Leveraging system thinking in transformations

n the quest for Agility, Transformation Leaders can find valuable insights in the work of Nobel prize winner (2002) and recently deceased Daniel Kahneman. His theory of System 1 and System 2 thinking is actually quite amazing and tremendously helpful during any change, as it helps you better understand why and how people react differently to an upcoming change.

Understanding System 1 and System 2 in our own business context

At the heart of Kahneman's theory lies the distinction between two modes of thinking: System 1 and System 2. System 1 represents our emotional, unconscious, and often automatic mode of thinking, while System 2 reflects our thoughtful, conscious reasoning and controlled thinking. While System 1 is rapid and takes up 98% of our brain capacity, System 2 is slow and only uses 2% of our thinking.

In the context of Business Agility Transformations, System 1 thinking is like our instinctual response and behaviour that is unfortunately common in most organisation’s. Let me give you an example: When faced with a familiar challenge, employees often rely on established routines and conventional wisdom to guide them through this challenge. This automatic mode of thinking does however also have a potential downside when it comes down to an upcoming change. It can for example lead to apathy, resistance to change, and a reluctance to question the status quo of your organisation or marketplace it operates in.

While on the other hand, System 2 thinking represents the critical analysis and strategic decision-making necessary for driving an organisational change. So, when Transformation Leaders tap into this deliberate mode of thinking, they can better challenge existing paradigms, envision new possibilities, and chart a course towards Agility.

System 1 and System 2 in action

To better illustrate Kahneman's theory in action, let's take a closer look at a real-life scenario in the context of a Business Agile Transformation:

• System 1 thinking: Imagine a company that has been working within traditional, hierarchical structures and siloed workflows for decades. When confronted with the need for change towards more Agile practices, employees may instinctively resist this aspired change, citing concerns about disruption of their current processes, that it can’t work in their industry, organisation, department or team, or whatever more reasons they can come up with. This basically can all be translated back to a fear for loss of control or the unknown. When dealt with these concerns in a proper way (i.e. see my article on Continuous communication in change management), Transformation Leaders can remove or counter many of these concerns and continue their journey successfully.
• System 2 thinking: Recognising the need for Agility is obviously the first step towards a sustainable and thriving organisation. After this initial step, visionary leaders should engage in a deliberate analysis and develop a strategic planning to design the company’s Transformation Journey. When they conduct this thorough assessment of organisational and employee capabilities, they can identify the barriers towards the aspired state of Agility. This will help them to develop tailored strategies and communication lines to design the desired organisational culture. Such a conscious effort should also include things like challenging conventional wisdom, experimenting with new approaches, and empowering employees to embrace the upcoming change.

Driving force of transformations

In theory, above sounds great. But how can Kahneman's theory of System 1 and System 2 thinking be leveraged effectively to drive successful your own transformation? Here are some key tips for Transformation Leaders to work with:

1. Recognise cognitive biases: Transformation leaders should be aware of several cognitive biases inherent to System 1 thinking. Without going in too much detail, think of biases related to resistance to change, confirmation biases, and anchoring effect. There actually quite a few more and there is obviously much more detail to it. You can read more about them here. By understanding these biases, leaders can anticipate challenges, address potential misconceptions, develop different communication strategies and grow that aspired culture of openness and curiosity.
2. Engage System 2 thinking: By contributing to and developing a culture of critical thinking and intellectual curiosity, transformation leaders can overcome a certain apathy amongst employee and drive meaningful change. This involves company-wide questioning of assumptions, challenging conventional wisdom, and making data-driven decisions.
3. Good balance between intuition and analysis: The benefits of leveraging System 2 thinking almost goes without saying and is essential to strategic decision-making. At the same time, it would be wise for Transformation Leaders to also recognise the value of intuition and instinctual responses - System 1. By striking the right balance between intuition and analysis, you can leverage the strengths of both modes of thinking and navigate complexity more effectively.

And don’t forget when taking above into consideration: it is strongly advised to empower employees at all levels – and not leave this solely to a happy few in the upper echelons of the organisation - to think critically, experiment with new ideas, and challenge the status quo. Providing the appropriate training and education will equip all employees involved in the change, with the right tools and growth-mindset necessary for success.

So, what will you do to harness the might of System 1 and 2?