of thinking you are working with. You have to learn to use Systems 1 and 2 together. You have to know when to “go with the flow” and when to “stop and think”. You can sometimes go with intuition when you are going to make a decision, but when it’s necessary, you can also reduce the risk of making a wrong decision if you verify references, investigate, corroborate information, ask probing questions, ask others to give you their impressions on an issue, etc. Don’t forget System 1 entirely when it comes to making a decision, but do use System 2 to make better decisions.

It’s true that System 1 is very useful for creative work, the famous Muse, but being a leader also involves making decisions that require a lower level of bias, given that our decisions also affect the people we lead. In a business context and also in our personal lives, there are many factors that have to be taken into account in order to make decisions. The trick is being aware of how to change from one system to another: when you are thinking automatically, when you are paying attention, and what tools can be used in order to make good decisions.

Reflection question: In the last important decision you made as a leader, were you on autopilot?