Business leaders make important decisions all the time, often with significant consequences for their people, their organisation and the world around them.
For some, decision making comes naturally and is an aspect of leadership they relish. For others, it can be an uncomfortable challenge, feeling forced to make decisions without having all the information or the time needed.
Our CEO, Jonathan Knight, spoke to Leadership Coach and psychologist Peter Webb about his research on decision making processes and how leaders can learn to feel confident making decisions in an uncertain environment using System 3 Thinking.
Jonathan: “Peter, I really enjoyed reading your new book, ‘System 3 Thinking: How to Choose Wisely when Facing Doubt, Dilemma, or Disruption’. It was a great mix of personal stories, academic references and practical frameworks. At what point did you realise there was a need for this System 3 Thinking?”
Peter: “My research initially started out looking at measuring decision making. Along the way, I investigated the psychology of wisdom and became interested in wise decision making. Together with my colleague Dr Barry Partridge from the University of Wollongong, we developed a self-assessment tool for evaluating decision processing. There are two systems we use to process information leading to a decision:
System 1 Thinking is all about making decisions based on our experience: from our ‘heart’ or our ‘gut feel’. It is an emotional decision making method, using our past memories to predict future outcomes.
System 2 Thinking is more about logic and reasoning. In this method, we use our heads to try and figure something out where we can’t base our judgement on previous experience. It might involve a spreadsheet or some calculations, creating evidence to support a rational response to a problem.
However, we discovered a third system of thinking which was psychometrically and statistically different from the other two.
System 3 Thinking turns out to be more considered and consequential, taking into account all the likely outcomes in both the short and long term. It represents a more compassionate way to make difficult decisions when faced with doubt, dilemma, or disruption. In essence, it is the practice of good judgement.
As a leader in today’s world, using either System 1 or System 2 Thinking is difficult. Take the global pandemic as an example. Leaders couldn’t make decisions using System 1 Thinking, as they had no experience of living through such an unprecedented situation. They couldn’t use System 2 Thinking, as there was no logic around the problem to base decisions on – no real evidence they could gather to make an informed choice.
It is situations like this where leaders need System 3 Thinking. System 3 Thinking is a balance between System 1 and System 2 Thinking. Science backs this up. The brain’s Default Mode Network (DMN) becomes activated when you are daydreaming or imagining the past or the future. It’s where your flash of inspiration or creativity comes from when you’re not thinking about anything in particular. It’s also where you balance System 1 and System 2 thinking about a problem. You can find a middle ground between those parts of the brain that are associated with both logic and emotion. This is a useful placeholder for the location of System 3 thinking.”
Jonathan: “I agree, Peter, that the world we are living in now requires a different decision-making approach. Things are so unpredictable that leaders can’t draw on past experience, and it is very difficult to analyse the future. But it is also such a fast-moving world, and leaders don’t often have the time to pause and step back to evaluate a situation, which System 3 Thinking requires leaders to do. How can leaders detect what type of thinking is required for a situation and when they really do need to push back for more time to consider a decision?”
Peter: “Depending on the nature of the problem or situation they are facing, leaders will probably approach it with System 1 Thinking, drawing on their experience. If this doesn’t work, they will subconsciously move on to try System 2 Thinking, using a rational, analytical framework. It is when these approaches don’t produce a solution that System 3 Thinking kicks in. My research has identified 6 dimensions of System 3 Thinking:
- Focus – Intentionally directing your attention to the key elements of the problem while screening out distractions. Developing a practice of mindfulness is how you sharpen your focus.
- Life Experience – Reflecting on your successes and failures and the lived experience of others gives you a common-sense perspective on both the problem and the people involved.
- Decisiveness – It’s better to make lots of small decisions and assess them rather than wait to make a big decision. When you don’t know what to do, run a series of prototypes and see what emerges.
- Compassion – When you see yourself and the problem in a broader context, you realize it pays to be kinder, to act with humility, and to practice compassion for the common good.
- Emotional Regulation – It’s easy to fly off the handle when your buttons are pushed. It’s much wiser to acknowledge what you’re feeling and to choose your response.
- Tolerance for Divergent Values – Your values and beliefs are important to you. But it’s only when you accept the diversity of values, cultures, insights, and viewpoints from others that you can make the best decisions.
You step back and realise that you are facing a bigger problem, one that you don’t have the experience to solve or you can’t calculate a solution to. You realise you need to think about what the long term repercussions of your decision might be and try to limit the fallout. In that moment of confusion or conflict, that is where System 3 Thinking comes to the fore.”
Jonathan: “System 3 Thinking is clearly valuable, but is it something leaders can practice or learn?”
Peter: “Absolutely. Most leaders practice System 1 Thinking by gaining experience through their everyday life. Then they are trained in using System 2 Thinking, often in business schools. We can also train individuals in System 3 Thinking by first assessing how well they are likely to apply the 6 dimensions of System 3 Thinking, and then enhancing those dimensions which appear under-developed through individual skill development and practice.
Simulations are very useful for this as they allow us to create scenarios that come as close as possible to real situations of doubt, dilemma or disruption that our potential decision makers might be facing. During the experience, we get them out of their comfort zone and force them away from System 1 or System 2 Thinking, to help them practice the techniques of System 3 Thinking.
We put them into a situation where they can experiment, where they can prototype and see how to respond to unexpected dilemmas and disruptions. Effective debriefing helps them draw out the learning and apply it to their everyday working lives, where they deal with complex problems on a daily basis.”
Jonathan: “Early on in the book, you talk about bias. How much does this affect our decision making?”
Peter: “I use the term AI – artificial ignorance. We are all affected by cognitive biases. Our brains are easily fooled. We live in an era where social platforms are driven by our biases and designed to hook into them. Trying to discern the world using our experience or logic is becoming harder. We need more than just rationality, and we can’t rely on our gut feeling as that can be so easily swayed. That is why we need balanced, System 3 Thinking.”
Jonathan: “You also talk about the WISE framework in your book. How does this relate to System 3 Thinking?”
Peter: “The WISE decision making framework was something I developed as part of my research into System 3 Thinking.
W- Widen your view
I – Interrogate reality
S – Sense what is emerging
E – Enact a way forward
I wanted a tool that was quick and easy to use when coaching clients as a practical way of getting into System 3 Thinking when faced with a problem. It’s an accessible route to getting people to ask the right questions and make a decision. System 3 Thinking and the WISE framework sit together as two approaches that inform each other.
I hope that System 3 Thinking makes a valuable contribution to the kinds of decisions that need to be made now. Things are moving faster with more disastrous consequences than ever before in human history. How do you make these difficult decisions? The pandemic has shown us that we live in a very big ecosystem. When one part of the system fails, it affects everything.
We are going to need a lot more people using System 3 Thinking in the future to solve these wicked problems. Applying System 3 Thinking helps us to move in a direction that is most beneficial for more people rather than rely on what’s worked before and hope it will work for the future.”
You can find out more about Peter’s book ‘System 3 Thinking: How to choose wisely when facing doubt, dilemma, or disruption’ here.
“Peter Webb’s book on System 3 Thinking is perfectly timed. In an era of unprecedented, uncertain change, relying on analytics or gut instinct and past experience for decision making no longer works. System 3 Thinking is the key to moving forward successfully in this new world. Blending engaging personal stories, academic research and practical action-oriented frameworks, Peter’s book is not only an essential guide to wise decision-making, but provides a philosophy for living in the 21st century.” – Jonathan Knight – CEO, Ososim
We were delighted to work with Peter Webb and Michael Kossler on the development of our Complex-city simulation, which enables participants to navigate complexity and ambiguity in a challenging yet safe environment. By recognising the impact of their personal preferences on the decision-making progress, individuals learn to apply specific decision-making frameworks to assess a situation and determine what kind of information is needed to make a wise decision. This experiential learning process broadens their perspective and provides leaders with an advantage when dealing with decision-making in their everyday roles.
To find out more about the Complex-city simulation and how it could help your organisation make more effective decisions contact us at +44 (0)1223 421 034 or email email@example.com. Our innovative business simulations use expertise from the worlds of artificial intelligence, corporate learning, gaming technology, neuroscience and organisational behaviour to enable individuals, teams and companies to perform at their best.