How Dual Systems Thinking Shapes Our Decisions

When Your Gut Fights Your Spreadsheet

I have noticed that my brain functions in two ways: one is analytical, and the other is more intuitive.

Last month, my investment team at Launch Africa was assessing a Healthtech startup from Ghana. The numbers were impressive—strong unit economics, reasonable valuation, and an experienced technical team. My analytical brain—what I refer to as my System 2 thinking—was in agreement.

Then, I spoke to the founder via a virtual call. Within minutes, I sensed that something felt off. The founder struggled to articulate the reason behind starting the company. Their responses about customer acquisition seemed rehearsed, and when I challenged them on their competitive positioning, they became defensive instead of curious.

My System 1—that fast, intuitive brain—was waving red flags while my System 2 was still admiring the spreadsheets, the deck in this case.

This tension is at the heart of venture investing, particularly in Africa's diverse markets. It perfectly exemplifies what Nobel Prize-winning psychologist Daniel Kahneman described in his dual systems framework. This mental model has profoundly described how most of us approach investment decisions.

The Two Brains of a VC

Kahneman distinguishes between two modes of thinking:

System 1: Fast, automatic, intuitive, emotional, and operates with little effort. This is your "gut feeling" when meeting a founder.

System 2: Slow, deliberate, analytical, rational, and requires concentrated effort. This is you scrutinising a financial model or conducting market analysis.

In venture capital, both systems are constantly at work—often in tension with each other. Sometimes, they align, and that’s often the sweetest spot. As I've led investments across multiple African markets at Launch Africa, I've become increasingly conscious of how these systems influence our decision-making, sometimes in ways we don't fully recognise.

The diversity of African markets creates unique challenges for both cognitive systems:

System 1 Pattern Recognition Challenges: The pattern-matching that works in Kenya may fail entirely in Egypt or Nigeria. At Launch Africa, we've had to deliberately expand our mental models to recognize that success patterns vary dramatically across the continent's 54 countries.

System 2 Analytical Limitations: Even our most sophisticated analysis frameworks sometimes fail to capture crucial contextual factors. When evaluating an FMCG startup in Kenya, our standard unit economics analysis initially missed the impact of unique local infrastructure constraints that later proved critical to the business model.

From VC to Life: The Universal Application

While I've focused on my venture capital decisions, these cognitive patterns extend far beyond investing:

In Business Leadership: As you build teams or evaluate opportunities, recognize when you're operating from System 1 intuition versus System 2 analysis. That immediate impression of a job candidate? That's System 1. The careful evaluation of their experience and skills? That's System 2.

In Personal Decisions: That house that "feels right" the moment you walk in? System 1. The spreadsheet comparing rent rates and the neighborhood statistics? System 2.

In Relationship Building: Your immediate impression of someone you've just met—their trustworthiness, competence, and warmth—that's System 1 making split-second judgments based on subtle cues. Your careful consideration of their actions over time? That's System 2 at work.

The key isn't eliminating either system—both are essential. The magic happens when you develop enough awareness to recognise which system is currently driving your thinking and deliberately switch gears when appropriate.

The Opportunity

There's something special about applying these cognitive frameworks across Africa's diverse innovation ecosystems. The continent's complexity demands cognitive flexibility—the ability to recognize when existing patterns apply and when entirely new mental models are needed.

The next time you're making an important decision—whether it's an investment, a hire, or a life choice—pause and ask yourself: Which system is driving this choice? Is this a moment for intuition or analysis? The answer isn't always straightforward, but asking the question is where wisdom begins.

And if you're curious about exploring these cognitive frameworks further in the context of African entrepreneurship and impact, tune into The Grinders Table podcast, where I regularly explore these themes with founders, investors, and ecosystem builders shaping Africa's innovation landscape.