Most books on marketing are junk.  Sometimes you can learn much more about marketing by reading certain non-marketing books, and one of the best I’ve encountered recently is Thinking, Fast and Slow, by the Nobel Prize-winning psychologist Daniel Kahneman.

Thinking, Fast and SlowIn this highly accessible book from 2011, Kahneman summarizes the findings of his long career of research into decision making and judgment, often conducted in collaboration with the late Amos Tversky. Between the two of them, they essentially created the discipline of behavioral economics, now the subject of so many fun TED Talks by folks like Dan Ariely and others.

In some ways, Thinking, Fast and Slow is a treatise on our cognitive blind spots as humans. And if marketing is one thing, it about taking advantage of these simplifications and blind spots to entice people to buy, and so it’s worth taking a look at.

Thinking, Fast and Slow in summary

Kahneman simplifies the problem of mind by dividing it into two systems:

  • System 1 is the more primitive, animal part of our brain. It handles our senses and emotions, processing feelings about this information quickly, automatically, and almost unconsciously. System 1 alerts us to unusual stimuli, primes us to react quickly to possible threats, and makes snap judgments about people, often based on looks or stereotypes.
  • System 2 is the logical part of our brain. It’s involved in making calculations, handling complex ideas, and evaluating challenging decisions. System 2 constructs thoughts systematically and can counteract the emotions and biases of System 1, but only with a great deal of effort, concentration, and practice. System 2 is also lazy — shutting off as soon as it can, and easily getting exhausted — and poor at multitasking.

As humans, we have a big problem: System 1 gets first dibs on most of the information we absorb from the world. Only a few seconds later can System 2 begin to act rationally on this data — by which time it may be too late. And System 1 can color, misinterpret, or withhold the data before passing it to System 2 for rational evaluation, which means the decisions System 2 makes can be based on very flawed data. Plus System 2 has limited resources, and can easily be overtaxed or filled to capacity, causing us to make errors like crashing your car when talking on your mobile phone.

This conflict between what System 1 does automatically and what System 2 does only when required is what causes us humans to fall into numerous fallacies of judgment. Examples include:

  • Poor understanding of probabilities
  • Hyperaversion to losses
  • Anchoring estimates to arbitrary numbers
  • Overreliance on “experts” when algorithms solve problems better
  • Overestimating the probability of scary but rare event

And so many others! It almost makes you wonder how people ever make good decisions — or avoid running each other over all the time. And perhaps sadly, there’s no way to separate these Systems. They are not based in neural structures; they simply reflect what our brains evolved to do and not do automatically.

This “system conflict” within all of us is the root of behavioral economics, and it has interesting implications for both marketing and management.

Behavioral economics and marketing

A lot of Thinking, Fast and Slow is about how to train yourself (that is, your System 2) to overcome the mistakes that System 1 makes quickly and unconsciously. From a marketing point of view, however, you can also think of the book as a treatise on how to take advantage of both System 1 and System 2 to get somebody to buy a product, a service, or an idea.

Take branding, for example. Branding is really about using System 1 to create an instant emotional reaction to your company. Look, for instance, at this little icon:




You probably have a feeling about this image, even before you can consciously articulate the name of the company it belongs to. Ideally, you will have warm, positive, friendly feelings, and these will color a lot of what you think about the company and what it does. (Mouse over the bird if you don’t know what company it belongs to.)

Thanks, System 1! And this is what so much brand advertising is for: to create simple, unconscious emotions in our minds that allow us to make quick decisions, but which also bias and slow down rational thought.

Business-to-business marketing, on the other hand, is often about the slow process of using System 2 to overwhelm fears and doubts that System 1 casts up when facing a non-intuitive decision involving lots of money and potential risk. By acknowledging the reality of these emotions and addressing them head on, I think marketers can overcome System 1’s resistance and achieve better, faster results.

Indeed if you learn anything from Kahneman, it is that there is no judgment and no decision-making uncolored by emotion. In Star Trek terms, there is no Spock without Kirk. Emotion is there no matter what you do, so marketers ignore the emotional content of their messaging at their peril.

Behavioral economics and management

Kahneman sounds an optimistic note for the science of management. Organizations, he says, can make better decisions than individuals, because in effect they can become the System 2 corralling the reckless, impulsive behavior of all those System 1-driven humans out there. Organizations can impose processes that allow careful evaluation of new situations rather than reflexive reactions based on rules of thumb. Organizations also have the time, resources, and inclination to develop algorithms to institutionalize good judgment, as well as recognize and correct for mistakes.

This reflects a lot I’ve learned as a marketer and manager. Rather than make snap decisions about what to say and how to spend money on marketing, I make myself go though a written strategic planning process — even when I’m pretty sure I already know what I’m likely to do. While this process take a little more time, it almost always substantially improves the quality and results of my marketing.

In summary, I recommend Thinking, Fast and Slow for any marketer — or for any person in business who wants to make better decisions. And I’m hoping that’s all of you, right?

I also found a nice visual summary on the web from Eva-Lotta Lamm, below:

Thinking Fast and Slow: A Summary

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