This week in our team huddle, Nigel told us how for many years he would frequently make rash decisions and soon find himself asking ‘Why the hell did I do that’’ until Daniel Kahneman explained it to him.
In his best-selling book Thinking Fast and Slow, Kahneman outlines how we can make abrupt and potentially harmful decisions by thinking too ‘fast’. He breaks this thinking process down into digestible stages that we can watch out for. These are particularly useful to keep in mind when faced with important business decisions such as choosing business partners, planning marketing campaigns, or the direction you wish to take the business in.
Kahneman explains that we have two thinking systems – our fast thinking system and our slow reasoning system. It’s important to be aware of what we are using – if you are jumping to conclusions or decisions without thorough reasoning, it’s likely to be the former. Fast thinking has many evolutionary uses, such as helping us to intuitively spot patterns or react to danger, but it can also easily be fooled into spotting patterns or reacting to dangers that don’t actually exist. There are three cognitive biases that make up ‘fast thinking’. These are the processes you may need to be cautious of:
1. Frequent Exposure – if you are exposed to the same thing, (idea, product, person) repetitively, you are inclined to build up a likeability towards it. “A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth”. This may sound like an old fashioned propaganda theory – but it works! It’s important to be aware of this when making big decisions, and ask yourself “Is this the best option or just the option I’ve been most frequently exposed to?”
2. Status Quo – research shows that the average human being will weigh a loss twice as heavily as they will gain. We also instinctively overvalue what we own and invest in – these two cognitive habits mean that we can be tempted to stay stuck in the past and maintain the status quo. We must therefore ask ourselves, “What opportunities am I losing by maintaining the status quo?” We must overcome our fear of a loss, with the opportunity for a gain.
3. Tunnel Vision – this is essentially the common fault of jumping to conclusions. We have the tendency to make snap judgments and then block out all conflicting information. Kahneman recommends making a strong effort to maintain our ambiguity. Making an effort not to assume, but to question and consider all possible truths. Kahneman encourages us to ask ourselves the question “why might the opposite be true?”, testin our assumptions, whilst helping us to find unexpected challenges and avoid underestimating. This should widen our lens and stop us from subconsciously ignoring valid information.
So, the next time you are making a big decision, go through this faulty thinking checklist and ensure you are utilizing your slow ‘reasonable thinking hat’. “Maintaining one’s vigilance against biases is a chore but the chance to avoid a costly mistake is sometimes worth the effort.”