01 Dec 2011  What Do YOU Think?

Thinking Slow: An Argument for Bureaucracy?

Summing Up Readers of Jim Heskett's column this month offer guidelines for when to think fast and when to think slow, from author Daniel Kahneman's book, Thinking, Fast and Slow.

 

Summing Up

Summarizing responses to questions about a topic as complex as thinking slow requires that one think slow. So I wrote this column, slept on it, rewrote it, and still have problems with it. But deadlines, as they so often do, help us avoid the "analysis paralysis" associated with the downside of thinking slow.

So here is what my gut tells me about what you said this month: Thinking slow, as Daniel Kahneman calls it in his recent book by that name, is important under circumstances of high risk, uncertain outcomes, and a limited experience base with the challenge requiring a decision. Good leaders know when to think slow. All of us need mechanisms for helping us to know. Some elements of bureaucracy can be included among the devices. But, as Ganesh Ramakrishnan said, "… we probably (need) to enrich the vocabulary … The word bureaucracy is associated with stagnation, rigidity, unthinking application of age-old rules … (vs.) careful reflective thought on matters that need intelligent application of criteria."

Just how to promote slow thinking where it is appropriate stimulated an interesting and stimulating debate. As Dave Schnedier put it, "I agree with Kahneman's diagnosis, but not his remedy… Whether the decision is to be made by an individual, a team, or 'the bureaucracy', I would say that all would be well served by the discipline … imposed by adherence to a rational process… (which) requires the intellectual rigor that professional management can impose…" Sudheer Thaakur concurred: "… in a world that is more complex and uncertain and ambiguous we should be promoting slow and deliberative thinking. Till we do that we will not be able to fully utilize the opportunity offered by (the) structured nature of organization." Rebecca Mott said "let's not forget the plethora of research that shows teams consistently outperform individuals. It is the modifying effect of the team, which also slows down the decision-making process, that produces a better result." Yadeed Lobo had other suggestions: "Good governance (the objective observer, non executive board members) serves as an effective moderator of (thinking fast) on the part of … executives. The relationship between the Independent Non-Executive Chairman of a Board and the CEO is particularly important."

Some saw a danger in flirting with the use of bureaucratic devices to promote deliberative thought. As Shadreck Salli put it, "What (is critical) … is the person that conducts the switching from thinking (either fast or slow) to (the) other … it may not be easy to have a series of processes in a bureaucratic chain that would best suit a particular type of thinking … Shalia commented: "I think the growth rate of large organizations slow(s) down precisely for this reason-not being able to separate decisions which need deliberations vs. quick decisions." Phillippe Gouambe was more blunt: "… bureaucracy slows everything down and I just do not have the time for that."

As you said, good judgment in thinking fast or slow is an important characteristic of outstanding leadership. Can it be taught or does it have to be acquired over time? How do leaders learn how to think slow at the right time? How do they ensure that others do so as well? What do you think? Or do you need more time?

Original Article

Behavioral economics has fascinated us at least since Daniel Kahneman became the first psychologist to win the Nobel Prize in Economic Sciences in 2002. It has allowed us to see more clearly traditional economics and the fallacy of the assumptions on which it is based: a world of rational humans who are unemotional, well-informed, and take the long-term view in economic decisions.

In contrast, behavioral economics emphasizes and examines the irrational side of managers, consumers, and investors—their tendency to take the short-term view while following their emotions. These "irrationals" are less well informed than they imagine (and certainly less well-informed than traditional economists assume).

As an antidote to these problems, behavioral economists have, for example, advised regulators to combat predictable irrationality in citizens and consumers by "nudging" them by means of economic incentives to act in ways that regulators believe are in citizens' best interests. Lest we underplay the significance of this or somehow associate it with conservative or liberal politics, consider that proponents of such ideas have been advisers to both David Cameron in the U.K. (Richard Thaler) and Barack Obama in the US (Cass Sunstein). Behavioral economists advise regulators that, when in doubt, make sure that business is transparent and even educational in its dealings with others in order to make them wiser.

An observer of policy based on behavioral economics might well conclude that an assumption of irrationality may be valid, but irrational behavior is hard to predict. Why, for example, do people (even experts and managers who should know better) act in their own worst interests or those of their firms? Can such behaviors be predicted and averted?

That is a subject of Daniel Kahneman's new book, Thinking, Fast and Slow. He concludes, based on his research, that as decision-makers, we rely too heavily on System 1 thinking (recall Malcolm Gladwell's book Blink) that helps us summon whatever knowledge we think we have. Among other advantages, it saves us time in situations with similar patterns. But errors of judgment occur when we apply it to complex issues that require more careful consideration, investigation, and reasoning--System 2 thinking. It helps explain behaviors ranging from overconfidence in planning to the defense of sunk costs and the failure to cut our losses in investments.

Kahneman implies, among other things, that in selecting decision-makers we should look for those who know when to switch from System 1 to System 2, that is, when to think fast and when to think slow (using his grammar). Another antidote to thinking fast at the wrong time, according to Kahneman, is to have an objective observer who can flag those situations requiring slow thinking when they arise.

But the best check on too-fast decision-making may be the organization itself. As Kahneman puts it, "Organizations are better than individuals when it comes to avoiding errors, because they naturally think more slowly and have the power to impose orderly procedures." Rather than castigate the bureaucratic nature of large organizations, Kahneman suggests we try to make them more efficient at slow thinking by improving processes for deliberation and making decisions

.

Do you agree with what Kahneman implies here? Does bureaucracy have its advantages? Is this one of them? What do you think?

To read more:

Malcolm Gladwell, blink: The Power of Thinking Without Thinking (New York: Little, Brown and Company, 2005)

Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2011)

Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness (London: Penguin Books, 2008)

Jim Heskett's latest book,The Culture Cycle, was published in September.

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Comments

    • Ganesh Ramakrishnan
    • HR Snr Director, OFSS

    Building upon the work done by Kahneman and others, several authors have used the latest studies on the brain to illustrate these different modes of thinking and their applicability to decision making, change management, happiness and employee engagement. Some of my favorite recommendations for further reading are:

    The Happiness Hypothesis by Jonathan Haidt Stumbling on Happiness by Daniel Gilbert A Whole New Mind (and Drive) by Daniel Pink How We Decide by Jonah Lehrer

    Yes, some situations and decision types require deliberative thinking and time as opposed to a gut-feel approach. Yes, this can be applied to organization and process design. But we probably require to enrich the vocabulary for broader adoption of these principles. The word bureaucracy is associated with stagnation, rigidity, unthinking application of age-old rules, personal agendas dominating the business purpose and so on. When we use the word bureaucracy (at least here in India) we instantly visualize a worn down government office with naysayers, delays, archaic or absurd rules and procedures, and thoroughly demotivated employees (yes there are exceptions, too). We do not think of careful reflective thought on matters that need intelligent application of criteria.

    So, please, the wonderful advances in our understanding of the human brain and its working need to be propagated to the business world but simplifying it as "bureaucracy is good" will be counterproductive.

     
     
     
    • Cheri Thomas
    • Chief Investment Officer, GMedCap

    This is interestingly congruent with the ideas of evolutionary psychologists such as Hugo Mercier, who argue that our apparently maladaptive cognitive biases actually serve to improve group decision-making by setting up the sides to argumentation. The problem with evolutionary psychology like this is a certain Panglossian " just so" bent to it. Countering this is Marcus, whose argues that the brain simply went down some unfruitful pathways and that we are only haphazardly rational. If Mercier is correct, there is a strong argument for hashing decisions out in groups.

     
     
     
    • Ravindra Edirisooriya
    • Senior Accounting and Finance Major, Missouri Southern State University

    Professor Heskett has raised another timely subject. However, thinking slow is not the same as acting slow or failing to act according to facts given the thinking is "complete", which is one of the biggest issues of bureaucracy (seen in our Congressional and Senatorial politics time and time again in recent times). Hence, the short answer to Professor Heskett's question "Thinking Slow: An Argument for Bureaucracy?" may be "No" with respect to the current regime and the opposition in our democracy.

    In order to understand behavioral economics, one may have to deconstruct our thought patterns with respect to managerial, consumption and investment decisions. We may think rationally, irrationally or oscillate between rational and irrational thinking. However, causation of effects is always rational (a true statement until somebody could prove the existence of "THE HAND" whose will is freely imposed.) When causation is approached with incomplete information (unknown, unknowable or uneducated) about an economic system, it may be seen as random, rational or irrational to the observer, who may act accordingly.

    Thinking Slow (System 2) is "Zen", which is focusing one's mind to see complex causal systems not visible to a naked eye or unfocused mind. It may have a (conscious or unconscious) feedback loop of rational thinking leading to higher and higher orders (dimensions) of understanding of the causal system underneath the effect(s). Thinking Slow may or may not take time.

    Thinking Fast (System 1) is adequate for decisions down the "beaten path" or in situations requiring "reactive" decisions. However, a prudent and passionate manager, consumer or investor will think of alternate outcomes in the set and predetermine a plan of action /decision for each outcome in a situation requiring "reactive" decisions.

    Thinking Fast is easy because it is reflexive given the situation is either anticipated as before or it has come unexpectedly. Thinking Slow is difficult because it occupies the thinker and his /her ability to think. Thinking Fast and Thinking Slow are parallel processes of the mind and (given all other factors) one becomes recessive (leaving the best choice for decision making) depending on the situation.

     
     
     
    • CJ Cullinane

    Reward what you want and penalize what you do not is a way to control some economic situations but often our leaders cannot seem to agree on what to penalize or reward. Both 'slow' and 'fast' decision makers seem to often go in the wrong direction, either very fast or very slow.

    Decisions can be dependent on the decision makers experience or their research/study. President Jimmy Carter was a 'slow' decision maker. Highly intellegent and systematic but his results were flawed at best. President John Kennedy was a fast decisive decision maker. Were his decisions any better than President Carters?

    I feel that each 'style' of decision making (from the gut or research/study) has to be utilized at different times and in different situations. Economists, in my opinion, have a school of thought they progress towards and do not change their 'thinking' much not matter what the research or results say.

    There is risk in all decisions and we cannot control everything (no one can or ever will). I feel the best decisions are made with as much information as possible so the risks can be minimized. If this can be accomplished 'fast' do it... but if there is a never ending flow of data and a decision has to be made pick a very lucky person to make the decision.

     
     
     
    • Tom Dolembo
    • founder, New North Institute

    The best entrepreneurs I have known "slept on it" certainly and often referred to staff, but followed a decision scheme I would liken to migrating geese, focused, implicit, and directed. Ewing Kauffman always filtered his decisions through his staff, but in the end the vision and direction was his with few delays. Classic decisions for bureaucracies, such as going to war should reasonably take time, but like Pearl Harbor and 9/11 events often intercede in the process. Richard J. Daley always said, "the smallest appropriations always get the greatest attention." Irrelevant and seemingly silly decisions often surrogate for larger decisions. The decision system is created in the petty squabbly case for the later, larger case taken quickly with little seeming thought. Iraq was all too easily done. One thing slow decisions can do is to break down the "impossible idea" process into digestible parts, parcel it out in such a way that it becomes possible, even palatable. The decisionmaker then may be handed something incredibly unwise and complex rendered simple. The mortgage crisis was such a thing. Highly complex, slightly intelligent, and disastrous computational idiocy was lent to sociopathic management who offered up simple packages of toxic investments requiring little thought. The system did grind out a decision over time, decision-makers were highly rewarded for acceding to it, and here we are. I would guess that good people, given time, do make good business decisions, even better ones when they team up. I do miss you, Mr. Kauffman.

     
     
     
    • Seena Sharp
    • Author, Competitive Intelligence Advantage, Sharp Market Intelligence

    Gut decisions are more likely to be successful when the situation and external forces are very similar. In a volatile and constantly changing business environment, such as the last several years, much is different, and not factoring in those changes significantly increases the risk of poor decisions.

    Don't think your industry or customers have changed or changed much? If so, you're risk has now jumped dramatically. Do you buy a car or big screen TV based on gut? Ask yourself if you do as much research for these decisions as you do for business decisions.

     
     
     
    • Gerald Nanninga
    • Principal, Planninga from Nanninga

    In my experience, individuals tend to have a bias to "go" while organizations have a bias to "no go." Similarly, individuals are more prone towards creation (the Eureka moment) and organizations are more prone towards evaluation (they critique better than they create).

    Therefore, this cannot be an either/or process. It is not "individual or bureaucracy" or "fast or slow." It needs to be a good, healthy blend of of both extrems--not one extreme and not one mashed up mess in-between.

    I talk about these biases to "go" or "no go" in these two blogs:

    1) http://planninga-from-nanninga.blogspot.com/2009/09/strategic-planning-analogy-275-bias-to.html

    2) http://planninga-from-nanninga.blogspot.com/2009/09/strategic-planning-analogy-276-bias-to.html

     
     
     
    • Dave Schnedler
    • President, Corporate Planning Forum

    I agree with Kahneman's diagnosis, but not his remedy, and my suspicion is that Kahneman has never worked in a corporation, and neither his years in academic life nor his early service in the Israeli army is equivalent.

    An organization's bureaucratic process might be no more than an unstructured political process with its attendant hidden agendas, power struggles, turf wars and winners and losers, or it might be adherence to arcane and mindless procedures "we do it this way because we have always done it this way". Furthermore group decision making can be susceptible to the same psychological traps and biases that effect us as individuals, plus a few others such as group think.

    Whether the decision is to be made by an individual, a team, or "the bureaucracy", I would say that all would be well served by the discipline which is imposed by adherence to a rational process. A bureaucracy can try to impose a rational process, but cunning people are usually able to circumvent it unless the process is perceived to have legitimacy, so the answer is adherence to a rational process, not the imposition of a bureaucracy.

    Adherence to a rational process requires the intellectual rigor that professional management can impose-- a constituency which is also likely to value organizational efficiency and hate bureaucratic waste. Decision making needs to be both good and timely, which means not too fast, and not too slow.

     
     
     
    • Farooq Javed
    • Associate, Rho Ventures

    This was an incredible book that everyone should read. I read it once and feel I only barely scratched the surface. It's scary to think how little we understand about our own brain. The chapter on associative thinking--the impact one seemingly insignificant input can have on our entire thinking process--should make us all stop and think.

    So long story short: yes. The word bureaucracy tends to have a negative connotation, implying almost unnecessary slowness in process to the detriment of an organization's effectiveness. However, if in creating organizations, in working as groups to achieve goals, we're not consciously improving our ability to make decisions as a group, then we'll see many more of the sorts of failures in business than we seem to be seeing with increasing frequency lately.

    Kahneman doesn't rule out the effectiveness of fast thinking but does a good job of defining when it works and when it doesn't. I think, though, that his framework largely doesn't apply to the business world. Fast thinking works in situations that are predictable (highly structured) and with feedback. That seems to me to apply less to the business world in which many highly diverse variables are at play (customer preferences, competitive offerings, technology advancement, press, regulations, etc.). So deliberate thought conducted in a highly structured setting, where perhaps Kahneman's heuristics are explicitly discussed and used to eliminate poor thinking, followed by commitment to those decisions would improve the world dramatically.

     
     
     
    • shadreck saili
    • UCT

    Off course anything on the planet has both merits and demerits of which bureaucracy isn't an exception.

    I however do not agree that either system 1 or 2 thinking is or can be an advantage or disadvantage to bureaucracy in it true sense and in the context of the subject matter above.

    I do not think that either system 1 or 2 can be linearly related to either merit or demerit in bureaucratic chain. what i think is that both are necessary at one point or another in the bureaucratic chain of processes. What should create either merit or demerit therefore is the person that conducts the switching from one thinking to another, the advantage or disadvantage then relates to the effectiveness of matching of thinking by the person visa vis the particular process at hand.

    I further would submit that it may not be easy to have a series of processes in a bureaucratic chain that would best suit a particular type of thinking done entirely . it is collective. unless maybe in a very minute processes where bureaucracy is perhaps not worth applying.

     
     
     
    • Srinivasan
    • Director, Hewlett Packard

    Like in most such topics - I don't believe that either System 1 (Fast or Rush of Blood thinking) or System 2 (Measured or Lethargic thinking) is always right or wrong.

    It's situational. If some of the entrepreneurs did not go with System 1 thinking in the early days of their entrepreneurship - I don't believe we would have the wonderful changes that this world has.

    On the other hand - if we were not systematic and studied, to the point of being consensual - we may not have seen the consistent scale-up that we have seen in manufacturing cars (as an example - the Japanese way).

    The challenge for all of us is how do we apply the right blend of thinking for right circumstance...

    It's the ability to identify the sweet spot of the right approach - that we really need to look at.

     
     
     
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited

    Depending on the nature of demand, thinking slow or fast needs to take place. In matters requiring urgent action, gut feeling will rule as there is no time to think slowly and then decide. However, in serious matters requiring indepth examination of all pros and cons, the thinking process would and should be slow as hasty decision can be harmful. The only problem with slow decision making is that it sometimes leads to exceptional delays which do greter harm. Switching from System 1 to System 2 is workable with intelligence and experience.

     
     
     
    • Ajay Kumar Gupta
    • Doctoral Researcher and Faculty (ITM Business School), Tata Institute of Social Sciences, mumbai, India

    Improving processes have advantages over bureaucracy. Process improvement involves almost everyone whereas bureaucracy involves few people who have decision making, policy making and decision influencing capacity. Personal decisions are usually influenced by gut-feeling and experiences of self and others, whereas organisational decisions are more influenced by cultural trends, key people interest and leadership credibility. So, it becomes difficult to predict irrational behaviour when people work in their personal interest than organisational interest. And that is the point where people make either right or wrong decision. That is the point when premise of assumption goes questionable. For example what happens when organisation has whistleblower policy but cultural practices stop and intimidate you to practice that policy? What happens when policy encourages banks to lend more in underprivileged and undeveloped areas but people are more fearful because of blame culture in the organisation? I am not sure what a manager can do in such circumstances. Whether he should follow his gut-feelings, experiences or cultural practices? I think most of the people might take a decision, which is in the best interest of individuals that is based on experience and trends. Can such irrational behaviours be predicted and averted? The answer is it depends. When people believe more in personal success than organisational success, then irrational behaviours can be predicted. When organisations are more focussed and concerned about numbers game i.e. profitability, revenue, profit per employees or market share, which is linked to their success, then irrational behaviours more than often tend to occur. On the other hand, when organisations appreciate and value ethical decision and means to achieve outcome, then irrational behaviour are less tend to occur.
    Information, data, trend, experience help to make better and right decision, but that decision cannot guarantee better outcome. The reason is simple. There are many "emerging dynamics" in external environment that influences outcomes. So, ability of decision makers (managers, policy makers or individual) to predict the dynamics strengthens decision making credibility. Examples are many. Why Lehman brothers failed? Why Citi bank laid off huge number of employees? The answer to both the questions is one. Decision makers or policy makers could not understand and anticipate the "emerging dynamics" that could challenge success and tends. Even if they could anticipate, they could not take decisions that were in the best interest of organisations. It clearly indicates that decision makers were more concerned about their success and less about organisational sustainability. Other example could be predicting outcome in stock market. We have a lot of information, da ta and trends about stock market, but analysts fail to predict the exact direction of the market. Market takes its own direction. Where is out decision making capability and logic. It clearly shows there are factors which are beyond our control. There are unseen emerging factors that can be seen with great vision and insightful analysis of emerging trends. "Intended decision" determines "intended outcome". Irrespective of emerging internal and external dynamics, data, sources, information and trends, intention of decision makers play great role. When intention is based on ethics, integrity and honesty then long term outcome has to be sustainable and real. I think numbers are outcome of means and means are nothing but intention. So, I believe that intention of decision maker along with other information can influence decision and outcome.

     
     
     
    • Shaila
    • Principal Consultant, Kfour Metrics

    Sure, large organizations take their time to decide but the disadvantage is, issues which require a quick decision also gets delayed.

    Can we really separate issues based quick decision Vs. deliberate decision?

    Organization nimbleness is often stressed upon on today's business context. I think the growth rate of large organizations slow down precisely for this reason - not being able to to separate decisions which need deliberations Vs.quick decisions.

     
     
     
    • Phil Clark
    • Clark & Associates

    There are times we must think quickly, others times when we can take our time. To survive, we must be able to react with little or no thinking. All types of thinking are necessary. The age old challenge has been when to use each properly. Nearly every religion and philosophy has all appealed "for the wisdom to act appropriately". Will that be found in a book? Not likely. It is found in life. Wisdom comes from experience and learning. No easy answers and you will not find it in a flow chart or procedure book.

     
     
     
    • Philippe Gouamba
    • Vice President of Human Resources, Skyline Windows, LLC

    Just two rhetorical questions on the topic of "thinking": When Bill Gates was tinkering in his garage with what would become Microsoft, was he thinking fast or slow; was he in a rush to market? When Thomas Alva Edison was struggling to invent the light bulb, was he thinking fast or slow? Was he rushing to get his invention to market or was he focused on making sure that it worked? Here is my problem with the question that we are faced with this month: the greatest decisions and accomplishments in the history of mankind are a result of passion and vision, not the result of bureaucracy. I would bet that Bill Gates and Thomas Alva Edison could not have cared less about bureaucracy as they were in the pursuit of their dreams that, later on, changed the way we all live. I despise bureaucracy! I love efficiency. I am an executive. That means that the Principals of the firm make decisions and I execute those decisions; bureaucracy slows everything down and I just do not have the time for that. Next!

     
     
     
    • Rebecca Mott
    • Project Manager, Tennessee Valley Authority

    Bureaucracy is defined as "a system of administration marked by officialism, red tape, and proliferation." Heskett has equated slow thinking to bureaucracy. But is it really?

    Officialism, red tape, and proliferation are the result of processes introduced into the system, sometimes as a result of "fast" thinking. For example, someone made the wrong "quick" decision resulting in major cost ramifications. How do we fix it? We place adminstrative barriers in place to prevent the error from recurring. A bureaucratic process has just been born. So, let's consider the possiblity that "fast" thinking is the driver for bureaucracy rather than the fix for it. Let's also consider the possibility that bureaucracy is born out of rational responses and not irrational ones.

    Basically, we must not assume that "quick" decisions are a good thing and "slow" decisions are a bad thing. It all depends on the situation and the resultant risks involved. In other words, what are the ramifications of making the wrong decision? You must weigh the associated risks as you decide how quickly you must respond.

    Let's use a simple example. If I am drowning, I don't want to go through a team or committee to decide the best way to approach the rescue mission. So, urgency and risk, as well as complexity, are issues.

    Finally, let's not forget the plethora of research that shows teams consistently outperform individuals. It is the modifying effect of the team, which also slows down the decision-making process, that produces a better result.

    Thanks to Jim Heskett for another thought-provoking topic!

     
     
     
    • Dr. S A Visotsky
    • Chairman & CEO, Vitech Group LLC

    Mr. Gupta commented: "Why Citi bank laid off huge number of employees? The answer to both the questions is one. Decision makers or policy makers could not understand and anticipate the "emerging dynamics" that could challenge success and tends.

    The decision maker, was none other than Vikram Pandit, Citi CEO,who some have called a "strategic thinker", sort of contradicts the argument for policy makers who "could not understand or anticipate"

    Mr. Gupta, after you finally graduate from University, and spend 30+ years in the industry, you to will have developed your own process of decision making. You should hope it is as keen as that of Mr. Pandit, who you have dismissed as incompetent.

     
     
     
    • Sudheer Thaakur
    • Free lance

    Yes, bureaucracies by their hierarchical structure should be attuned to slow and deliberative thinking. Only problem is that organizations are 'peopled' and people are predominantly given to System 1 thinking. And our society seems to unwittingly support and promote such behaviour. Look around and you find everywhere premium on fast quick thinking on your feet being promoted and presented as behaviour of successful people. Such behaviour is successful in relatively simple and experienced before situations. But in a world that is more complex and uncertain and ambiguous we should be promoting slow and deliberative thinking. Till we do that we will not be able to fully utilise the opportunity offered by structured nature of organisation. Sudheer Thaakur Shimla

     
     
     
    • Yadeed Lobo

    I agree with Kahneman's assertion especially in organisations.

    Good governance (the objective observer ,non executive board members)serves as an effective moderator of irrational exuberance on the part of ambitious executives. Poor governance is what happens as in the case of Enron and Worldcom.

    The relationship between the Independent Non-Executive Chairman of a Board and the CEO is particularly important. While Board papers and board meetings function as an effective mechanism of communication, it is outside this process when strategy is formulated or strategic decisions are made that dialogue between the board and management is essential. The element of challenging management's thinking is something of a useful bureaucracy which prevents cognitive biases inherent in the System 1 thinking of management from occurring.

    In some cases though this governance bureaucracy can lead to dominant groups prolonging decision making. It is a fine balance but one that has to be attempted to be achieved.

     
     
     
    • Anonymous

    Seems like there is more commonly negative connotations to System 1 thinking than System 2 thinking. The whole involves personality types, as well. As an analytical thinker, System 2, if you will, I obtain as much information as there is and weed out the "fat" and arrive at a well thought out decision. I use this System 2 thinking on critical issues. On non-critical issues, or issues that commonly arise, I tend to look at past decisions and attempt to make more System 1 decisions. I believe that System 2, for me, works best because IF the decision was wrong, due to unseen factors, I can defend my decision.

     
     
     
    • Ross Garcia
    • Retired, None

    I am an Engineer by training and in my work did Design, Project Management, and Line (people) Management. I also have an Executive MBA degree that I got while working. Generally, I do not agree that System 1 vs. System 2 Thinking is an argument for "Bureacracy", as the title of the article suggests.

    I do have a recent example indicating how crucial knowing about when to implement System 2 Thinking is when in most situations System 1 thinking is adequate.

    My son recently had his wisdom teeth removed. This was to be a relatively routine surgery performed by an oral surgeon. He had the surgery on a Thursday and should have been ready to go back to work by Tuesday. On Tuesday he had a tremendous amount of pain. He went back for a follow-up check-up and was told he likely had muscle spasms in his jaw. After the surgery he was given an antibiotic along with pain medication if needed. He was given muscle relaxants and more pain medication, neither of which worked. In addition, most of the checking and analysis was done by a dental hygienist or assistant rather than the surgeon.

    After visiting the surgeon's office several times and two weeks passing, all in pain, he got swollen and was sent to the hospital. Here another oral surgeon determined that the antibiotic he was first placed on was not working. My son had to have surgery to drain the infection and was in the hospital for three days and after another three days is still recovering. He is getting better, but his tongue is numb on the side of the infection. He has been told that this will tale a long time to come back and it is possible it may not.

    This is a long background to get to the point. That is that just because most of these surgeries go well with the same process does not mean that they cannot have problems. It is an example of a failure to apply System 2 thinking even when indications are present that demand it. The article suggests an independent observer be involved at times and this is likely what is needed when the needed difference is not recognized.

    in Project Management one has to be constantly aware of not getting into "Analysis Paralysis" because a decision is usually needed to go forward and delays are the enemy. In the above situation, the surgeon has the training, but needs to apply it when needed or be willing to bring in independent help quickly when needed.

    System 1 Thinking is similar to an "Assembly Line" approach, where System 2 can be the analysis of problems encountered on the line. This is where the people on the Line can provide input. Bureaucracies are generally not good at doing this. The ones that do tend to be very successful and have more contributing employees.

     
     
     
    • Anonymous

    I agree that bureaucracy has useful purpose. Besides, slowing down the decision making process, it allows different perspectives, interpretation, and experience to be considered. Additionally, it often forces us to be more systematic and transparent. The Bush's decision to invade Iraq is an example that thinking slow may come up with an alternative approach -- but that may be wishful thinking!

     
     
     
    • Bob Kelley
    • CEO, ABL Organization

    As someone who has built several boards for entrepreneurs, I believe the " disconnect" that's described above relative to Kahneman's "Organizations are better than individuals" when deliberation is needed, is due to failing to sufficiently describing "Organizations" and their processes, in appropriate detail.

    My experience is that decision makers need effective "sounding boards" for many kinds of major decisions. Certainly the CEO working with an Independent Non-Executive Chairman of a Board is often a very useful approach with key decisions in ensuring "good governance". In these situations, the chair can also be key in identifying which decisions might, or should, be addressed with exposure to the full board.

    Large enterprises, in dealing with their middle managers, often deal effectively with the risk addressed, by requiring "internal proposal processes". These can include submission of a proposal" to "higher authority" for certain kinds of expenditures. This approach also benefits from the proponent having to lay out their thinking in the proposal, which can be a very useful exercise in itself. But too many organizations design way too much "bureacracy" into these kinds of processes. This leads to "bureacracy" getting a well deserved bad name and to poor decision making. (Many opportunities go nowhere because of the perceived "hassle factor" to the person with the insight and those that move ahead "miss the window" because of the often encrusted & time stretching aspects of the particular organization's "bureaucratic" processes.)

    I see the key to overcoming the "bureaucracy" problem as "streamlining the bureaucracy" with approaches such as the CEO working with an Independent Non-Executive Chairman of a Board. For many large enterprises, more "approval processes" might include one approval sign-off, unless more research is apparently required, for lower commitment project or issues. There might then be an additional requirement that that the "approver" respond within a couple of business days, unless greater urgency is warranted.

    One other aspect of this is that while there are generally processes in-place for approving large economic commitments, there are seldom good "bureaucratic" guidelines regarding "crisis response" issues. In these cases, when effectively designed, a one or two line email might be better, in the interest of timeliness than a "fully thought through proposal".

    My thanks to Professor Heskett and the other contributors, as this is one of the most critical, and toughest, processes to help shape for any organization, from a governance perspective.

     
     
     
    • Xuefei Peng
    • MBA student, BiMBA

    In Chinese old saying, men will get smarter after one night sleep. So thinking slow does have its advantage. However, at workplace, employees are often required to think on their feet to make quick decision. In my oppinion, generally, the higher the organizational level, the slower the thinking turns to be.

     
     
     
    • danimports

    Bureaucracy is pretty annoying for the most part, I currently work from home selling export goods and I read on this blog http://www.importexporthomestudy.com/export-business/export-goods/ export goods greatly help the country's trade deficit. Problem now is that bureaucracy usually gets in the way with the big taxes and all.