Daniel Kahneman: Thinking, Fast and Slow
EPISODE 140
With a Nobel prize for economics, when Daniel Kahneman does something, it’s worth paying attention to. In his book Thinking Fast And Slow (buy on Amazon) he reveals how our minds are tripped up by error and prejudice (even when we think we are being logical), and gives us practical techniques for slower, smarter thinking. It will enable you to make better decisions at work, at home, and in everything you do.
It shows you where you can and can’t trust your gut feeling and how to act more mindfully and make better decisions.
Thinking Fast And Slow shows you how two systems in your brain are constantly fighting over control of your behavior and actions and teaches you the many ways in which this leads to errors in memory, judgment, and decisions, and what you can do about it. It shows you where you can and can’t trust your gut feeling and how to act more mindfully and make better decisions.
SHOW OUTLINE
INTRO
Daniel Kahneman and how to make better decisions
Delay your intuition_trimmed(2m26)
UNDERSTANDING THINKING FAST
Our behavior is determined by 2 systems: one conscious and the other automatic
What is thinking fast and slow (1m26)
Productivity Game breaks down System One (Cognitive Ease) and jumping to conclusions
What you see is all there is (2m02)
HOW TO THINK SLOW
Daniel and using System Two (Cognitive Strain) to remove impulses and gut reactions
Slow yourself down (1m43)
When you’re making decisions, leave your emotions at home
Avoid the noise in decision making (1m46)
CLIP CREDITS
https://www.youtube.com/watch?v=WKSts1lNZhc&ab_channel=OurCrowd
https://www.youtube.com/watch?v=PirFrDVRBo4&ab_channel=Inc.
https://www.youtube.com/watch?v=UO4BNlFkCZY&ab_channel=ProductivityGame
TRANSCRIPT
Hello and welcome to the moonshots podcast. It's episode 140. I'm your co-host Mike Parsons. And as always, I'm joined by the fastest thinker in the west. Mr. Mark Pearson Freeland. Good morning Mac. Good morning, Mike. This is mark. The fastest thinker in the Southern hemisphere reporting to you live and the moonshot podcast.
How are you in fine winter? I'm fine. I am. And I'm enjoying and bathing and ES and sunshine. I have to admit. And mark, I just don't know. Should I be thinking fast or slow? Well, I'm sure you myself and some of our listeners are probably asking that very question every single day in this fast-paced world.
How do we distinguish when we want to take a breath and really think about a problem or whether the idea is just to react as quickly as possible? Well, tonight and today, Mike, I think we're going to put that question to rest because we are launching into an absolute [00:01:00] classic as a bookend to our mental models series.
We're going to be Dean to Daniel. Kahneman's thinking fast and slow (buy on Amazon). Yeah, this is, I mean, I know Einstein that was heavyweight, this, this piece of work by Daniel is also, it's pretty lofty powerful stuff. I think much like this entire series. It's like Munger, Einstein and now Conaman, I mean, these are some heavyweights, some living legend work to wrap up the series.
Right? Well, if there were any single books that I remember being recommended when I was first starting out my career, this is one of them. This is probably in the top three. I am not sure what the wrong word would be gifted, maybe recommended books on thinking that I've ever run into and that I've met.
And why is that? What do you think? I think because it speaks beyond [00:02:00] boundaries, you know, he touches on a lot of core essential, almost caveman esque thinking, and he helps us understand how and when we can apply it in our day-to-day lives right now. And I think that concept of contemporary advice is what you and I have run into throughout the entire mental model series.
So far, these legends like Einstein, who in my mind is untouchable. He's almost like good God of science, but hearing how he would break down these incumbent pensive problems like the universe. That's a pretty small problem, right? To try and crack just a little one, just a small one and thinking. Okay, I'm going to apply this mental model and see how I can think about it differently.
That then shows me well, if he can do it on the universe or gravity or, or whatever, then I can do it in my own problems here in this modern world as well. And I think that's why you see a book like [00:03:00] thinking fast and slow, so popular as well because it's contemporary. Yeah, it is. It is a great piece of work.
And for you, all of our listeners, you're going to be introduced to the two models by which Daniel Kahneman has suggested. We can see and think about the world. And this matters because you know what? We often make sloppy decisions. We often are victims of wishful thinking or heaven forbid. Our very own bias, stops us from making good decisions.
It leads us into a world of problems because we just didn't think about thinking. So what we're going to do today is to unveil to you the real essence of the book, thinking fast and slow (buy on Amazon) by Daniel Kahneman. And like this is worth your time. Linear is to a Nobel, a Nobel prize winning economist, who has spent so much of his life breaking down how we [00:04:00] think.
And this will be the tool set for you to go out into the world to think better to me, better decisions for you to be the best version of yourself. Mark I'm ready. I think it is time for us to dive into this world of thinking fast and slow (buy on Amazon) thinking better perhaps. Where would you like to begin? I mean, with that proposition in mind, how to change your decision making from sloppy decisions, sloppy choices, and instead making better decisions where better than to start with Daniel Kahneman himself telling you and I Mike, and our listeners, how to make better decisions.
So, so let's get into our discussion. We have an audience full of investors and entrepreneurs, and they all need to make decisions with less than perfect information. Given all the systematic cognitive biases you've documented, how can they make decisions when they are necessarily not fully informed and [00:05:00] have to use some intuition?
Well, I mean, all decisions are made with only partial information and decisions don't have to meet to be perfect in order to work. And most decisions are imperfect and they still. So, what we can do is improve things at the margin and improving things at the margin can be done in multiple ways. And this is what we're studying now.
So let's, let's hear, how about, how are some of the ways to improve decisions at the margin? You know, there is a question about intuition in now whether you're for intuition or against intuition, it's absolutely clear that intuition can be marvelous. And it's also absolutely clear that intuition is often wrong.
And, and there are a few things that we know we know about the conditions under which intuition is likely to be. Right. And I think we know something about how to improve it, [00:06:00] and we know that it's likely to be right if you've had a lot of experience. And if the word is sufficient regular for that experience to be worth something.
So for example, I do not believe in. In intuition and the stock market, because the stock market doesn't have the regularity that it takes, but where intuition is worthwhile is worth having and it's worth having in many situations, what you really want to do, I think is to delay it. It's to delay it until you have all the information, the problem with wrong intuitions, they tend to arrive very quickly.
They tend to be premature and you are better off. If you collect information first and collect all the information in a systematic way, and only then allow yourself to take a global view and to have an intuition about the global view. This applies in many domains because [00:07:00] delay, as much as you can, before making that judgment, he had delaying your judgment, gathering the facts.
I mean, This is insanely simple, but oh my gosh, like how we're so quick to judgment, we rushed to judgment. We rush in the public sphere. We sometimes rush to outrage and all of this, you know, how do you mark slow yourself down? I mean, Daniel's advising us slow the hell down. Don't rush to judgment.
Don't let your intuition run on fight or fight. Take stock of the facts first. I mean, that's easily said it's easily sad and much harder done. Isn't it there's been plenty of times in my career. Even now when I'll be on the receiving end of something, it might be an email or cool. You know, a bit of feedback or a comment from a partner client, whatever, it might be [00:08:00] both in work as well as outside, right?
And your knee immediately, your body reacts. Sometimes your body reacts quicker than even your mind. And what I mean by that, Mike is you, you might feel, you know, your inverted commas, your blood boil. And I think what kind of one's calling us out there is instead of, and he's obviously referring to a kind of economic situation, investors, finance, and so on, but let's think about it in a broader sense.
Let's think about life as our economic situation. I think what he's calling out of here. Just take a breath, you know, you and I have spoken about breaths in the past, on the show, Mike, the idea of before hitting send on an email when you're just is kind of saying, well, am I totally sure about this idea?
Am I totally sure about the way I'm coming across in this language of the email or a message or a call, just taking a [00:09:00] moment to consider all the facts, including what the other person might be thinking and how the other person might receive the message? I think this is what saying is just pause. Don't react and let your your passion or your anger overweigh your mindset of making that better decision.
This reminds me of something we've talked about on the show before, where Napoleon would delay all of his mail. And he, the reason he did it is people would write to him like, oh, this is big problem. Do you remember this? There's this big problem. And he said two years to all of these assistants and a support team at Boeing said, delay on the email one email, gosh, talk about that.
Delay my letters coming in. And in particular, anyone who's asking for something, I want you to delay it all. And what he would do is he would have a ruler. He'd open it [00:10:00] two weeks later. And what he found is often the thing just got resolved before he even opened the letter. And that was the way he reduced his workload.
And I think there's something in this. We are we're revved up during the day. We've got messages, calls, meetings, work to do ping, ping, ping notification rev up. So we kind of get into a trap where we're trying to operate as fast as our technology around us. And you know, sometimes that doesn't have much of a consequence.
It's like, do I have lunch now? Or in 30 minutes, do I send this now? Or in 30 minutes? However, it's when we're making bigger calls, like, let's say there's a piece of it work and you need to review it before it goes to the next stage. And if you just rush through that and rush consecutively, you might end up with a.
A piece of writing a [00:11:00] presentation and analysis, a spreadsheet that's actually built on a number of rash judgments. So the end product is just not very good. I think that the fight we're up against is the desire to be quick and efficient, but thinking properly takes time. And I think, you know, that is having an awareness.
I think of when the stakes are high and taking time to work on it. This is for example, why I would always, always do work in advance of a deadline or giving a big talk or producing a piece of work because I need to allow myself time to digest the work. The thinking the ideas we've often talked about, trying to write a week before a presentation.
You want to have your table of contents. So you roughly know what you're going to write to or present build. I think this is like me trying to put him in place. This idea of delaying my [00:12:00] intuition, because what I often find is whether in creative pursuits professional pursuits, the more time you live with the work and take your time to think it through the better it gets, you know, mark, have you ever had that experience where you've written something and you've saved the document and it feels really good.
I think I could probably send this, but you come to it in the next day, fresh eyes, and then you might find this one or two little grammar errors, or maybe you're like, you know what, that doesn't quite sound right. I could rewrite that a bit. Do you ever have those moments all the time? All the time. And, and it's one of the, in a, in a funny sort of way, it gives me a lot of.
Satisfaction to come back the next day and to fix it up, you know, to have like you say, a table of contents, or maybe it's a fleshed out kind of skeleton or point of view written down to be able to cover. The time to come back to the next day is a huge [00:13:00] relief. So just planning in advance the ability to work on it, to sleep on it, to wake up the next day and look at it again.
Maybe get some feedback from a colleague that is, is actually a surprisingly joyous process because you're removing the uncertainty that comes with reacting really, really fast. That's right. That it takes a bit of the anxiety out of it. So, no, it really sets us up though, because we've got to understand how we think, and then we need to allocate time into our diaries to give ourselves the time and space to do it.
You know, there's no use understanding how you think and looking at your, getting to your computer in the middle of the day and say, I have to send this document out at the end of the day. And I'm, I'm having my first, I'm doing my first draft today. Like to me. Like I have to protect myself from that. So I would always be looking at the day prior to at least [00:14:00] have it some sort of pretty good out mine.
If I'm shipping, like if I'm shipping it on a Tuesday, I need to have a solid outline. On the Monday, otherwise I just don't have time to let it percolate. I don't have time to let it digest to, to really Polish it from an 80 up to a 90 or beyond, you know? Yeah. And, and actually I'll build on that for any of our listeners who are doing exams or studying.
And so on some thing that I'm sure you heard as well, Mike back in the day, and in fact, I think it's still true with emails and, and problems that we might run into nowadays as well in our careers is read something first and then come back to it. You know, mark an email as a draft or read a problem.
If you're doing an exam, read the question and then read the next question. The next question, rather than jumping into the results or the answer instead, read it and allow your subconscious mind to kind of reflect on it as well. Yeah. So then you've got it. I mean, [00:15:00] it's, it's really about time and space for thinking, which, you know, that's kind of quite contrary to the way in which we work is developing into this hyper fast connected slack chat environment.
You know, and I think this is why our listeners love deep work by Cal Newport because it's, it's about pushing up against that. And he told us to go deep and you know what the great thing is where we have equally powerful advice today from Daniel Kahneman in thinking fast and slow. In fact, he has decoded this thinking.
So now we're creating space. The question becomes, how do we think? And the great news is Daniel Kahneman has been. Your book makes use of a very useful analogy. In fact, the analogy is built into the title, thinking fast and slow system. One is thinking fast system two is thinking slow. What's the difference between the two [00:16:00] systems and why is it important for business decision makers to understand the defense?
Well system one is essentially what comes up automatically in your memory. So, you know, when I say two plus two, something comes through into your head. When I say a mother, an emotion comes so all the things that are automatic, that's what I call system one. And you have no control of it because it's automatic and involuntary system to the slower thinking is distinguished, really not so much, but by the fact that slow though, it's pretty slow, but by the fact that it's effortful and deliberate.
So what you can do deliberately you do in system two, and you can do. Well, control yourself. Control your thoughts perform complicated computations. Those things are activities of system two. So system one does most of the mental work. It happens automatically. We don't have to [00:17:00] worry to where to put our next foot or what word should come next?
Some of the work and its important work is done by system two. When we slow down or sematic versus controlled, I think this is a really nice breakdown, Mike, to help me understand Carmen's two systems, this idea of an automatic quick response versus one that I actually take control over. Yeah. And, and I think the the problem that we've been pointing out is we often deploy fast things.
When we should be displaying, slow thinking, what do you think is that, is that the real problem, or I think the real problem is this idea of memory, this idea of muscle memory coming into the way that you react to things. So you are a product of your environment or your upbringing and you might be well-trained.
And let me come back to this idea, or well-trained in a second, you might be [00:18:00] well-trained or experienced through your career to know how to react to an uncomfortable situation. Let's say it's a problem with a colleague, or let's say it's a demanding deadline. You might have a natural reaction. Well, I'm going to blame somebody or I'm going to go and tell them that it can't be done that reaction.
Like I say, it's not well exercise. It could be a bad habit. And I think what Conaman saying to us here is this idea of a memory reaction. You've got to know and be aware whether that reaction is actually a good one or not. You might have cultivated a reaction as part of your experience that is actually quite damaging and by reacting in that same way, again and again, it's not a good habit because it's, it's a poor mental model that you're following.
Mm mm. And I think you know, a great example of this is the saying, you know, count to 10, you know how people say, Zach, just count to 10, take a [00:19:00] breath because what's happening is your automated response wants to just fly, right. Particularly if it's sparking fight or flight response. Right. And, you know, it's this idea about shifting into slow.
So it's really interesting. Two different systems. You know, a very deliberate way of thinking the slower way of thinking versus the automated thinking. So I'm curious mark, when, when you're presented with that, this idea of, of this, do you have like a playbook on, on when to, and how to like how what's, what are the rules to this game?
Well, I think the w what comes to my mind as we're continuing this journey into the mental model series, where we learn from Einstein shame, Paris, and Munga was this concept of second order [00:20:00] thoughts, second order thinking where don't just rely on your immediate first reaction. So challenge yourself and think, okay, well, we're about to.
Make a decision on who to cover in our next podcast, Mike, and we might think, okay, well, you know, Mike really likes this author. Mark really likes that author. Let's meet in the middle and choose author Zed instead when actually the truth is we want to create shows and episodes that our listeners want to hear.
So by applying a bit of second order thinking, we might turn around in our record and say, Hey listeners, please get in touch and let us know who you want us to come. And I think that's this, the fast thinking would be. You and I making a decision without considering that end user, having a moment to think more controlled, maybe a bit slower.
We might reach out to our listeners who were making the show for and ask for their point of view. [00:21:00] Does that, does that make a little bit of sense? It does. And I think what's really fascinating is how big this universe is of mental models and how to apply them. How to think. I mean, that's why we've done this entire series is so we can make better decisions.
We can apply the right model for the right context. We've got the first one. Why don't you kind of set it up so we can go and break down system one? Yeah. This is a great breakdown from productivity game, telling us about economists first system. So let's hear from productivity game telling us about what you see is all there is.
What's your automatic response to the falling riddle from thinking fast and slow. Steve is a very shy and withdrawn American. Who's invariably helpful, but has little interest in people or the world of reality. Steve is a meek and tidy soul and he has a need for order and structure. Is Steve more likely to be a librarian or a farmer?
If [00:22:00] librarian seemed like the obvious choice, based on the limited information I gave you, then you've just been fooled by system one. Again, if you slow down and use system two, you might realize that the probability of Steve being a librarian is very low. If you've verified your fast, intuitive conclusion, you'd realize that there are substantially more farmers than librarians in the United States.
In fact, there are roughly 20 times more male farmers than male librarians jumping to a conclusion about Steve is a hallmark feature of system. One system, one loves to use limited information to form a quick judgements and then block out all conflicting information. I call this the tunnel vision bias author, Daniel economy, and calls it w Y S I a T I, what you see is all there is Conaman explains that system one sees two or three pieces of information and then infers and invents causes and intentions, and then neglect, ambiguity and suppresses doubt.
This is why you can meet someone and assume, you know what they're like based on their profession or what they [00:23:00] look like only to realize much later with much more information that your judgment was completely wrong. To counteract our natural tendency to form beliefs based on limited information, we need to get in the habit of asking ourselves, why might the opposite be true when I'm given a project that's similar to a project I've done before and believe it will be easy.
I asked myself why might the opposite be true, which then gets me to test old assumptions, be prepared for new challenges ahead and prevent me from underestimating a project and misleading other people. Regardless of the situation asking why might the opposite be true, widens our lens and helps us identify helpful information.
We've been subconsciously ignoring. Ah, this is so good because mark, I was seeing middle age balding man, with glasses in a cardigan, I'm going to admit it. I was really trying to visualize it for the exercise. And I was like, oh my gosh, I did not have a farmer in mind. How [00:24:00] about you? Fantastic. Yeah, I think it's true.
And again, it's just a wonderful thought experiment there because I think you myself and maybe even our listeners will probably automatically go for that for that reaction, you know, and that is just us inferring it in our own minds ideas. Isn't it. And you know, you know, the thing is when we look at the pattern here, There was a instant mental model we got, which is to intentionally take the opposite side of the argument.
Right? So whatever assumption you're drawing, whatever image you're drawing of, potentially a solution to a problem, just ask yourself, well, how would I do the, the inverse the opposite? And it's building these disciplines just to not rush to judgment, but to have a few exercises. You know, I love the idea of just writing down that the first principles, the undeniable truths of a problem, like what is the data that we have, [00:25:00] then you can say, Hmm, is there any patterns in the data?
And then once you have a hypothesis about the solution, then what you can start to do is say, okay, I think. Going left is going to solve this. But for, I mean, it's like debating society back at school. Well, let's just take the opposite point of view and argue that and see how that feels. And that's often something that you'll see in in law practice is in order for your position as a lawyer, to be stronger, the way they prepare is to then attack their own position as if they're on the other side to see if there's any weakness in the argument.
And I think if you can build stronger arguments by being agile and nimble to take on different points of view. I mean, to me, this is huge because if I look at how I thought. And the early part of my career, it was all jumping to conclusions, wishful thinking it was all, you know, [00:26:00] kind of luck. And once you, once you really think through your, an approach to a problem, rather than just rushing to solution to me, this unearths a world of opportunity of mental models and thinking different, doesn't it?
Yeah. And, and I think to take it a step further, there's an assumption that I think some of us have, or an inference to use maybe economist's language and inference that we will have with regards to success. So we assume that Einstein or Munga where. Gifted by the gods, you know, they had an unworldly talent and that was it.
They just had a brain that just worked. And there's no hope for us mere mortals because they're the ones who are out there choosing the right stock or solving scientific problems and [00:27:00] so on. And our inference is okay. Well, that's, that's just the way that the. Deal with things, but actually, as we've been finding out, they are just the ones using these mental models, Mike, they are the ones challenging their assumptions or their, their own blockages in their own brains.
They're the ones who are making those better decisions by just breaking it down a little bit easier so that they can react and think better. And I think that's really the biggest aha throughout this series for me, which is how to take the the concepts that these individuals are saying such as inversion, you know, maybe starting at the end or let's try and argue the opposite as the lawyers might do by putting yourself into that almost competitor thinking or different way of thinking.
That's how you're going to go out and solve that problem, or consider something in a totally different way. [00:28:00] Yeah. So I, I think this jumping conclusions is perhaps the simplest way of saying what is our enemy, right. Just jumping to conclusions and not having more information you'll never have.
All of the information is kind of says, but search to take time to examine the facts. I mean, geez, in some ways it sounds insanely simple and straightforward, but if you just need to look around in the world and we see that people are constantly falling victim to rushed decisions, like you just think about if you only were to take the sports world and look at all of the, you know mid season trends, furs, and indices and transfers where people by players thinking you're going to be great and turn out to be like zip or a decision to swap a player at a certain time.
These are all. We see it's a spectacle of decision-making in front of us and it's just the same in life. Isn't it, [00:29:00] mark. Yeah. And I think this is one of the ideas that Conaman makes us aware of in thinking fast and slow, which is this system. One is thinking fast is something that just runs continually runs continually when you wake up.
I think both of them run and both systems one and the systems two are alive and conscious in your brain. When you're awake. Of course, system one is kind of like a heartbeat and it's continual. And what we need to learn is to not allow system to the conscious or the slower thinking to be completely disregarded so that we're only inverted commas shooting from the hip.
You can have system one thinking it's always going to be active and it's always going to be around. But when you have a problem or something that requires a little bit. Real conscious consideration. That's when we should challenge ourselves and call it in the idea of taking more time in our day, [00:30:00] maybe doing the deep work as Cal Newport would say, maybe turning off on notifications as we've discussed before.
And just doing that deep work, being able to put on your system to hat and going against that system on automatic response. Yeah. This is such a an awakening. I think it's such a, an opportunity to embrace this because I, I feel I'm so grateful to be doing this series together for all of our listeners, because, you know, I mean, I'm in my early days of discovering mental models and I'm a huge fan.
Of Shane Parrish and the work that he's doing. And I just feel so lucky to realize, to have the aha moment. There are different ways to think, and it kind of becomes really fun. If you look at Charlie Munger, he's like, well, I try to have a, like a hundred models in my mind. So when a thing comes past me, I'm like, can I imply one of [00:31:00] my models to that?
If so, if it's in my if it's in my circle of competence, then you know, maybe Warren and him will make an investment. And I think it's so fun to think that it's about having this tool set so that when the right things come you're like on it, you apply the model and you get a better result. I mean, That is pretty exciting stuff.
I mean, it's, it's kind of liberating, isn't it? Liberating is, is actually quite a good word for that. It's the relief that I was talking about earlier when you've got all the time to reflect on your own work, then you've kind of have that, that sentence. Ah, yes. I know I've done my best job here because I made them it's time to come back to it, to reflect on it, to think about it, a stew on it overnight or whatever it is.
But you can only practice that when you're aware of that value. And I think why can't admins quite a, a nice bookend to our current series, Mike is because he's showing us okay. Well, if you've learned. Mental models and you're like, Munga, you've got a [00:32:00] hundred in your repertoire and you can call on them when needed.
Here's kind of, and now telling us, okay, well now let's figure out how we apply it. Let's figure out how our conscious and unconscious mind works. So that instead of reacting in this standard stock, automatic system of system one, instead use some of those mental models with your system, two thinking in order to go and make that better decision.
Yeah. And mark, I've got great news for you. It's not only us here on the show that is doing this deliberate and constructive thinking and giving great advice. In fact, some of our members are, are really getting in the spirit of things. I think we have to celebrate some of the great feedback that we've been getting.
I think it's time to, to cast our eyes across the across the Pacific to one of our neighbors. Do you think that yeah, we want to give a heartfelt. Very enthusiastic, very [00:33:00] celebratory and very specific call-out to Jess from New Zealand who has given us not only Mike, some, some powerful thoughts to consider, but also some great feedback.
That's kind of put a smile on our face, you know, when our listeners get it in touch and it shows that they've had to listen to our shows and they've got recommendations and how you and I, Mike and our team can make our shows better. I mean, that's that to me is. Unique position. It's quite nice to hear from somebody who's consuming us through their headphones in the day to day world.
And they've taken time out of their day to give us some helpful suggestions. I mean, that's what we're doing here. Mike, we're learning out loud and say it learned from our listeners as well is, is pretty cool. Yeah. So a big thank you to Jess. And she is an official moonshot of mark. She is a member of the moonshots podcast, and we are so excited to welcome her [00:34:00] and the other folks that are all joining in.
And we want to make an invitation you, our listeners. We want you to become a member of the show because becoming a member of this show gives you access to our master series. We've finished the first one, which is live, which is a deep dive, a 90 minute deep dive with worksheets and tools on motivation.
And the next one inspired by this series is going to be on first principles and how you can think better. And if you become a member, your contribution, your donation will have help us build our very famous and much desired mobile app. So come on, moonshot is we know you can do it. Get in there, become a member it's like a dollar away.
And you get access to our moonshot master series. You get to contribute just like Jess has, but here's the other thing. You'll give us the resources to make the experience even better. It's going to help us build our mobile apps. So come on, get in there. We [00:35:00] really appreciate you guys joining with us to learn out loud and you can be part of it even more by becoming a member and mark, if I want to become a man.
Where do I go for those who want to join the moonshots family, pop along to www moonshots.io and hit the members section and via Patrion, you can subscribe up and become part of our friends and family circle. I mean, it's great Mike, that we're seeing the group grow week by week. It's so exciting. It is.
And pretty soon we'll be releasing our second master series. She's going to really, I think, blow the top off first principles. So if you're getting into this thinking series, we know that in particular, the Einstein series was hugely popular. We thank you for sharing the experience with us. Head over to moonshots.io.
If you want to get more into first principles and thinking better, become a member and listen to our master series. Okay, mark. [00:36:00] So we've kind of set this up. In the work from Daniel Kahneman thinking fast and slow, we know we're in a big hurry and we can make some pretty ugly decisions. He's saying slowed down, pause the intuition for a little bit, you know, gather the facts and be aware that there are these two systems system one, you know, this fast impulsive, automated approach.
But now it's time mark for us to actually dive into the second system system. Number two. And this is where we really start to get a little Zen and where Daniel Carnahan is going to tell us about slowing down system one, the intuitive, fast thinking system in which most people spend most of their time operates in a state that you call cognitive ease or system two requires something you call cognitive strain.
When you're taking the easy [00:37:00] path of system one, what kinds of mistakes are you prone to? And the first place you are going to act more impulsively, you're going to act quickly. So if you're impulsive, still not to be wrong, you know, if you're not a chess player, but you are sort of living in a world with first impulses are not necessarily wrong.
You may may make sense sticks, which by the way, not all mistakes are avoidable well, but there are some mistakes that if you brought system two to bear, if you slow yourself down, you could avoid. So when you are in a, and the sort of free flow mode of cognitive ease and system, when running the show, you're going to be more impulsive.
You're going to be more emotional. You're going to be more optimistic. And you are going generally to follow your first impressions and your first intuitions. Isn't that good? Haven't we read that your gut is right 90% of the [00:38:00] time. No, it's not right. 90% of the time the chessplayers got, if the trespassers are masters, right.
90% of the time, those are situations that allow for skill. But when we're dealing with situations, whether to invest in this or that, whether to we're not always there, the first impulse is not necessarily right. The first time that's such a good wake up, Mike, because I think there's a natural tendency in life, I suppose, probably across a number of different business verticals and careers that we can all choose, where you trust your gut, you trust your instinct about maybe a business decision or how to speak to a colleague.
Yeah, there's something invisible. I need to think. Yeah. My Gus has served me well all these years. I'll trust it again. I think this is the big wake up call economist challenging us with, by [00:39:00] saying, Nope, that's an impulse. Nope. You're probably reacting potentially from a bad habit perspective. And by not providing yourself an opportunity to do the the system two thinking or the slow thinking or the cognitive strain thinking you're not giving yourself enough of a chance to do better thinking.
And unless you have, as you say that Zen moment, you're gonna react in a way that 90% of the time is probably incorrect. It's it's really, it's really a call to action. Don't rush. To judgment. So mark, the question becomes, knowing that the chances are we're doing too much fast thinking and not enough slow thinking, what could you do in your week this week to slow down your [00:40:00] decision, making it and to take your time, to make better decisions?
I mean, you know, with an agenda, as busy as mine, Mike, I don't have time to slow down. I have to, I have to, I have to make things up as I go. You're like in a whack-a-mole game, but how true is that idea? You know, the idea that life is just a whack-a-mole that we're all trying to, you know, get on top of, and, and it's not conducive to doing good work as we've already, as we've already found for me, it's really about preparation.
It's about scheduling. So scheduling in enough moments to have constructive focused conversations with, with colleagues or partners and by partners, I mean, you know, business compassion clients customers that you're working with, maybe even consumers functioning in enough time to, to speak to them and doing an almost scientific approach [00:41:00] to these, these problems, I think is where you are going to benefit a busy, busy schedule.
Because instead of, as we found out with system one, thinking reacting straight away, you're probably gonna make those little mistakes that none of us really want to admit. And when, you know, we reached the end of our week, Mike, we want to look back and know that we've done a great deal of, of positive and good work.
So only by scheduling in advance and giving yourself enough time. Do I find that I. Can think better in a, in a cognitive way. How about yourself? So let's, let's do some brainstorming because I mean, effectively this entire show in this entire book is getting us to like, Hey, habitually, we generally just are impulsive and automated in our thinking.
And it, typical moonshot way of doing this mark is we are like, okay, how do we do it? How do we do it? So I think there's like some [00:42:00] golden rules, much of what you've talked about is just planning your time. Okay. Let's, let's go. Even further, I think when you're thinking about a problem and you considering some solutions, I think limit the options is great advice, right?
If you, we mark it just recently. I think it was yesterday. We were talking about the paralysis we get on Netflix. Cause there's too many options. Right? It's so true. That's gonna kill your thinking. So if you're. Really going through an exercise of coming up with a solution, then maybe choose between one, two maximum three, I think allocating the time to do this.
And let's say, you've got a big call that you need to make a Monday. Then I wouldn't just be saying, talk about it on Friday. I think you want to do a series of activities on Wednesday and Thursday, then let the weekend happen, come back to it on the Monday. And you're like, yep, I'm totally into the problem space.
I've thought [00:43:00] about it. My recommendation would be option two. Sorry. So I think that, that, that prioritization, that scheduling works, but I think not all decisions are as big as each other. So I think obviously you need to look at some of your key decisions and prioritize ones that I've got the most impact.
Right. If there is a really big decision, defer, addressing other decisions until you've tackled this because Mike, you know, the interesting thing about this is that if you know, you've got some big decision coming, it's very hard to focus on other stuff anyways, isn't it? Yeah. It's absolutely difficult to tune out other work that's in the back of your mind, unless you're really focusing on it right then and there.
Yes. And I love the idea of, you know, I've been talking about this example of like a week is let's say you've got this decision to make on the Monday. I love [00:44:00] kind of doing like 90% of the work before Friday, but just leaving this little space to come back at it fresh on, on the Monday after the weekend.
And does giving you the chance for one last, how do the facts settle with me? And if, if you're feeling like there's something. In the data that's not quite right, then it gives you the capacity to go back at it. I think because of that, that habit of rush, we're always doing it. Now, the last thing I would say is you've got to go to your mental models.
You know, we've talked, talked about in this series, there are many different mental models. So what you need to do is to do a quick check. I think to make this time, I would first say, are you trying to solve a problem? Are you trying, trying to make a decision or you trying to design a system of sorts? So like, if you're into this problem solving thing, you know how we [00:45:00] talk to that?
The Ishikawa diagram, which helps you get to the root of something like a conflict resolution diagram maybe, or maybe even with problem solving, you approach it, the problem from a different point of view, that was the inversion model we talked about. Sorry. Step one. Mark is like, we have to have like a bit of a go-to.
We need to know our models well enough, so that on the fly we can say, okay, is this problem-solving decision-making or systems thinking which one? And then apply the model. So I just did problem solving. So mark, if we're going to make a decision, right? What, what do you think of the models that come to your mind that might be really handy to use for decision-making?
Oh yeah, that's a good one. I think the issue cower is a, is a bit of a classic isn't it? That can help me understand where the cause in a, an event might identify potential challenges that are coming my [00:46:00] way and therefore enable me to potentially solve a problem quicker. Yeah, the. For decision-making I definitely be looking at you know, second order thinking like, okay, if we decide to go left, then what would happen?
Oh, geez. If we do that, then it's got all these consequences, but that's a really good model for decision making. There's the old Edward DeBono where six different hats. All right. To come at it. In fact I think if you've got to make a decision, you may even use one of my favorites, the Eisenhower matrix.
Well, you know what? I was going to save the Eisenhower matrix for when you're trying to determine how to break up your time and prioritize it challenge. But what is it? But back work with me, that's a decision. Exactly. And that's why, that's why it's a perfect model for decision-making right now.
Another one, another one to do is this last one. And this one. Is quite interesting for [00:47:00] us because it's all about product design, which is kind of our universe. And you can do all sorts of things. You can do the connection circles model, where you start to explore relationships and loops and systems.
That one's really good. Another one, which is super fun as the iceberg model. So we always talk about like, there's the peak that's above the waterline and then there's everything below. So you could take an event or a product or a thing and say what's above the waterline, but what are all the things happening below the water line that we don't see?
What are the hidden activities? Very good. If you're thinking about product stuff, you can think about different. Balance loops. You can think about reinforcement loops that are in, like, how does something happen over time? What is the, the looping factor inside of a situation or inside of a product?
The point I think we've got here, mark, is that there? You've got to have these systems at [00:48:00] hand in order to think better. You've got to start really picking one or two to start with one, even that you really like, like second level thinking, I'm just going to go deeper. And I think about consequence. These are all really they're there.
They've been studied, they've been nurtured and they're there at our disposal. It's really a question of, are we going to make time to slow ourselves down and ask which of those models. Our best. I mean, that's pretty awesome, right? I mean, it reminds me of what Charlie Munga said in our last show, Mike show 1 39.
He was calling on us as, as individuals to not go throughout life. Just knowing what you know right now, because you're going to have a disservice when you run into. Potential challenges or problems, right? Imagine leaving school and learning nothing else for the rest of your life, by taking that ownership and knowing, okay, well, I'm going to run into some challenges, maybe it's product design, or maybe it's running a [00:49:00] business, or maybe it's managing my money.
All of these require different skills and different lessons, don't they? So this idea of constant lifetime learning is really what I think this, this mental model series is, has revealed to me at least, and probably to our listeners and listeners. If you're hearing us referencing all these different mental models and ideas and diagrams, head on over to moonshots.io and check out our mental model series, where we've touched upon some of these great mental models, Mike inversion, second order thinking, thought principles.
It's been, it's been an education for me at least. It has, it's where we're learning out loud with you. Our listeners, the moonshot is we're so glad to share this with you because personally, this has been incredibly powerful in helping me in my journey just to make better decisions, to be a little bit better every day.
And I think it is only appropriate that we have one last thought from Daniel Kahneman to bring us home. And it's all about [00:50:00] avoiding the noise. Let's elaborate on this. I think some of your current work is on different ways of tuning out the noise. Yeah. Could you elaborate on that? Well, there is an enormous amount of noise in decision-making.
I mean, we, we became aware of that, the extent of that actually in an insurance company in asking by how much do underwriters, who look at exactly the same risk differ in their assessments. And we compare that to the expectations of the executive. And the differences among underwriters were about five times as large as expected by the executives.
And it turns out that this is true, wherever you go. We now have a sort of saying wherever there is judgment, there is noise, and there is more of it than you think because people underestimate overestimate the extent to which others agree with them and underestimate the amount of the extent of [00:51:00] differences very consistently and very systematically suggest in entrepreneurial environments taking the time or in corporate environments, taking the time to almost write down areas of agreement to avoid this, this cognitive bias.
Well, I mean, you know, the, the one danger in all of those is you don't want to paralyze yourself by too much analysis and you don't want to paralyze yourself by too many bureaucratic procedures. So fine. The best way to combine a disciplined approach to decision-making with something that is not too bureaucratic and the decision-makers will feel is the help to them rather than a sort of a bureaucratic constraint.
That's a tough exercise. It is a tough exercise. There you go, Mike, thank goodness. We're hearing from Daniel Conaman himself telling us and reassuring us. It can be tough to be disciplined with yourself and to [00:52:00] not be bogged down in being, you know, drowned out by the noise of your system. One thinking when you're trying to solve.
Yeah, I cannot think of a better way to describe our modern lives as you know, surrounded by noise. Like if you think about everything that is fighting for our attention and how beautiful, a quiet still and peaceful morning feels I feel like that's a sanctuary amidst all of this information, news communications and notifications.
And I think if you are aware of the world in which we live, and if you're a geriatric like me and you remember the life before internet, where we used to send faxes to our clients, You know, the, the reality becomes that you've got to realize that we, we have, you know, thinking as a precious resource and all of that noise is [00:53:00] stealing our attention, stealing our energy.
So we have less, less power and less energy for thinking about the big stuff. So be deliberate, be purposeful and intentful in allocating time to things that matter decisions that matter. And don't rush them, craft them, own them. And I'm sure the outcomes will be. What about you, man? Yeah. This is such a huge call-out that I think has been consistent across all of our individuals in the mental model series, starting with Einstein, just making the time to think about the problem.
Do you remember that quote from Einstein? I spend 95% of my time thinking about the problem 5% of the time thinking about the solution. I think this is bang on that same concept. Spend time to get rid of all the distractions. Spend time to think about that problem rather than rushing in, in a fast thinking approach to jump to a conclusion or a reaction or infer a reaction [00:54:00] instead, spend enough time just focusing on the problem at hand, give yourself that breathing space, be deliberate and controlled about it and that reaction or that result will be far greater.
I think this is been a big lesson for me, Mike, to really challenge myself. In how I, in how I think and how I react to problems, then my day-to-day world. Exactly it mark. That's exactly it. And out of, you know, we were brainstorming that big list of things that you can do. What can you, what, what one practice could you do, do you think to help you allocate a little bit more of your thinking into the slow category right within the fast?
Well, I was really, I learned a lot from Cal Newport's recent book, a world without email, and I think that's very much a first step in as condoms calling out [00:55:00] on that final clip, avoiding the noise. I think being deliberate about when and how to use distractions and notifications is very much a way. Of giving yourself time.
And I quite like the distinction you made a minute ago, Mike, those notifications take energy away from your ability to solve those problems. So I think being really focused and removing technology is going to be the thing for me that I think will help me think in a more slow, deliberate way. Where are you, what is your mind go?
I would probably say making more time to explore different models. So I probably quickly grab a model and go for it. I'm okay. About the time allocation. I think the quality of my thinking could be better if I explored, if I was more deliberate about deliberately [00:56:00] thinking. In the way, I don't think the answer is, but, you know, thinking the, taking the opposite side of the argument deliberately, or, you know, any of those models that I described, just being more curious to explore different approaches, I'm often pretty time-constrained.
So I th so it's a little challenging, so I've got to find a way to quickly punch through a different couple of models. I think my thinking could be better if I did that. Yeah. Experiment there were saying as well, and with these different models, see what works or maybe see one work and then try another and thinking and see if that one works as well.
Yeah. That's a nice color. Very good. Nice. Call-outs indeed. And what a great show Delving into this fast and slow thinking, what a great series. How do you feel at the end of the mental model series? I think what I have been impressed by [00:57:00] is the concepts of these mental models from these, these hugely well-known and recognized and celebrated authors and thinkers is not how necessarily cerebral a lot of these challenges or considerations are, but how practical we've learned a lot of very actionable logistical steps, Mike, that you and our listeners can, can put into our, our day-to-day lives straight away.
I think that's, what's really struck me how our practical, these concepts from all the way from Einstein now and to Conaman have been. Yeah. And isn't there, this meta-learning learning like that in the end, the successful thinkers are those. Make the time to think, and they prioritize their effort and spend a ton of time.
Just getting the facts on the most important things. Like Einstein's like, basically I just thought about the one thing more than anybody [00:58:00] else. It's so good. Yeah. It's really powerful. And then on the other hand, you're like, damn, this is a health. This is down to one thing and it's discipline. Not that old discipline again.
Can't they be at like a secret sauce? Like a magic powder. Come on. Can I just take a supplement and that'll make it easier to supply the hardware while mark, mark. Thank you for joining me in this mission to decode the work of Daniel Kahneman and thank you for producing together with me this whole mental model series.
It has been wonderful. And thank you to you, to our listeners. Our moonshot is those of you who are joining us to learn out loud so we can be the best version of ourselves. And today show 140. We did that with Daniel Kahneman and he's work thinking fast and slow because this is really important. We never have all the time formation that we need to make a decision, [00:59:00] but we've got to have a way to make better decisions.
So we need to start. He says to delay your intuition, but then one we delay what happens next? Well, we've got two choices. We should be aware of our automatic things. And then our slow and deliberate thinking. In fact, what Daniel Conaman has done is presented us to systems that can help us think better.
And here's the thing in the end. We're always a little too tempted to automate our thinking, to do fast thinking. We need to make more time for slow thinking. And if we're going to make decisions, leave your emotions at home, get rid of the noise, take a breath. Don't rush. Take your time, get the facts, select your mental model of choice, and you will indeed make better decisions if you can think fast and slow.
So there you have it, everybody that is the moonshots podcast.