Managers Use of System I and System II in Decision Making
Organizational managers are often meet by situations that require them to make decisions. The decisions made may determine the success or the failure of an organization. The managers must make the most rational decisions so that their organization can benefit from the action taken. These decisions may involve investment, marketing, employment, insurance and all aspects of an organization. Managers mat apply different thinking strategies that can help them to make an informed decision. According to Kahneman et al., managers should consider many things before making significant decisions in companies. These considerations should involve in-depth analysis, evaluation, and examination of experiences and expertise before settling down for one decision. Managers should ensure that they make sure that they make the right choices before venturing fully into a decision. The quality of decisions made by the managers can determine the fall or the rise of an organization.
The system I verse System II Thinking.
The system I thinking approach is usually the simplest, and it takes the least time to come up with a decision. Managers who apply this system of think mostly follow their intuition. This thinking approach in business the managers mainly look at the losses and the profits. They make decisions based on what is presented to them (Tay et al.). If the information submitted to them indicates advantages, they instantly take the option but if it indicates losses the instantly become aversive. This thinking is often not correct since data may be presented misleadingly. Managers who use this approach are either not competent enough to apply more profound thought, or they are careless.
System II thinking, on the other hand, uses more than just intuition to make a decision. The managers under this thinking take more time to conclude. They take more time to analyze and evaluate the information and situation presented to them. They also consider other experiences of their own and expertise options before arriving at a decision. This system is likely to offer better decisions that are more accurate and that favour the organization’s welfare. This approach is more advances, and it has been advocated by many scholars (Tay., et al.).
The system I and System II in Marketing Decisions
Marketing decision decisions often adopt these two thinking strategies. Managers in the organization have to make the right decision regarding their marketing and advertising choices (Martuscello). The selection of marketing cans results in losses or gains to an organization. The opportunities in marketing can be placed as one option is cheaper and reaches a small audience while the other option is expensive, and it reaches a broader audience. The System I manager will instantly go for the costly option that will reach a wider audience. This manager will be focus only on the number of people concluded and may be missed on other essential aspects of the business.
In this same situation, a System 2 manager will conduct market research to find out the potential customers for the company’s products. They will use this information to determine which one of the two methods will reach potential customers. One may come to find that the cheaper option that reaches a few audiences reaches all the potential customers. This manager will also look at the nature of the products and determine the appropriate channel to use. The manager will also analyze previous marketing experiences before making a choice. The final decision for the manager applying system II will be informed than the manager applying system I thinking. The opportunity for System II will have high chances of bringing profits to the organization compared to System 1.
The system I Versus System II on Investment Choices
Choices of investments also demand that managers apply critical thinking so that they can settle for the right investment options for the organizations. Managers, when presented with varying investment options, should ask thinking to determine the right options (Kahneman et al.). Two investment options may be offered as follows: the first investment forum maybe in a location with no similar business and a high population. In contrast, the second investment location may have related business posing as competition with the high society as well. The system I manager will invest in place I that has a high population and no race. This choice may show that since location one has a high population and no competition, the business will seize the market and make high profits.
The system II manager, when presented with the same similar situations, will analyze the locations first. This manager will first find out why place I have no related business, yet it is a promising location. The manager, after analyzing the investment location might come to realize that maybe the reason why position I do not have similar businesses with his is because of the culture of that location conflict with the company. In such a situation, the manager will instantly opt to invest in location two. Manager under system two will also analyze position two also and determine what the real competition is doing and find ways of conquering the completion. The manager that used System II to make decisions will be more informed and more accurate in their choice than the manager in system 1.
The system I and System II in Employment Options
Employment choices are another area where managers should employ adequate reasoning. The nature of labour employed plays a massive role in determining the quality of the success of an organization. The skills the employees have are also relevant for organizational success. System 1 managers will employ employees based on their skills and the numbers needed. System II managers will use people based on many factors like the skills these people have, the amount of money that the organization can afford to raise in paying them, and the requirements of the organization in terms of labour requirement. The manager that applies system II thinking when hiring is likely to have the most appropriate labour for the organization.
Conclusion
System II is often considered as the surest way of thinking and coming up with decisions (Kahneman et al.). This system is better than the system because it applies more reasoning, and its conclusions are based on facts rather than personal intuition to make decisions. System II has more chances of making the right and favourable decision when compared to system I. This, however, does not mean that system one is always wrong. This system can also generate good ideas. System II can also go wrong, but its chances of being right are higher. Managers should employ the method that advocates for the more in-depth analysis, evaluation and expertise to increase their chances of making the most favourable choices.
Works Cited
Kahneman, Daniel, Dan Lovallo, and Olivier Sibony. “Before you make that big decision.” Harvard business review 89.6 (2011): 50-60.
Martuscello, Jason. “Is “System 1” & “System 2” Still Relevant for Consumer Insights?” Web blog post. GreenBook Blog, 2 May 2018. Web. 20 Aug 2020
Tay, Shu Wen, Paul Ryan, and C. Anthony Ryan. “Systems 1 and 2 thinking processes and cognitive reflection testing in medical students.” Canadian medical education journal 7.2 (2016): e97.