MBA2093 Must Read: Thinking, Fast and Slow by Daniel Kahneman

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Hey oh. Welcome to the $100 MBA Show. Bite sized Business lessons to help you become a better entrepreneur every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today's episode is Must Read Episode on our Must Read Episodes I share with you a book that I've read that has influenced me as an entrepreneur. I share with you its takeaways, its insights and why you should read it too. Today's Must Read Thinking Fast and Slow by Daniel Kahneman Daniel Kahneman is a Nobel Laureate in Economics who is a psychologist by training. He won the prize mostly because of his work on decision making, specifically what's called the Prospect Theory. And this is why this book is so powerful and so insightful for you and I. As business owners. We are constantly making big and small decisions all day long. These decisions will change the trajectory of your business. The success and failure of your business is directly correlated to the decisions you make all day long. And basically this book is a crash course. It distills all of Daniel Kahneman's work in one volume in one resource. But the real gift of this book is that it's written in a way that anybody can understand this stuff so that we can apply it as business owners in our own businesses. I really can't wait to share with you some of the deep and insightful takeaways I got from this book. How it's changed the way I've made decisions and really made me question some of the decisions I made in the past. This book is rock solid. Can't wait to share more. Let's get into it. Let's get down to business.

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The February 2025 Nielsen report. In this book, Thinking Fast and Slow, Daniel Kahneman really takes the brain and uses the analogy of a computer. Some things a computer will process quickly, some will take longer. There are bugs in a computer, sometimes in the software. But it's important for us to understand how our personal thinking works. Early on in the book, he talks about two systems of thinking. System one operates automatically. It's quick. There's little effort, there's little voluntary energy needed to produce this type of thinking. System two is a way of thinking that requires energy and time. It's often correlated to agency, choice and concentration. We feel like we are consciously making decisions here. The interesting thing is that we all have these two systems and they coexist in our brain. System one is intuitive. It just cannot be turned off. They just kind of come natural. They help us, protect us from threats. It's the same system that gets us to drive home without really thinking much or like, how do we get to this point in the journey? Don't really remember. Was on autopilot. That's system one. System two, on the other hand, is when you actually sit down and concentrate to solve big problems. And in business, this is like trying to solve a financial problem, trying to solve maybe a personnel problem or a team problem. It's like a puzzle you're trying to solve, right? You're conscious of the fact that you're thinking about this. You're trying to solve something. And the point of this whole book is to allow system one to help system two and vice versa. This makes you a very powerful thinker and decision maker. Now I'm going to stop for a moment because that was pretty heavy, Right? And I'm going to relate to some of the stuff that we talked about right now in this book to your business. Okay, let's talk about this for a moment because it's actually quite throughout your day, you're making decisions left and right. Some big Some small. Sometimes we make quick decisions because they're like a no brainer for us and sometimes the opposite. We overthink something and spend time and concentrate and it takes us a while to make a decision. Now the issue we have in business is that not all problems or decisions are created equal. Too many business owners spend way too much time and energy using system two, thinking, deliberating, trying to solve the problem on a decision that really doesn't impact the success of your business. It's not really a big deal. The opposite is true too. Sometimes we just use our gut instinct to solve a problem or to make a decision on something that really can change the trajectory of your success and your business. So I'm going to give you two examples. Example number one is that often people use system one when recruiting new team members. They leave the interview or end the interview feeling I like this person, I have a good feeling were just quick to make a decision like that went well, I think they'd be a good fit, all that kind of stuff. Now, whenever you feel like you're using your system one, my advice based on what I learned from this book is ask yourself how critical is this decision? How much of an impact? And even if you want to put a dollar amount to it, it can really allow you to illustrate how big of a decision this is. Sometimes a bad hire can cost you hundreds of thousands of dollars, if not millions. Whether they make a mistake or get you in trouble or purely they just waste time and don't job as they should and they go on for three months, six months, a year getting paid and it's just not worth it. In my book, this is a pretty critical decision. Making a hire, adding somebody to the team is going to change the dynamics of the team, the chemistry. You're obviously making a hire because you need to get something done and if it doesn't get done, that's going to cost your business some financial losses or blows. You want to make sure that you're not using System 1 only when you are making decisions that have a great impact on your business. This is when you have to stop yourself and say let's use System 2. Yes, let's use a little bit of logic. Let me just try to build a case, use some evidence, figure out and challenge myself and say, what if they're a bad hire? How can we make sure they're not a bad hire? That could be doing a third or fourth interview, asking them to do a mini project, maybe contacting three or four or five of the references, reach out to maybe some people that are common friends or connections on LinkedIn. I'm not saying don't trust anybody, but verify this is a big decision. Let me give you the opposite scenario. You're working on your website homepage and you're trying to come up with a great headline for that page. Yep, that headline is important and it can help your business. But if you get it wrong, it's not critical because you could change it immediately. Going with your gut in system 1 may not be such a bad idea. Just to get the ball rolling and getting you started and getting that page launched. You can then use System 2 later on to verify, to split test, to do all that kind of stuff. It's not a disaster. If your copy is not perfect, you can always improve it. There's a really solid chapter in this book on priming and it's all about how our brains are association machines. And if you know anything about sales or pricing or marketing, this is a huge, huge part of optimizing your business. When you early on on your website, in your sales pitch, prime your customer, telling them how valuable this product is, how much time, energy, effort it's going to save them, maybe how much reven it's going to make them. Case studies, testimonials, this primes them to believe, wow, this is going to be hugely valuable. So therefore it's probably going to be expensive. So that when they go to the pricing page, when they go see the price at the bottom of the page, if this is like a single sales letter, they are primed and even if the price is expensive in their mind they see like, wow, this is $2,000. They could justify it because they're like, I saw how valuable it is throughout the page. Also in your pricing and your packaging anchoring is very important. Whether you offer two or three packages, they're always comparing packages based on price. If I have a course and I have three packages, one is for 500, one is for 1000 and another one is 1500. 500 looks inexpensive only because it's anchored against the thousand and the 1500. There's another solid chapter on jumping to conclusions. System one of our brain is likely to jump to conclusions because it's not really processing information logically. It's just drawing a conclusion based on the quick information it gathered. You should never make decisions based on what system one has gathered or has concluded. This is where system two comes to the rescue and you stop yourself and say, let me see what the facts are. Often people use what's called first principles. This is a theory where you just start with what do I know for sure and not what I think or feel. This is not saying your feelings are irrelevant or unimportant, but it's important for you to identify that feeling and then identify what you know. This next takeaway I loved and it was all about answering easier questions. If you're trying to solve a big problem or an issue in your life or business, try to give yourself an easier question to answer. So instead of asking yourself, are you happy with your life? Such a big grandiose question, ask an easier question. What's your mood right now? How are you feeling in the moment? How long have you felt this way? How often do you feel this way? These are easier questions that allow you to come up with a better answer. I got more on today's must read episode Thinking Fast and Slow by Daniel Conlon. But before that, let me give love to today's sponsor.

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SXM guys and gals. Thinking Fast and Slow is a dynamic book. It's not one of those books that you can just zoom through. It makes you think, it makes you put the book down and see how this applies to my own life and business. But there's so much more in this book. It's pretty, pretty powerful. I'm going to let you find out on your own, but I'm going to share with you one more takeaway and that is the insight of less is more. Sometimes we try to communicate over communicate, whether it's with our emails or sales copy or even when we're talking on stage or in a sales meeting. For example, if you were going to think of a headline to a website that is going to really resonate with your ideal audience, you want it to be punchy, short and powerful. The longer it is, unfortunately, the weaker it becomes because you start to kind of lose its meaning. You start to lose its effectiveness. Our system, one brain just can't absorb that information and it kind of falls flat and the reason why we want to appeal to System one is because system one is appealing to our intuition, our emotions and our really quick, fast decision making. So say for example, I was a fitness coach for CEOs or founders or business owners. A headline like Coaching for business owners is really powerful because if you're a business owner, you identify with this is me. This is what I want to do. I need fitness coaching. The headline Fitness Coaching for Business Owners. It's short, it's punchy. I can easily grasp the idea. There's not a lot of ideas here. It's just this is what I provide for this type of person. Some people, what they do is they try to add more to it. They say, like fitness coaching for business owners that are too busy to make time for exercise. Now you've lost me. And now it's not as punchy or powerful because you're giving me information I already know as a business owner, I know I'm busy. Being short in your communication allows you to have gravitas to really be powerful. If you think about some of the most powerful ad campaigns, it's really short language. Think different, Apple short, punchy communication really drives things home. Guys, I highly encourage you Pick up Thinking Fast and Slow by Daniel Kahneman. It's a fantastic book. It's going to help you in your business decision making, but also in your life decision making. At the very least, it's going to make you self aware of how you actually make decisions and in what modes so you can stop yourself when you are making decisions that actually have a huge impact. That wraps up today's lesson. Thank you so much for listening to today's episode. If you love what you hear, hit subscribe, hit follow so you don't miss an episode right now on your favorite podcast app. And the best way to pay a forward to show your love for this show is to share it. Share this podcast on social right now. Thank you in advance for doing that. I'll be on the lookout to say thank you on social before I go. I want to leave you with this. What I love about reading a great book that can help me as a person, as a thinker, as an entrepreneur, as a professional, is that it's not only going to help me and impact my business, it's going to impact all the businesses I create in the future, all the ventures, all the investments, all the things I do in the future. It's one of the best investments you can make is to pick up a powerful book that can really move you in the right direction. Recalibrate a few things inside of you. Thanks again for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

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