My first task at Davos this year was a fun one: to interview Daniel Kahneman, the Nobel prize-winner and author of the best-selling book on the psychology of decision-making, Thinking, Fast and Slow.
One of the thoughts Mr Kahneman mooted in a lively hour of presentation and discussion was that chief executives, who are naturally optimistic people (for they would not be in that position if they weren’t), hold two sets of expectations in their heads.
One is the goal they announce publicly for the people in their organisations about what they need to achieve, and how the business should change. The second is what they expect to happen, which they keep to themselves.
Both sets of expectations will be optimistic – even what they regard as their realistic ones. But they tend to set “stretch” goals not in the hope they will be achieved, but to shift employees out of their comfort zones.
Mr Kahneman explained his metaphor for the human mind – that it has system one and system two methods of making decisions and processing information. System one is the fast, instinctual set of judgments that people make without thinking; system two is the slow, mechanical process of working out problems that cannot be solved instantly.
He gave the example of the sums 2×2 and 17×28. The first can be answered without thinking, while the second requires work. The mind tends to use system one whenever it can because system two is “lazy” – it does not want to be engaged until necessary.
System one also tends to be optimistic. It is the sense most people have that they can answer a question, perform a skill, or “know” something will happen when they are really guessing. Without it, life would be too arduous but it equally can lead us astray.
Mr Kahneman’s advice to the audience was to go slower sometimes – to take time to check their instinctive intuitions with system two calculation – and not to rush into error.
In general, though, he was a pessimist about whether we can change our thoughts by being aware of them. When I asked if self-consciousness would reform the audience and it would walk out of the room with a different mental approach, he answered simply: “No.”
