To read from the begining of this article see Developing a Thinking Organization Part I

The art of balancing System 1 and System 2

On the surface it might seem that the answer is simply to get people to engage in more controlled, effortful, analytical System 2 thinking. Well no, and besides it’s not that easy. The notion of everyone constantly questioning their own thinking would be tedious, to say the least. In reality our System 2 minds are much too slow to act as a substitute for System 1 in routine decision making and anyway, as our thinking, whether System 1 or 2, is largely invisible, how can we be certain our people’s System 2 thinking is completed with the right degree of rigour? Each of us will have developed our own idiosyncratic approach to System 2 ‘analysis’ and some of us will have developed better approaches than others.

To optimise our organization’s thinking, our people will need to know how to use their System 2 minds, when to use them and, crucially, when to use them together. In the same way as we would give the members of a sports team routines and techniques that will help them coordinate their individual strengths to win the game, we need to give our people guidelines and procedures for gathering, sorting, sharing and using the information needed to feed their System 2 minds and together, produce the highest possible quality solutions.

Over 50 years ago, social scientists Chuck Kepner and Ben Tregoe developed an understanding of how our analytical minds work and their ideas can help us understand how we might approach improving the quality of thinking across an organization. Their insight was to see that our System 2 minds were based on four distinct thinking patterns and, whilst people think in all sorts of different ways, every productive activity that takes place within an organization is related to one of these four thinking patterns(6).

The four basic thinking patterns are reflected in the four kinds of questions we hear asked as an individual ‘changes gear’ into System 2 thinking:

What’s going on? Begging for clarification, it asks for a sorting out and a breaking down, a key to the map of current events, a means of achieving and maintaining control. It reflects the pattern of System 2 thinking that enables us to impose order where all has been disorder, uncertainty or confusion. It enables us to establish priorities and decide when and how to take actions that make good sense and produce good results.

Why did this happen? Indicating the need for cause and effect thinking, this is the second basic thinking pattern. It is a pattern that enables us to move from observing the effect of a problem to understanding its cause so that we can take appropriate actions to correct the problem or lessen the effects.

Which course of action should we take? Implying that some choice must be made, the third basic pattern of thinking enables us to decide on the course of action most likely to accomplish a particular goal.

What lies ahead? Looking to the future, the fourth basic thinking pattern enables us to assess problems that might happen — the decision that might be necessary next month, next year, or in five years time.

Kepner and Tregoe’s contribution has been to document carefully the thought patterns of some of the best, clearest thinkers as they engaged their System 2 minds in each of these four thinking areas; bringing their methods into the open and converting them into systematic thinking processes — termed ‘Rational Processes’ — that can be made visible and shared with others.

Kepner and Tregoe found that where organizations learned and mastered these ‘Rational Processes’, a common language could be introduced for shared System 2 thinking. The processes provide freedom to use System 1 where justified and ensure the introduction of System 2 thinking at the right time; first to challenge and check the veracity of System 1 responses and, where necessary, trigger shared, visible, high quality System 2 thinking.

Building a ‘Thinking Organization’

We have learned that left to its own devices, System 1 can lead us astray. Indeed we might argue that poor quality, unchallenged System 1 thinking might account for the majority of poor problem solving and decision making we see in organizations today. We understand that through the use of Rational Processes we can harness and control our remarkable System 1 minds whilst at the same time, provide the opportunity for improving our System 2 thinking both individually and collectively.

As we now start to think about how we might turn our enterprises into ‘Thinking Organizations’ through the judicious use of Rational Processes, we are confronted with two pivotal questions:

Where and when should we employ balanced System 1, System 2 thinking through the introduction of Rational Process thinking?


How can we ensure this new approach to thinking will deliver the step change in business performance that we require?

The problem solving and decision making that is going on in your organization will, broadly speaking, happen in three places: in the heads of individuals as they wrestle with thorny issues; in informal conversations with others and during business meetings. As it would be unrealistic to believe we can create an immediate step change in the quality of thinking across all three of these spaces, we need to consider where to start sowing the seeds of improved organizational thinking so that they might germinate, grow and spread.

Experience suggests that a useful incubator for the growth of better thinking is in the relatively controlled environment of business meetings. By shaping the thinking that takes place here, not only will we have the opportunity to influence the quality of the most significant strategic and operational thinking, but through their participation in meetings, individuals will be exposed to a rational process approach that will improve the thinking associated with their day to day conversations and ultimately, to the way they balance their individual System 1 and System 2 minds. With this in mind, the first of our five steps to creating a ‘Thinking Organization’ is to identify the meetings that matter.

1. The meetings that matter.

Some years ago we did some work with a major soft drink company in the UK to improve the effectiveness of their meetings. One of our studies explored the Byzantine system of meetings that took place across their organization and we came to the rather unglamorous conclusion that Pareto was alive and well and that 80% of the strategic and operational problem solving and decision making that actually mattered to them took place in only 20% of their meetings. So as we look at improving the quality of thinking in meetings, the lesson from this experience is that we might as well start by looking at those meetings that matter.

We find a relatively brief survey of how your senior leadership group chooses to run their part of the organization will soon surface the collection of meetings that shape an organization’s nature, direction and progress. From this collection, one can identify those meetings that matter by testing published meeting outcomes against a set of questions that might include:

  • Is there evidence that significant strategic and/or operational problems are being addressed?
  • Is there evidence that decisions are being made about the deployment of significant amounts of resources?
  • Is there evidence that risks and/or opportunities are being explored that could materially affect the nature and direction of the business?

Having conducted this analysis, you might be surprised how few of your meetings really matter!

2. Ensure you leverage genuine expert intuition.

The next step in creating a thinking organization is to ensure that you have the right people involved in the ‘meetings that matter’. Whilst many factors should shape who gets invited to a meeting, such as for example, the need to secure a particular individual’s commitment to an outcome; from the perspective of ensuring high quality thinking, our objective must be to ensure we have the right experience in the room. The notion that our intuition is based only on recollection and that in the absence of directly relevant information, our System 1 will simply make things up, should help us understand that the more direct experience attendees have of the issue at hand the more likely we are to produce a high quality outcome. As Kenneth Blanchard points out, “…remember, all the brains are not in the top of an organization.” Whether the purpose of the meeting is to engage with divergent thinking about a universe of future possibilities or with the convergent thinking associated with making a specific choice, the question that must be asked is, how much direct, actual and real experience is there in the minds of proposed participants?

3. Create the container.

Next, you need to ensure that you create the right physical, mental, and emotional space for the meeting.

At the heart of any meeting is a conversation. The ability of people to converse easily is essential if their thoughts are to be combined and leveraged effectively.

An irony of the human condition is that although we spend much of our life talking, a recent survey carried out by Courage Beer(7) revealed that whilst the typical British adult spends a rather staggering four and a half hours talking, truly open and honest conversations are rare. Interactions that may be self revealing, mildly confrontational or minimally unpleasant tend to be avoided. If the quality of our conversations could be improved, perhaps more partnerships could be forged, more deals agreed and the need for difficult change be better understood. Clear, shared problem solving and decision making requires the highest quality conversations. Research carried out by Marcial Losada and Emily Heaphy(8) showed that high performing teams meet and converse differently. In teams associated with greatest profitability, greatest customer satisfaction and highest evaluations by colleagues, team members had developed the capacity to talk to each other in clearly observable ways. Specifically, three capabilities were noted:

  • They asked questions as often as they asserted their own opinions (1:1 ratio between advocacy and enquiry)
  • They showed as much interest in others as they did in themselves (1:1 ratio between focus on self and focus on others)
  • They made more positive than negative comments so enthusiasm and encouragement far outweighed criticism and cynicism (3:1 of positive to negative)

Sarah Rozenthuler in her book Life Changing Conversations(9) describes the importance of creating what she terms a “container” if you want to improve the quality of conversations. She explains that this container should be thought of as having two dimensions. First, the container should be woven out of a set of behavioural rules that encourage open, shared thinking and are agreed by all meeting participants. If carefully crafted and honestly adhered to, these rules can promote the right balance between advocacy and enquiry, the right focus on self versus focus on others and the maintenance of positive rather than negative energy. The reality is that most meeting participants will experience a degree of discomfort as these behavioural rules are introduced but, if unhelpful behaviours are consciously surfaced and managed, gradually, this more self-aware approach will become institutionalised.

The second dimension of the “container” is physical. The notion of ‘Priming’, discussed earlier, allows us to understand that the environment in which the conversation is contained will have some bearing on the quality of the thinking. Is the environment ‘neutral’ for all the team members? What is their experience of the chosen environment? Have prompts that might bias good, clear thinking been removed? As we explore, it’s surprising what can trigger and prime your associative memory.

4. Connect with respect.

Next we need to ensure a harmonious melding of all participants at a meeting that matters and this can mean building an awareness of how people communicate and think. For example, the Myers-Briggs personality type indicators(10), with which most will be familiar, help provide an understanding that what might seem like random variation in the thinking and behaviour of others is actually quite orderly and consistent—whether they prefer to focus on the outer world or on their own inner world (Extraversion or Introversion); whether they prefer to focus on the basic information provided or add interpretation and meaning (Sensing or Intuition). When making decisions, whether people prefer to first look at logic and consistency or first look at the people and special circumstances (Thinking or Feeling) and whether they prefer to get things decided or stay open to new information and options (Judging or Perceiving).

By investing in understanding and actively using knowledge of a participant’s different thinking and communication styles, our own communication can be moderated to accommodate how information lands with others whilst also allowing it to become easier for us to understand the nature of communication and thinking offered by our colleagues. This ability to “connect with respect” will help refine the quality of inputs and outputs of our System 2 deliberations. As, for example, extraverts may become able to resist the desire to just pump information out without filtering it first, Sensors may realise they will sometimes have to deal with the abstract, Feelers will understand that the first port of call for Thinkers is always logic and that Perceivers will try to understand that sometimes closure will be required.

5. Structure your thinking.

By ensuring that you have the right knowledge and expertise available for the ‘meetings that matter’, by creating a ‘container’ in which participants can do their best thinking and by ensuring they have the capability to ‘connect with respect’, the foundations are laid for the delivery of some high quality thought. The final piece of the puzzle is to utilise a set of rational processes that can help structure your deliberations in such a way to ensure you use speedy System 1 when you can be sure of the veracity of the results produced and switch the conversation to analytical System 2 when more rigour is required.

The rational thinking processes in question are Situation Appraisal, Problem Analysis, Decision Analysis, and Potential Problem and Potential Opportunity Analysis. Each reflects one of the four, core System 2 thinking patterns outlined earlier in this paper. They are used to optimise the flow of thinking and the conversation within any meeting. Each rational process will be used at different times and in different ways during a meeting that matters, depending on the nature of the issues being resolved and the need to manage our impulsive System 1 thoughts. Any well
structured meeting will, however, typically start in the same place with the requirement to make sense of the situation and bring order to what can often seem like unmanageable chaos.

For this purpose, we use Situation Appraisal to identify concerns, state them clearly and specifically and develop a prioritised list of issues requiring action. This process helps our System 1 minds ‘unload’ all the hot topics from our associative memory and moves us toward the appropriate engagement of our System 2 by asking four critical questions about each issue:

  • Is there a positive or negative deviation for which we don’t know cause and need to find it?
  • Does a choice need to be made or an alternative evaluated?
  • Are we going to take an action that needs to be protected or enhanced?
  • Can we rely on our collective System 1s for the optimal resolution?

Where the full engagement of our collective System 2 is required, the answers to these questions will direct the meeting towards one of the other rational processes; Problem Analysis, Decision Analysis, or Potential Problem or Potential Opportunity Analysis.

Problem Analysis will provide meeting participants with the tools they need to fix root cause of deviations quickly and inexpensively. In this process, System 2 thinking will predominate as the focus is on analysis and data. The approach requires participants to clearly define the limits and characteristics of the deviation and compare these data with other situations that are problem free. This comparison triggers broad activation of our associative memory in the search for relevant distinctions and possible causes and prevents our System 1 from using narrow, learned patterns to jump to the wrong conclusions. Engaged properly by the Problem Analysis process, our collective System 2 thinking will ensure no time is wasted on hit and miss actions and that no costly ineffective fixes are applied.

Decision Analysis is the thought process we use when we are faced with a choice. In decision making, the tendency to think that what you see is all there is can be avoided by having a structured, visible process. By making people slow down and by making sure they know what they want before looking for it, Decision Analysis will keep people focused and ensure the influence of irrelevant System 1 priming does not take the discussion off track. The development of a list of specific measurable objectives for the decision will help free our thinking from the usual performance norms we associate with possible alternatives and give us something concrete to evaluate these alternatives against. Finally, when all the information on our objectives, alternatives, and risks are clear and visible, System 1 can be allowed back out to decide what is best for us and the organization.

Potential Problem and Potential Opportunity Analysis is the future orientated thinking process that has saved many organizations from disaster and made many others into overnight successes. Whilst even the most intuitive people can’t know the future, intuition is, remember, only recognition. Many will have experience of the threats and opportunities associated with very similar endeavours. A structured process is needed to collect these insights from associative memory and then apply our collective System 2s to think through the most likely causes of future events, planning actions to prevent or promote those events to provide a much needed advantage in today’s highly competitive environment.

On first acquaintance, these processes may seem like powerful tools capable of improving the quality of your collective thinking—and they are. The idea of structuring all your meetings in this way may feel like a pretty tough challenge, but remember the first time you tried to drive a car? Your System 2 went into overload, whereas today your ability to drive no longer takes effort because the skills required have become intuitive and now reside peacefully in your System 1. Similarly, with practice, the use of these rational processes will become intuitive and transform the quality of thinking; first in your meetings that matter and then more broadly as you become a Thinking Organization.

At its heart, the thinking organization is one in which, individually and collectively, System 1 and System 2 thinking is balanced and leveraged through the ability to have high quality, structured conversations. Crucially, people within a thinking organization will be continuously vigilant of the more wayward impulses of their System 1. If I may leave you with one final puzzle:

A bat and ball cost $1.10

The bat costs $1 more than the ball

How much does the ball cost?

A number came to your mind which of course was 10 cents. The distinctive mark of this easy puzzle is that System 1 invokes an answer that is very appealing and very wrong. If you do the math you’ll see the correct answer is 5 cents. If, like 50% of students at Harvard, MIT and Princeton who answered the bat and ball puzzle, you got it wrong, ask yourself if you and your colleagues are letting your collective System 1s have a little too much influence over the nature, direction, and performance of your organization.

Whatever resources your competitors may have at their disposal, the only factor that will allow their deliberations to be more meaningful and insightful than those of your leadership team is the speed and accuracy of their problem solving and decision making. The theatre of war is the meaningful business meeting, and the winning weaponry in your arsenal is your ability to think.

List of Figures
Figure 1: Pounds paid per litre of milk consumed as a function of week and image type
Bateson, Nettle and Roberts, 2006. Cues of being watched enhance cooperation in real-world setting.
Biol. Lett. 2006 Sep 22; 2:412-4.

Figure 2: A Process for Rational Thinking
Charles Kepner and Ben Tregoe, The New Rational Manager. Princeton: Princeton Research Press,1981.

(1) H.G. Wells, The War of the Worlds (London: Penguin Classics, 2005)
(2) Yankelovich Partners, A study of decision making and problem solving in today’s business environment
(Norwalk, Conn.: Yankelovich Partners Inc., 1995)
(3) One Poll and Kepner-Tregoe Ltd., A study of business managers & decision makers (London: One Poll, 2012)
(4) Daniel Kahneman, Thinking Fast & Slow (New York: Penguin Group, 2011)
(5) Bateson, Nettle and Roberts, Cues of being watched enhance cooperation in a real world setting
(London: Biology Letters 2, 2006)
(6) Charles Kepner and Ben Tregoe, The New Rational Manager (Princeton: Princeton Research Press, 1981)
(7) Courage Beer, Great Conversations (London: Wells & Young’s, 2010)
(8) Emily Heaphy and Marcial Losada, The Role of Positivity & Connectivity in the Performance of Business Teams:
A Nonlinear Dynamics Model (American Behavioral Scientist, 2004)
(9) Sarah Rozenthuler, Life Changing Conversations (London: Watkins Publishing, 2012)
(10) Isabel Briggs and Peter Myers, Differing Gifts - Understanding personality type (Mountain View CA.: CCP Inc., 1995)


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