Thinking, Fast and Slow (2011), by Daniel Kahneman, is another book that gives great insight into how we can better understand human behavior. In doing so, we can become better leaders. In similar fashion to Dan Ariely’s Predictably Irrational, Daniel Kahneman’s
research and findings have also challenged the prevailing assumptions about human rationality that are found within many fields and particularly in modern economics. In this case, modern economic theory sees man as a rational self-interested being – “homo economicus.” However, In Thinking, Fast and Slow, the reader is taken on an unexpected tour of the mind and what Kahneman identifies as the mind’s two systems. System 1 is that fast thinking, emotional and intuitive side while System 2 is slower, calculated or more deliberate and logical.
The first part of the book is devoted to how these two systems work and lays out several stories, many of which were used to test the subjects of Kahneman’s research. It also dives into how humans make decisions, judgments and come to conclusions. Other parts of Think, Fast and Slow, deal with biases, overconfidence and choices.
The book, based on Kahneman’s lifelong research for which he and the late Amos Tversky were awarded the 2002 Nobel Memorial Prize in Economics, identifies the ways in which these two systems influence our decision making – whether we like it or not. What the book and the research that led to it challenge is the idea that people are, for the most part, rational. System 1 is often wrong and System 2 is easily disengaged. Knowing this and knowing that we are not rational, however, is a great benefit. It allows us to step back and fully rethink (therefore engaging System 2, the slow moving and thinking system) our ideas and thoughts.
Especially when in a leadership position, this is most important. If Kahneman’s research is correct, what do we do when a business is run by people who are, without fault of their own, irrational? A leader should be able to identify how the two systems proposed by Kahneman and his colleagues work together to lead our decision making and thoughts. In the end, this would avoid having to make those rash decisions that too often doom a business in its prime or even causes a business to lose highly valuable employees.
To learn more about Daniel Kahneman’s research, view the video below. It is an hour long, but certainly worth it: