Decision Making
Human minds are not machines that operate perfectly, and humans do not always think flawlessly. Researchers have studied how humans think and take decisions, and Kahneman was one of the researchers that discussed the two forms of thinking known as System 1 and System 2. Both Systems 1 and System 2 are special in their forms of thinking, and humans cannot rely on one of them to operate. Kahneman (2012) classified System 1 as a fast way of thinking and System 2 as a slow way of thinking. Kahneman (2012) suggested that system 2 is a monitor for System 1, and individuals switch from System 1 to System 2 to enhance their System 1 decisions. Although both System 1 and System 2 are forms of thinking that have mutual influences (Kahneman, 2012), but they both differ from one another and their major differences will be discussed throughout the following paragraphs.
System 1 is the automatic mode of thinking, and it is the way humans regularly use to make decisions. System 1 requires minimal amount of thinking and is considered to be a spontaneous way of thinking. System 1 depends on what individuals remember, and it has a greater effect on their minds than their intuitive tells them (Kahneman, 2012). System 1 is a fast, simple, and easy way of thinking (Stanovich and West, 2000, cited in Bazerman and Moore, 2013). Most decisions taken by individuals rely on System 1 which is not a problem, and it is a valid way of taking decisions (Bazerman and Moore, 2013). Individuals would use System 2 to confirm their System 1 decisions, and that’s why System 2 is needed as much as System 1 is needed.
Unlike System 1, System 2 is a slow, complicated, and exertive way of thinking (Bazerman and Moore, 2013). System 2 is beneficial for taking more accurate decisions in situations with higher complexity. Bazerman and Moore (2013) suggest that individuals should not always rely on their intuitions, which is part of System 1, and that they should involve with System 2 for more accurate managerial decisions. System 2 can be challenging because it requires a lot of effort and requires individuals to gather more information that build their decisions. Individuals cannot rely on System 2 all the time because individuals are humans and their minds are limited; for example, Bazerman and Moore (2013) note how hard it would be and inefficient to reason every choice an individual takes in a grocery store.
Today’s world is mostly known for its speed, rapid development, and change. Businesses are continuously changing and they are in race for dominating and leading their markets. As a result, business managers should be flexible and efficient in taking decisions using System 1 thinking. In situations where time restricts managers, it is strategic for managers to use System 1 thinking. Decisions taken using System 1 thinking can then be revised and monitored using System 2 thinking as it was suggested by Kahneman (2012). There are many different cases were managers would preferably rely on System 1, throughout the following paragraphs are few examples that show how managers can benefit from using System 1 thinking.
Managers do not need to overthink and reason why they want an urgent meeting. It would not be efficient for a manager to go through a long process of thinking, System 2 thinking, to call for a meeting whilst there is a huge need for the organisational benefit. If the need for a meeting is very obvious and the organisational benefit requires a meeting to take place, then a manager should gather the employees and have a meeting done. Managers can take such decision in a matter of seconds, but managers could revise their decision, using System 2 thinking, if multiple employees ask their manager to excuse them from attending the meeting. Managers can use System 2 to terminate their decisions or adjust them to fit with what they think is needed and has to be done after long and slow thoughtful thinking.
A good example from real-life situations that is very well-known of happening is the process of evaluating job applicants by reading their CVs. According to The Telegraph (2014), most recruiters spend less than thirty seconds reading applicants’ CVs and the average time spent was 6.25 seconds. Logically, the way these recruiters scan a CV is done using System 1 thinking which directs them to decide whether they should dismiss the CV or go through it. HR employees receive lots of CVs and they have gone through lots of previous CVs; as a result, both their memories and experiences help them evaluate a CV in a matter of seconds.
Recruiters are required to use System 1 thinking for evaluating CVs, if not, it would take them weeks to read applicants’ CVs and then months to meet and evaluate each applicant. It would be neither efficient nor effective if recruiters used System 2 thinking to evaluate every applicant’s CV. Thanks to System 1, recruiters have to exert less effort and they trust their memory and intuition instead of going through the complexity of evaluating each applicant’s CV. In this example, System 1’s efficiency and effectiveness can be easily seen and preferred over System 2.
Although recruiters can evaluate a CV using System 1 thinking, but they still need System 2 thinking to take decision on whether they should employ the applicant or not. However, to shorten the employment process and make it simpler the recruiter uses System 1 thinking and then shifts to System 2. When two similar and very competitive applicants apply to the same job, recruiters fall into the dilemma of which applicant should they choose. Recruiters will need to back up their decisions with facts that do not link to any racial, religious, sexual, or physical reasonings. This is where recruiters need to use System 2 thinking and choose between the applicants after evaluating each one of them fairly.
Another example from daily life situation can be whether to cross a traffic light which is orange and close to turn red or stop. In such situations, drivers are forced to use System 1 thinking to decide whether to hit the fuel or brake pedal. The driver’s decision might result to be good or bad, but that is not known until the driver goes through deeper thinking which is System 2 form of thinking. The driver might think it was the correct decision at that time; however, the driver will reconsider that if he or she is fined for crossing that traffic light. As a result, it can be seen from similar daily life examples that System 1 influences individuals to have effective decision making. In other words, System 1 directs individuals to make a decision which either results to right or wrong and that is where System 2 involves. System 2 evaluates the effectiveness of System 1 decisions. By time, individuals develop their System 1 and it becomes a path for a more effective decision making.
In conclusion, System 1 and System 2 are both forms of thinking. System 1 is the fast and spontaneous way of making decisions, while System 2 is the slow and thoughtful form of thinking. System 1 thinking can be effective especially when an individual is limited in time and needs to take a fast action by making a decision. Systems 1 and 2 are not only used by managers, they are also used by individuals to make decisions in their daily lives. System 1 decisions might be very effective, and what aids System 1 is the monitoring of System 2 to decisions taken using System 1. Individuals can simply take fast decisions without lots of considerations and then adjust them when needed using System 2 form of thinking. Finally, both Systems have their own privilege but the greatest privilege for System 1 is speed and time as previously mentioned. This makes System 1 an efficient form of thinking that results in effective decisions making.
References:
Bazerman, M. and Moore, D. A. 2013. Judgement in managerial decision making. 8th Edition; Wiley.
Kahneman, D. 2012. Thinking Fast and Slow. London: Penguin.
The Telegraph 2014. Career Advice Article: Does your CV pass the 30 second test? — Telegraph Jobs. The Telegraph. Available at: https://jobs.telegraph.co.uk/article/does-your-cv-pass-the-30-second-test-/ [Accessed January 12, 2021].
