Patrick Woodman is in search of difference
As the seasonal holidays arrive, many leaders look forward to spending time with their families and recharging their batteries. For many of us, it’s a vital chance to stop and think: the implication being that we’re too busy for thinking when we’re grappling with the day-to-day challenges of leading a team or running a business. But what if the problem isn’t ‘not thinking’, but thinking the wrong way?
Nobel prize-winning economist Daniel Kahneman has spent decades exploring how the mind works to solve problems and make decisions. His now-classic book, Thinking, Fast and Slow looks at two modes of thinking. System 1 is quick, instinctive and relatively easy, while System 2 is slower and harder, deliberative and logical.
Most of us like to think our businesses run on System 2 lines: making rational decisions, using data to build smart, insight-driven strategies. But to what extent is that the case? When it comes to how we view leadership, we often favour System 1 traits. We prize gut instinct. We revere chief executives who shoot from the hip. We laud the ability to reach snap verdicts, proclaimed with certainty and conviction.
Clearly, there are times when that’s just what’s needed. No decision can be worse than a bad decision. But what about times when no decision is the smart move – or at least, ‘no decision for ten days while we figure this thing out’? Do we recognize those moments when they arrive? Or are we conditioned to give the snap judgment?
Over-reliance on System 1 could let leaders down in multiple ways. Loss aversion – a System 1 reaction – means we recoil from risks when being bolder might pay off, if we could only reframe how we see our opportunities. Our reliance on heuristics makes us vulnerable too. Used by the brain to learn and recognize patterns, they mean we can move fast when we see situations repeated. But that ability doesn’t necessarily work reliably in today’s fast-moving VUCA business environment. When we think we recognize a situation, there’s an ever-bigger risk it’s actually something new. Just consider the sheer scale of data now available. Walmart analyses 2.5 petabytes of data every hour: that’s 2.5 million gigabytes. It’s impossible for any human mind to categorize situations on that scale.
While the two systems are hard-wired in us, there are ways to mitigate some of our tendencies. First, find the time and energy you need for System 2 thinking. Look at the evidence, question it, cross-examine it, with the knowledge that System 1 has already biased your assumptions. It’s undoubtedly time well spent. Second, create teams with diverse perspectives, and a culture that empowers dissidents to challenge orthodoxy. We’re all biased to believe people with whom we feel affinity. If you’re a tech-bro CEO, you instinctively want a team of fellow tech-bros. But where then will different views come from? As Airmic’s classic Roads to Ruin study showed, executive groupthink is a critical factor in many corporate collapses.
At a personal level, every leader needs people in their network who help them think differently, who they consult about challenging problems. Or about those problems that look simple on the surface, but we might be misreading thanks to those System 1 biases. It also means diversity in personal characteristics. Lest we forget, white men are reported to account for 72% of corporate leadership in Fortune 500 companies. While in the UK, more FTSE 100 firms are run by people called David and Steve than by women and ethnic minorities. Yet McKinsey has shown that firms with the most diverse leadership teams are 35% more likely to outperform the median. If only for that reason, we must keep diversity on the corporate agenda.
Ask yourself again whether your mind may be playing tricks on you? If you do one thing this holiday season, make sure it’s giving yourself the time to change the way you think.