Remember multiple-choice exams back in high school? Remember that gut feeling you get when you start pencilling in too many A’s in a row? You start to think “Surely the markers would not put four A’s in a row. That didn’t happen in your last exam so it can’t happen now.” Then you review the questions, check your sums and come to the conclusion that your answers were correct.
What you’ve experienced are the two systems of thinking, described by Nobel Prize winner Daniel Kahneman in his book Thinking, Fast and Slow as System 1 and System 2.
Everyone uses these same two systems to give quick instinctive responses and to (sometimes) come to a considered conclusion. Today, we explore the two systems and what it means for decision making.
Fast, instinctive, obvious, and instantaneous.
The initial gut feeling you had during those exams was your instinct. Instincts are based on your past experiences, emotions, subconscious feelings and associations.
System 1 conclusions are often inaccurate and superficial, because they don’t use logic or process information in a rational manner. Most of our life decisions are governed by this system.
System 1:
Slow, rational, logical, purposeful, and deliberate.
Solving a math problem or using your self-control are both situations where your System 2 is being used. System 2 is the actual considered thinking that people do – and it takes effort.
System 2:
For any situation, System 1 is your first response. System 2 will only kick in if triggered by a tough decision or if something seems out of place. Kahneman also explained that System 2 starts by trying to reinforce System 1’s response, before testing the assumptions.
Did your first reaction tell you that the answers are 10 cents, 100 minutes, and 24 days? That was System 1 giving you an impulsive answer. Then, if you could summon the energy, System 2 kicked in to get you to the real answers — 5 cents, 5 minutes, and 47 days.
The key implication here is to recognise when you need to engage rigorous thinking to ensure your decisions are well made.
System 1 and 2 means people make an emotional decision first, before looking for a rational justification. In your marketing, there are implications you should be mindful of when you're developing a business strategy.
Market leaders should avoid System 2 thinking — by keeping customers in a familiar territory. This is how System 1 forms habits. Be careful with changes to your brand or, for FMCG brands, your packaging. You want the customers to buy from you naturally, without any second guessing.
Challenger brands need to disrupt System 1 in order to get a System 2 reevaluation of the category. This is your opportunity to avoid looking the same as the market leader or using the same language. Give your customers a reason to reassess their habits and choose to buy from you.
If you write proposals and tenders, remember you need to win emotionally before you present a rational justification. A 200-page tender document hides the value unless the reader already likes you.
Unlike biases, knowing about the systems won’t make you immune to them. So don’t just blindly trust your instincts. Know when to reassess your thinking and you’ll be able to influence your customers more effectively.
PS. Did you catch our last post about how Virtual Reality is Transforming the Way Businesses Do Their Marketing?