Making sense of ‘Thinking Fast and Slow’

I was recommended Daniel Kahneman’s book, ‘Thinking Fast and Slow’, by someone here on Linkedin and as am a fan of non-fiction books, I ordered it at the opportune time (I mean when I had some spare money in my account).

The first few chapters were interesting and introduced me to the concept of Systems 1 and 2. I could relate to the reasons Kahneman presented on typecasting and why do humans judge. I could recollect a few job postings on LinkedIn and where the recruiter/hiring manager had explicitly mentioned ‘IIT/NIT or IIM/XLRI (full time) in the required qualification section. I linked it back to Kahneman’s explanation of System 1 of our brain which relies more on intuition, and heuristics, rather than on logic.

Before I move ahead, let me give a brief background on Systems 1 and 2 that Kahneman talks of. As per him, human beings have two distinct levels of thinking:

System 1 - which is quick, intuitive, and takes the path of least resistance. This part of our brain prompts us to typecast and group people or things, and thus results in people being judgmental about various situations, things, and/or people. In short, this part of the brain has certain templates stored that it will take out and compare with anyone they meet, and will try to fit them in there, and it is this part of the brain that creates the first impressions.

System 2 - on the other hand, is quite logical and calculative. This part of the brain is used more in scenarios which demand greater level of thinking and due diligence. This is used in specific cases and can’t be generalized. Naturally, this is used less often.

As per the definitions above, and rightly so, I was reading the book slowly, trying to assimilate the complex scenarios and enjoying the same. Things started become interesting towards the middle of the book, where Kahneman starts talking of the role of luck in the success of athletes, or organizations. He also speaks of regression, and biases in our judgements, and of halo effects that lead to the biases.

If I understood correctly, and am still trying to assimilate this (am halfway through the book), Kahneman lays huge emphasis on chance or luck in the success or failure of any individual, or organization. Not only that, he also gives evidence that some great MNCs, athletes, and teams performed really badly immediately after having a winning run and having been praised for that. Kahneman attributes this to regression and goes on to say that any variation from the normal, either too good, or too bad, will self-correct and return to the normal over a course of time.

He was particularly critical of the autobiographies of CEOs and management books on successful companies, saying that much of such success was attributable to chance. He has, in fact, named the book, ‘Built to Last’, and criticized Jim Collins and Jerry Porras for creating a false sense of order by proposing a template for success, when there exist none. Kahneman also states, though with a disclaimer, that the probability that a ‘good’ CEO contributes to the success of a great company is less than 10%, and goes on to talk of ‘outcome bias’ wherein, the same decision, if it works well, won’t add to much, as the System 1 already assumes that the person taking the decision is good and will deliver (halo effect). The problem arises when the decision does not work and there is no obvious explanation for the same, then the human mind will try to find some logic to bring an order to the inexplicable, when there is none. He concludes by saying that it is either chance or regression at work and everything else falls in between and are nothing but creations of human mind, to find order in a chaotic world.

Things were fine till here, however, the sh*t hit the roof when Kahneman stated that even the success of Google is attributable to chance and has nothing to do with any of the assumptions that we have made about its success. He goes on to say that, it was just that Google has gotten lucky for very long, decision after decision, time after time. This is where I stopped thinking (neither fast nor slow), kept the book aside, and went out for my daily walk. Still trying to figure out the meaning of what I had just read…thinking slowly :)

Wish you all a Merry Christmas, a Happy New Year, 2018, and a great holiday season ahead!

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