Daniel Kahneman Thinking, Fast and Slow.

System 1 is thinking fast. It is our instinctive and automatic decision-making process

and is how we make the majority of our decisions. This system is incapable of
experiencing doubt, decisions are based on our experiences and memories, and it
enables us to jump to conclusions with limited evidence.

Problems with System 1 can arise for a variety of reasons including flawed memories
and hindsight bias. Hindsight bias is when we assess the quality of a decision not by the
soundness of the process, but by the outcome - and luck can play a role so that a poor
process can still lead to a good outcome.

How to make System 1 work for you? Plan, prepare and practice. Make it so your fast
decision is based on a sound process and won't be derailed by an instinct to jump to a
flawed conclusion based on limited evidence.

System 2 is thinking slow. This is a more complex and mentally draining process. It's
also the process used to plan and prepare. It's actually sitting down to complete the
Readiness Playbook as well as go through the effort of putting together a GO-bag or
buying one, as well as stocking your house with the necessary items to shelter in place.

Poor decisions can emerge from System 2; it is not a cure-all for the shortcomings of
System 1. Problems arise from biases (some of which we've discussed in previous
posts) as well as from ignorance and laziness.

To be properly prepared requires putting in the time and energy and avoiding the natural
cognitive biases that are part of being human.

S1 automatic /instant good mode/creative

S2 concious/ take time rational thinking/decission making

WHERE you are going and WHats right next

COLLABORATIVE DECISION MAKING
Isolation ->distress and confusion
Involve people./transparent->more buy in and understanding

Who needs to be involved->when and to what extend

DECIDE
1. Define yr goal/what do you want to achieve
2. Estb criteria/which features you want
3. Choose good options meeting the criteria
4. Identify pro/con of each option(decission grid)
5. Decide most logical option /rank
6. Evaluate the result (what did you like/did not like)

DECISION MAKING (speed vs accuracy)

call center call
R-delivers project
A - approves project and R reports to accountable
C - go out and gather information
I - need to be kept up to date

Ambiguity
1. Highly predictability
2.
3. Distinct outcomes - >involve distinct parties ->contingency plans
4. Spectrum of outcomes- >gather information as much possible mult sources

5. Unpredictable outcome - >phased decision making

Choice Overload

1. Cut -> lower cost->improve choosing ->improve sale/profit

2. Concretization that in order for people to understand the differences between the
choices, they have to be able to understand the consequences associated with
each choice, and that the consequences need to be felt in a vivid sort of way, in a
very concrete way
3. Categorization -> We can handle more categories than we can handle choices.
More category better-> but they should be distinct category (to chooser not choice
maker)
 4. Condition for complexity It turns out we can actually handle a lot more
information than we think we can, we've just got to take it a little easier. We have
to gradually increase the complexity. If I start you off easy, I learn how to choose

DECISION MAKING
DECISION MAKING STYLEs

AUTHORITATIVE allows for quick decisions but may alienate team members
Authority/Expert ->discuss with the affected and explain your reasons

DEMOCRATIC yields greater team satisfaction and buy-in.

Consultative
Voting/Traditional Majority
Consensus

● ⏱️ Authority or expert style allows for quick decisions but may alienate team members.
● 🗳️ Consultative style incorporates input while retaining final decision-making authority.
● 🗣️ Consensus style seeks agreement from all parties, fostering inclusivity.

● ⚖️ Single vs. Multi-Focus Decision Making: Single-focus leaders may miss broader
perspectives, while multi-focus leaders adapt to changing circumstances. Flexibility can lead
to more comprehensive solutions.

Maximizers vs. satisficers: differing approaches to information and decision-making.

Maximizers
People who strive to make the best choice by carefully weighing options and examining as much
information as possible. Maximizers may spend a lot of time and effort on a decision, and their
choices may look logical and efficient. However, they may have trouble making decisions because
they want to get it perfectly right.

Satisficers
People who tend to adopt a "this is good enough" approach and settle for a satisfactory choice.
Satisficers may evaluate only a few options and select the first one that meets their acceptability
threshold
Heuristics
Cognitive tools for Shortcut to judgment
Straight forward rule of thumb based on past experience
Availibity heuristics - >assume based on data available
Representative heuristic ->an indv is more representative than it is
So be humble and listen to others

Judgement, intuition, experience and knowledge all come together when making decisions
​ Tool 1: Do you need to make a decision?
​ Tool 2: The POCA decision making model
​ Tool 3: Decision levels
​ Tool 4: 7 step decision making process
​ Tool 5: Team decision making
​ Tool 6: Evaluating alternatives

Nutt’s research illustrates that bad decisions were usually bad because two things were missing:

1. Adequate participation of stakeholders in the decision making process.

2. Sufficient time spent generating a range of possible solutions.
3. managers make bad tactical selections ….. because they believe that following
recommended decision-making practices would take too much time and demand
excessive cash outlays.

Solution

4. Involve the key people who should be involved.

5. Generate enough alternatives upon which to base our choice of decision.
6. Follow recognised and proven decision making processes
Cognitive Biases

Memory Distortion->over confident

 7.

The path to decisiveness is rife with barriers

FEAR,TIME,INFORMATION,DEFERENCE,HABIT

DECISSIVENESS
Common Biases and Judgment Errors in Decision Making

AVAILABILITY BIAS
INFORMATION TYPE BIAS
CORRELATION AND CAUSATION
 ​ Correlation is a situation where two variables move together, but this
relationship does not necessarily indicate causality.
​ Causation describes a direct relationship where changes in one variable
directly result in changes in another.
​ Misinterpreting correlation as causation in product analytics can lead to
ineffective strategies and wasted resources.
​ Hypothesis testing and controlled experiments like A/B testing help rule
out false positives and confirm relationships.
Correlation measure
Cor. Coefficient
A positive value suggests that the variables are increasing or decreasing
together: there’s a positive correlation. A negative value indicates they are
moving in the opposite direction (a negative correlation), and 0 means there is
no linear relationship. correlation coefficient doesn’t tell us if one variable is
causing the other to change

To measure correlation, start by selecting your variables and gathering data. Use
quantitative variables and exclude any outliers from your data set.Next, use a tool or
software like Excel to calculate the coefficient. The Pearson correlation formula is
famous for measuring linear relationships between variables.

Pearson Cor Formula

Causation
Once you find a correlation, you can test for causation by running experiments
that control the other variables and measure the difference

1. A/B test
2. Hypothesis Test
Poly-not many presentation
Mono-bullted points

Poly vs Mno
Low vs high context
Low-germany,sweden,US,Netherland,Aus,Canand,Aus ->
Over explained information
High ->read the air,body lang->metaphor,past -more format writing->more personal touch
Collaboration Principles and Process
The Need for Collaboration
Silo mentality - just let me do my job>increase power struggle kills colab
4 Tips to Create a Collaborative Culture
1. Set group expectation
2. Set group behavour
3. Embrace team diversity
4. Provide accountability through feedback

GROUP DECISION MAKING