Think slow, Act Fast

What can Pixar teach us about making better decisions?

The animation studio behind some of the biggest blockbusters in Hollywood is a master of thinking slowly and acting quickly. It is the key to their success.

Each Pixar script and storyline takes an average of 2 years to write, spanning a whopping 8 development stages. This gives the team time to rework ideas, sit on concepts, and constantly iterate. Each new version gets you just a little closer to perfection, and it's relatively inexpensive, so dragging it out doesn't sink the budget. Once the story is ready to shoot, production is done rapidly to minimise the window where things can go wrong.

It turns out that humans aren't very good at thinking slow, acting fast.

Daniel Kahneman is an Israeli-American psychologist who authored the groundbreaking book, Thinking, Fast and Slow. Kahneman's book applied psychological insights to economic theory, discovering that people's decision making isn't rational and depends largely on how we frame things.

Furthermore, we're wired to be impulsive, reaching for the lowest-hanging fruit like a kid reaches for more lollies. Even the most self-proclaimed rational person is emotional.

His work landed him a Nobel peace prize.

As business leaders in a fast-changing world, we're often faced with decisions and tasks that ask a lot of our brains. They need to be carefully thought out. Considered and critical. Executed perfectly. It is in these very situations that our irrational brains come in and make things difficult. When we come across situations where we need to exert mental effort, we tend to draw on biases, leading to erroneous thinking. To minimise the impact of emotional thinking, we need to think slowly.

Unfortunately, we'll often skip steps and make vast leaps to reach a fast conclusion. In our day-to-day lives, our brains are actively working against thinking slowly.

The two levels of thinking.

In his Nobel-prize-winning study, Kahneman breaks our thinking down into two streams: system 1 and system 2. Our system 1 thinking is like the autofocus on our phones. It is fast, automatic, and responds unconsciously to the stimuli around us. This could include reading the text on a billboard or seeing a banana and recognising the colour yellow.

System 1 thinking builds heuristics. General rules of thumb. It doesn't require any effort to tie your shoelaces, for example. And you don't need critical thinking to hop over puddles, either.

While these examples are straightforward, system 1 thinking can seep into other areas of our decision-making. When we're put on the spot, we might choose the 'obvious' option or the one that makes the most sense at first glance. These decisions aren't drawing on facts of the moment but on conditioned patterns embedded into our minds. We are making associations that may or may not be correct, and they're not supported by analytical information processing. This is "think fast, act fast".

Our system 1 brain doesn't listen to the voice of reason. Say you're walking past a cafe and get a strong whiff of espresso. You're tired, have a day full of meetings, and won't leave the office till late. Bam, you're $5 dollars lighter! Your brain doesn't care that you're trying to stay off caffeine. Or that you've already got coffee meetings planned. Or that your office has a really fancy machine.

You wanted coffee, and so you bought some.

System 2 thinking takes more effort to harness. In fact, you can see when a person has engaged their system 2 thinking by looking closely at their pupils. Human pupils will immediately dilate when a person starts problem-solving!

System 2 thinking can be thought of as your thinking cap.

It is deliberate, critical, and conscious thinking which helps you reason your way through the world. While system 1 thinking occupies itself with the intuitive and menial, system 2 wants to dive deep into complex matters. It is the definition of "think slow, act fast".

Doing your tax returns? System 2. Pixar spending two years on scriptwriting? System 2. Writing an article on how we think? System 2. How meta.

It might seem obvious that system 2 thinking has all the intellectual muscle. So it must be the mode of thinking we use all the time, right? Wrong. System 2 thinking is mighty but doesn't have much stamina.

You'll have experienced this yourself. When you've had a long day at work, full of tricky deals and problems, the last thing you want to do is think more when you get home. You want to switch off and binge your favourite show.

How the two systems come together.

Even when we're in a situation where we know we should think critically, we still revert to system 1 thinking.

Cue the Linda Problem.

"Participants in the experiment were told about an imaginary young woman named Linda, who is single, outspoken and very bright, and who, as a student, was deeply concerned with discrimination and social justice issues.

The participants were then asked which was more probable:

(1) Linda is a bank teller, or

(2) Linda is a bank teller and is active in the feminist movement."

The most popular answer was (2) by an overwhelming majority. But when we think about it, this is in flagrant violation of the laws of probability. Option (2) is a subset of option (1), meaning that fewer people would fit in that category. It is far more probable that Linda fits into the umbrella category (1).

If that tricked you, then don't sweat it, you're in good company. Among students at Stanford Graduate School of Business, 85% flunked the question.

This is system 1 thinking at play. It gives the illusion of validity and seems logical based on the information we have at our disposal. Our system 2 thinking lazily verifies this answer because it doesn't want to activate. We think even faster when we're presented with an option that is socially acceptable or implied.

Why we need to think slow in business.

One of the most important parts of running a business is planning and preparing. Pixar has it nailed, and you can too.

If you start your strategy work under the influence of system 1 thinking, you will fall into the planning fallacy. This arises when we overestimate the benefits and underestimate the costs of our projects. Kahneman cites the example of Americans building houses to demonstrate his point. They often estimate it to cost 50% less than it actually does.

This comes from our pervasive optimism and our desire to avoid losses as humans. We want to have some illusion of control and inhabit a world that is much kinder to us than it really is.

As a business owner, thinking slowly can help you overcome the planning fallacy and many of the other pitfalls associated with quick decision-making. Drawing your decisions out allows you to better adopt new evidence into practice. It allows you to analyse situations critically and find inventive solutions to your problem. With system two thinking, you will approach every problem as if you are encountering it for the first time.

Furthermore, slow thinking allows you to unpack how you do things and find new strategies. We often rely on tried and tested strategies. But we live in extraordinary times. What worked in the past is not guaranteed to work now. Innovation is a crucial benefit of slow thinking.

To conclude.

Our biases affect every aspect of our personal and professional lives.

It is understanding how our mental biases work that allows us to devise better ways to work around them. This frees up parts of our brain that are best at the challenging and complex tasks which we all need to complete.

The next time you are working on strategy documents or trying to work through a tricky deal, try to step back and take it slow. Question the first answers which come to mind. Is your first response the best way to tackle a problem?

By thinking slowly and activating your system 2 brain, you can think with the clarity you need to make better decisions.

I'll leave you with a few fun questions to test your system 2 thinking! Let me know your answers in the comments :)

1: There a water lilies on a lake. Each day, the amount of water lilies doubles. After 20 days, there are so many water lilies that the entire lake is covered. After how many days was half of the lake covered?

2: A racket and a ball cost $1.10 in total. The racket costs $1 more than the ball. How much does the ball cost?

3: There are two hospitals in a city, a small and a bigger one. In which of them is the likelihood higher of more boys than girls being born in one day? (Provided that girls and boys are on average born equally frequently).

4: Marc looks at Anne, Anne looks at Simon. Marc is married, Simon is single. Does a married person look at an unmarried person?

5: Five machines produce five plates in five hours. How much time do three machines need for three plates??